This Property Week article about technology in the property industry (proptech) includes a section about how Black Swan created The Knowledge Network – an industry leading tool to improve and target sales opportunities.
This article appeared in Property Week by Emanuela Barbiroglio and can be read in full here.
In 2008, property listings platform Zoopla launched. It wasn’t the first residential listings website to market – Rightmove.co.uk claimed that honour in 2000. The difference was that Rightmove was backed by agents; Zoopla, on the other hand, was venture backed and as a result many identify Zoopla as the ‘big bang’ moment for proptech.
A decade on, proptech is far from reaching maturity and the pace of change is ramping up. Disruptive products are launching all the time and, although the residential sector has long led the charge, commercial is now catching up. Some of the businesses behind these products will inevitably fizzle out and die. Others will gain traction and go on to disrupt the industry.
So are established property firms waking up to the potential of proptech?
When it comes to tech adoption it’s fair to say that compared with some other industry sectors property has been slow to join the party. The vast majority of proptech companies are less than five years old.
Daniel Mohamed, managing director at Urban Intelligence, said at a recent proptech leaders’ event: “Bloomberg, the face of fintech, has been around since 1981; that’s nearly 40 years. Proptech is still very much in its infancy.”
Bloomberg has been around since 1981. Proptech is still very much in its infancy
Daniel Mohamed, Urban Intelligence
It’s in its infancy, yes, but it is growing up fast. More and more proptech companies are being launched and more and more developers, landlords and agents are making use of technology – and promoting it to clients – in a bid to change with the times.
GVA, JLL and Lambert Smith Hampton (LSH) are just a few of the agents to have climbed on the bandwagon. In June 2017, GVA established a new department, Futureproofing, to advise landlords, developers and investors on appropriate technologies for their buildings and to help solve problems that have long frustrated clients.
Rupert Parker, head of Futureproofing, gives an example: “Often our clients would ask about the connectivity merits of the building and received unsatisfactory answers due to the lack of information provided by the landlord.”
Evolution of Futureproofing
In the quest to solve such problems, the role of Futureproofing morphed into an area unexpected at inception: innovation. By understanding its clients’ problems and building relationships with proptech entrepreneurs, GVA has been able to share expertise that Parker says “mutually benefits” all three parties and leads to faster transactional processes.
JLL is also embracing proptech. Last year it launched ONE, an automated value estimation tool that combines big data and real estate market knowledge to provide what it claims is “fast and highly accurate” single or portfolio value estimations.
It also uses a series of back-office tools to support repetitive tasks. “For instance, we use a machine learning tool for lease administration that identifies keywords and scans key data from leasing paperwork and converts it into digital formats,” explains Alex Edds, JLL’s head of innovation.
“We also have the Inspection App, which is a mobile tool used by our property management, project management and valuations teams when visiting sites, enabling us to collect data centrally and enhance the advice we give to clients.”
Virtual reality check
When it comes to providing a better service for clients, virtual reality (VR) is also playing a part and is, of all the technologies currently being used, predicted to have the biggest impact on the industry.
Software development firms Matterport and Panoskin are both being used to give clients VR tours. They have introduced a new interactive approach to finding and viewing property, particularly office and retail space.
“The growth and adoption of VR and augmented reality [AR] is the future,” says Wojciech Kalembasa, chief executive of Panoskin. “There was an estimated seven million VR headsets implemented in 2016 and this is forecast to grow to 37 million by 2020.”
VR can improve property marketing and potentially lead to space being let or purchased on the back of a virtual tour alone.
The growth of VR and other technologies that are currently being adopted by the property industry will make an impact in a number of ways. While some landlords, developers and agents create their own tech solutions or use proptech companies’ products and services, others, like LSH, do both by forming partnerships with proptech firms.
LSH has recently established a joint venture with predictive analytics firm Black Swan to create The Knowledge Network, a commercial property service designed to turn a huge pool of data into meaningful answers for companies looking to make decisions around their property portfolios. For example, when an agency instruction comes in, LSH will gather client data and define key requirements and data selection parameters.
