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Proptech sees another strong year of investment

Proptech, which broadly includes innovative technology solutions focused on real estate asset and property management, experienced another banner year in 2019, with $2.6 billion of global investment.

Global private investment in Proptech- Chart

Proptech as a sub-segment of fintech heated up over the past 2 years, seeing considerable investment paired with some acquirers’ interest. Although 2019 was slightly down from 2018, given its robust tallies relative to historical figures, it is clear that the fintech aspects of real estate are increasingly explored by founders and financiers as another potential arena to transform with digitization.

The real estate industry is by its nature quite a traditional industry but it faces a number of challenges. As the sector is quite data-rich and is open to exploring digital opportunities, this makes it particularly well-suited for leveraging digital and innovative property technologies as a means to address their myriad of challenges such as using space more efficiently, improving tenant experience and satisfaction and managing the carbon footprint of their assets. As the industry continues to build its awareness of the value of proptech over the next year, investment will likely grow considerably in both investment in innovative solutions but also in required new competencies and capabilities within the teams (e.g. data scientists).

Sander Grunewald
Global Real Estate Advisory Leader,
KPMG International

Over the past year, there has been an increasing number of real estate firms globally focusing on identifying innovation and proptech opportunities and incorporating digital solutions within their primary business processes. Data and data management was a major focus for proptech investment during 2019 given that data is essential for improving efficiencies and for making even better strategic decisions. AI and automation were also key areas of investor interest as it relates to monitoring and optimizing assets. In a number of jurisdictions, proptech is also being used as a mechanism to address sustainability issues and better manage the carbon footprint of an asset.

Looking forward, more real estate and property management companies are expected to embrace proptech. This will likely start with companies defining their digital strategy and roadmap, and figuring out the best mechanisms to collect and manage their data. It also requires a cultural change within the organizations and significant investment in competences and capabilities of new and existing employees. Over time, investment in proptech will likely continue to grow as traditional real estate market players begin realizing the value associated with such solutions.

Fintech subsector insights and regional trends