Banking / Financial

Record Investment Driving Fast-Growing Proptech Industry

Wayne-based Valley Bank and Bank Leumi USA released the first annual Present & Future of Proptech (property-technology) report that explores industry trends and provides a positive outlook for this nascent tech category.

Deal making rebounded sharply in 2021, with a record $5.1 billion in capital invested in venture alone across a record 219 transactions.

“This has been an exciting period for Proptech with the complexities of the current economic recovery from the COVID-19 pandemic representing promising growth and considerable implications for real estate developers and investors,” said Stuart Cook, executive vice president, chief products officer, Valley Bank. “This report affirms that Proptech is positioned to benefit as the real estate industry further digitizes its processes and the future is very bright for companies with the foresight to invest and embrace this fast-evolving industry that is leading sustainability advancements,” he added.

Key highlights from the report:

  • H1 2021 saw the highest volume of venture financing for Proptech ever in the U.S.
  • The intersection of technology and real estate has rarely seen as much interest and innovation as in the past few years. A resurgence in funding signifies the proliferation and maturation of multiple companies spanning the key segments of Proptech, from asset utilization to transaction solutions to property management.
  • Traditional financial firms that have engaged in real estate investment have benefited significantly from startups offering much-improved data and analytics tool suites, which have helped improve returns via transparency and more efficient projections.
  • The future of Proptech will likely unify around two key themes of sustainability and security. Property owners will be required to produce sustainability related data for investors and asset managers, further encouraging the development of even more powerful data platforms. Construction firms will source recyclable materials and sink carbon into substances, such as concrete, to obtain credits.
  • Proptech security solutions will also be increasingly important in an era of climate change from a financial perspective. Proptech companies will have to build the tools for institutions and asset allocators to mitigate climate-change-related risk, while builders will also have to invest more heavily in resilient buildings in many hotbeds of development, especially the coasts of developed nations.

Methodology behind the research

Estimates of market sizes and private investment activity within the Proptech space differ widely due to a variety of factors, such technology and types of real estate markets. This report views Proptech through a much more rigorous lens, using the Pitchbook platform to construct five distinct segments: asset utilization; finance and investments; construction, maintenance and renovation; property management; and transaction solutions. You can find more information under the introduction page in the report.

Read the full report here.

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