COVER STORY
With the rapid adoption of e-commerce and digital work solutions as well as rising awareness of climate change and health , technologies such as fintech , healthtech , and greentech have seen significant investment during the pandemic . In contrast , growth in proptech , which encompasses innovations in real estate fintech , the shared economy , and smart buildings , has seen somewhat slower progress . Undoubtedly , the broader global economic downturn and work from home arrangements have cast a shadow on the outlook for the real estate sector .
“ There has been some rebalancing . For most real estate companies , there has been a real need to focus on what ’ s important . There are several real estate companies where their innovation budget , in particular , has sort of been put on the window sill for the time being ,”
Data from statista showed that 261 new proptech enterprises appeared on the real estate landscape in 2014 . However , over the last six years , the number of newcomers has decreased . In 2018 , only two new proptech companies were established . The spectacular fall of WeWork in 2019 certainly didn ’ t bode well for the sector .
According to CB Insights , proptech funding reached a peak of US $ 8.86 billion in 2019 . However , in the first eight months of 2020 , amid the coronavirus pandemic , new funding for proptech was just US $ 5.22 billion .
In the US , the National Real Estate Investor said funding of US Proptech companies dropped 69 % in the first quarter of 2020 compared to a year earlier .
By comparison , the fintech sector saw investment volume ( venture capital ( VC ), private equity , and mergers and acquisitions in the first six months of this year reaching US $ 24.6 billion , down from US $ 39.4 billion in the same period last year , according to KPMG data . However , global VC activity in fintech with corporate participation showed resilience despite the pandemi , with investment volume rising to US $ 12,177.2 billion in the first half of this year , compared with US $ 7006.8 billion in the same period last year . Notable deals included Gojek ’ s $ 3 billion series
F funding and Grab ’ s late stage VC with $ 886 million of funds raised .
By all counts , Biotech is a major winner during the pandemic . Pitchbook data , as cited by Forbes , showed that VC funding into US-based biopharma companies alone was the largest quarter in the history of the industry – topping over $ 6.4 billion .
On green technology , the rising awareness of climate change risks and an increasing number of governments and corporates committing to net-zero by 2050 meant that funding into the sector is set to rise . The accelerated shift towards low carbonrelated investments in response to the pandemic has become a global trend , with US president-elect Joe Biden pledging to invest $ 2 trillion to clean energy infrastructure and the European Union dedicating a significant amount of its coronavirus recovery fund to combat climate change .
CHALLENGES FACING SECTOR
In a recent REIT AsiaPac ’ s proptech discussion with Yardi Systems , Regional Director Bernie Devine said the sector faces two critical challenges during the pandemic : firstly , reduced funding due to an uncertain business environment ; and secondly , the sector ’ s ability to create solutions that meet customers ’ needs at a time when the market is ready to adopt such solutions .
Since funding has been tighter for almost all companies due to the disruptions from the pandemic , Devine said capital has shifted focus to “ survival ” instead of “ innovation ”.
“ There has been some rebalancing . For most real estate companies , there has been a real need to focus on what ’ s important . There are several real estate companies where their innovation budget , in particular , has sort of been put on the window sill for the time being ,” he said . “ I think the innovation budget became very focused on the issue of firstly , survival and secondly , just addressing managing the current crisis .” Devine added that the pandemic has caused “ a sudden pivot in the environment ,” which changes real estate firms ’ priorities .
“ Successful proptech companies are the ones who quickly understood what Covid means and pivoted accordingly . Unfortunately , funding will be cut off from those that haven ’ t been able to pivot yet ,”
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