January 22, 2019

Property technology or ‘PropTech’ had a banner year in 2018, both in adoption and funding. The sector saw US$4.6 billion in venture capital in the third quarter of 2018 alone, according to RE:Tech.

“The snowball will keep rolling in 2019,” says Mihir Shah, the co-CEO of JLL Spark, which has a US$100 million global PropTech venture capital fund.

PropTech innovation is changing the way real estate is built, managed and used – from reducing construction costs and streamlining documentation processes to allowing tenants to access building amenities via an app.

As a whole, it is making the industry more efficient and saving it money. Cloud-based collaboration software, for example, is making construction teams more efficient, which can ultimately drive down personnel costs and speed up project timelines.

Shah has outlined his predictions for how PropTech will influence the commercial real estate industry in 2019.

Adoption will continue to accelerate
“In 2018, there was a noticeable increase in the appetite of investors and property owners to try new technology products,” Shah says. “They recognize the positive impact these new products can have on their business.”

This change in mindset is starting to accelerate PropTech adoption cycles.

“Previously, we would often see companies do a two-year review cycle on a new product,” he says. “In 2019, you’ll see more companies moving quickly to pilot a product. If the product demonstrates ROI, they will implement it more widely.”

Tech companies will drive change
In the past, most PropTech startups were instigated by real estate professionals who believed they could address pain points in the industry through technology. That has changed in recent years, says Shah with the tech industry now at the forefront of change in the sector.

“We’re starting to see seasoned tech entrepreneurs building companies focused on the commercial real estate industry because they see the enormous market opportunity,” he says. “In 2019 we will continue to see an influx of high-level technology talent enter the PropTech world, helping accelerate the pace of innovation.”

AI to help provide insights
The real estate industry generates a vast amount of transactional and operating data. This data can be overwhelming for property owners and occupiers looking to pick out key trends and insights.

But new technology is helping make sense of this data through Artificial Intelligence. VergeSense, for example, uses sensors to record exact occupant counts in office buildings and allows companies to identify usage patterns for conference rooms and other office areas. This data can then inform optimal office layout and deployment, including how many conference rooms are needed, what areas of the office are over and under capacity and need to be expanded or shrunk accordingly.

Another example is Skyline AI, which leverages proprietary artificial intelligence to source, analyze, acquire and manage institutional-grade property investments.

“We’ve seen a lot of AI-driven technology emerge this year and we will see these technologies begin to show their value in 2019,” Shah says.

Tenant apps will grow in popularity
In 2018, owners of commercial office buildings showed interest in apps for tenants that provide easy access to the building and a variety of in-building and local services. They allow, for example, a tenant to book a spot in a yoga class offered by the landlord, or order food from an onsite vendor.

“Although these applications are widely talked about, the PropTech industry has been slow to adopt them,” Shah says. “We expect this to change in 2019.” Tenants are demanding better, more flexible workplaces and property owners are starting to feel pressure to create better tenant experiences using digital applications and services.

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Mihir Shah

co-CEO of JLL Spark,

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