Black Swan uses this information to create bespoke algorithms designed to uncover specific opportunities such as occupier activity, brand sentiment, relocation triggers and industry influencers. This information is then overlaid with LSH’s internal knowledge to produce a targeted marketing strategy and a list of qualified target occupiers.
As well as Black Swan, LSH also has an eBay-style online selling platform for commercial property.
Ezra Nahome, chief executive of LSH, explains: “Currently, most agents won’t take a buyer who has perhaps £3m or £5m to spend seriously – it’s not worth their time. If that buyer can acquire property through an online platform such as our auction site, however, they can compete against anybody. We can open the market to more buyers, which can only be a good thing.”
Many property companies like LSH are embracing change. However, it will be a while before proptech’s adoption becomes widespread, argue some industry experts.
“I do believe the head-in-the-sand approach of commercial property, coupled with a veneer of acceptance of proptech, will prevail for some time,” says Nahome. “There are several boundaries holding back change in the commercial sector. There are some interesting platforms that could have a profound effect on businesses, retailers in particular, regarding where properties should be located, but before these will be adopted there has to be an educational drive to encourage businesses to take ownership of such platforms or innovations.”
Revolutions in residential
One sector that doesn’t have its head in the sand is residential, which is far more technologically advanced than its commercial counterpart. This is partly because the majority of residential customers are either homeowners or independent landlords who own one property or small portfolios.
That is one reason for the blossoming of online estate agents such as Purplebricks, a ‘hybrid’ model that mixes the work of employees with technology, which was founded in April 2014 by brothers Michael and Kenny Bruce. Michael Bruce claims the business was the world’s first 24/7 estate agent.
“There’s no more waiting for the phone to be answered or trudging up and down the high street during working hours,” he says. “We’re open when most other estate agents are asleep – viewings can be arranged, offers made and sales or lets agreed 24/7. We’ve even agreed sales on Christmas Day.”
“We’re open when most other estate agents are asleep”
Michael Bruce, Purplebricks
HouseSimple is an estate agent with a similar proposition – the estate agent was founded in 2007 after identifying a gap in the market for an entirely online and low-cost agency. The role of such companies is to give buyers and renters more power in the transaction process. Nested, a one-year-old firm, has gone a step further by offering people a guaranteed sale price for their home.
“I had the idea [for the business] when buying my own house,” explains Nested chief executive Matt Robinson. “It was very clear that cash buyers hold all the cards in the UK market, and if you are stuck in a chain or have a property to sell before you can buy, you are at a significant disadvantage. The more I talked to people looking to move, the more I realised the scale of the problem and how little there was available to help.”
The question is: to what extent are these proptech companies a threat to traditional agents?
Goodlord, the company behind a system of the same name that digitises the pre-tenancy process, argues that, when it comes to renting, agents are a necessary and integral part of the experience. As the firm is designed to support agents rather than cut them out, using Goodlord to streamline the administration involved in processing a let should allow agents to focus on the personal aspects of building relationships with their customers and closing more deals.
‘Being online is not enough’
HouseSimple’s chief executive Sam Mitchell agrees. “I wouldn’t say online agents are a threat,” he says. “They have been good for the industry as a whole because there was definitely a level of complacency that had set in among high-street agents – they had enjoyed a monopoly on the market.
“Online estate agents have shaken up the market and traditional agents need to react. There are signs that traditional agents seem to be stepping up their game by cutting commission rates and improving their online presence.”
However, Nested’s Robinson insists that “simply being online is not enough”. He argues that consumers want a quality service and will become increasingly discerning as more firms enter the market and technology advances.
It is this, in part, that is driving the evolution of proptech. According to Aidan Rushby, chief executive of Movebubble, an app for renters, 2018 will be the year when many proptech businesses begin to gain momentum as they move into the mainstream.
However, he also predicts that it will be the year when many companies will fail. “Only those that are solving a real problem will survive,” he says. Collaboration and integration could be the key to weathering the storm. It would not be a surprise, Rushby says, to see companies joining forces later this year.
“If 2018 is survival of the fittest, 2019 should be the defining year for proptech and we should expect to see many start-ups firmly making their mark on the industry,” he says. “This in turn should mean consumers are finally seeing the benefits, which will bring a positive narrative to the industry.”
But who is in control of that narrative remains to be seen.
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