ULI MEMBER–ONLY CONTENT: The global COVID-19 pandemic promises to accelerate the adoption of property technology (proptech), which sits at the intersection of the roughly $230 trillion global property sector and the nearly $3.4 trillion global technology sector, speakers said in early September during the virtual ULI Asia Pacific REimagine conference.
Bill Lee, cohead of technology and infrastructure at Hong Kong-based real estate investment firm Gaw Capital Partners, said that the pandemic has prompted more real estate companies to consider incorporating proptech into their operations. But he added that real estate companies “are still very viscous and slow.”
Proptech fills a gap between the slower-paced real estate industry and the faster-paced tech industry, Lee said. “When there is a gap, there is a considerable amount of opportunity,” he said.
Gaw, with $25.7 billion in assets under management as of the first quarter of 2020, is seizing on that opportunity. For example, Gaw-backed Beike, a real estate transaction platform, went public in mid-August through a nearly $2.45 billion initial public offering (IPO) on the New York Stock Exchange.
Another example of Gaw’s proptech investments: In April, Singapore-based proptech startup SensorFlow announced that it had received an $8.3 million round of funding led by Gaw and Openspace Ventures. SensorFlow’s technology helps hotels, offices, and industrial properties manage their HVAC systems to improve energy and operational efficiencies.
“Gaw Capital Partners is always looking at innovative technologies that will shape the future of real estate. . . . We foresee big commercial real estate owners and hotel operators integrating smart-building solutions in [the] not-too-distant future,” Christina Gaw, managing principal and head of capital markets at Gaw, said in a news release.
Lee said that he thinks the future is bright for proptech.
“But I think we also have to be very careful about what we get into because there’s a lot of noise,” Lee said. “And there’s also a lot of consensus, and sometimes consensus isn’t very correct.”
For now, though, the consensus in the Asia Pacific region is that proptech is going nowhere but up.
According to a new report from global investment bank GCA, the U.S. proptech sector alone raised $4.4 billion in growth capital during the first half of 2020. The money came through 136 investment deals made in proptech startups serving industry segments like office, multifamily, mortgage, hospitality, construction, and facilities management.
GCA forecasts that the coronavirus pandemic will spur further adoption of proptech, “and the industry will emerge stronger as a result.”
Josh Raffaelli, managing partner of Brookfield Technology Partners, the tech investment arm of Toronto-based Brookfield Asset Management, agrees with that forecast. The parent organization has $550 million in assets under management.
During the ULI Asia Pacific session, Raffaelli said that Brookfield Technology Partners “has made a really dedicated and concerted effort” to invest at the junction of real estate and technology.
“The trend lines are becoming clearer that this is an industry that is going to be advantaged in the long run through adoption of technology tools,” Raffaelli said, “and it will create a fertile opportunity for technology startups to be successful.”
Case in point: In May 2019, Brookfield Technology Partners led a $90 million round of funding in New York City–based VTS, formerly View the Space , which operates a leasing and asset management platform for the commercial real estate industry. Raffaelli sits on the board of directors of VTS, whose customers include Brookfield Asset Management, CBRE, and JLL.
Tech tools like the VTS platform enable real estate companies to enhance productivity and asset values, Raffaelli said. Brookfield Technology Partners has unearthed “fertile territory” in proptech by teaming up with “really smart and innovative” tech entrepreneurs, he said.
Lee said he thinks that one of the emerging innovations in proptech will be detection of biothreats at properties in sectors like residential and retail. But he cautioned against randomly throwing money at buzz-generating proptech startups.
“You have to take the sex appeal away from it and look at the fundamental aspects of the business,” Lee said.
Amid the pandemic, some proptech startup founders and investors in the United States are questioning the fundamentals of their industry. Bisnow cited a recent survey by New York City venture capital firm MetaProp of 2,500 proptech executives and investors indicating that their outlook for the sector had faded.