PropTech: Turning Real Estate Into a Data-Driven Market?

Abstract

The real estate industry is traditionally a slow-moving asset class. The recent hype around real estate technology or ’PropTech’ stands in stark contrast to this traditional view on real estate. It has been argued by PropTech entrepreneurs, tech evangelists and scholars that this ’digital disruption’ of the industry leads to a digitalised global real estate mar- ket. These claims coincide with observations made in other markets that went through a process of digitalisation. Data-driven markets are often characterised by a winner-takes-all competition between firms that o er platform business models centrally focused on providing digital services for users, who ’pay’ in providing more user data.

In this paper, we investigate whether PropTech is actually turning real estate into a data-driven market. The quantitative findings from an analysis of more than 7,000 PropTech firms reveal that such trends are at work in PropTech. PropTech is indeed an increasingly important, global phenomenon, with data analytics technologies at the core of the network of property technologies. In this core sector, most acquisitions between PropTech firms occurred.

The findings presented here are important for users and owners of real estate. In order to bene t from the efficiency gains associated with the digitalisation of the market, they need to become aware of the business value of data they are generating in buying, renting, or managing real estate.

Keywords: PropTech, Automated Valuation Models, Datafication, Data, Crunchbase, Social Data Science

JEL Classification: M13, O30, R30