We are witnessing the longest economic expansion on record, and the economy is facing liquidity, economic, policy and social headwinds, including tightening monetary policy with Quantitative Easing ending. Central banks continue to increase net liquidity globally—injecting trillions of dollars into the marketplace—quelling yields and shoring asset prices. With historically high governmental debt levels, it will likely become challenging to assess risk and generate a return that outstrips the impact of easy monetary policies. Against this backdrop, and in the coming years, investors, managers, developers, operators, and owners will leverage real estate technology to drive efficiencies, growing alpha.
Real estate technology is a collective term that refers to startups that offer technological innovations, products, or business models for the real estate market. Within real estate tech, three primary subsectors have emerged: real estate Fintech which focuses on removing the frictional cost of information, providing real-time and transparent information (such as Blend); Contech which focuses on the way we plan, design, manufacture, and installation of components, and build structures (e.g. Buildops); and Proptech which focuses on extracting additional revenue and margin from the property with the use of technology (like Roofstock). According to Crunchbase, in 2019, more than $16 billion in venture capital poured into Proptech real estate startups. Real estate is a fragmented asset class and has also experienced unprecedented growth, complicated by ever-changing socio-economic patterns, and behavioral preferences. Yet the sector has not caught up.