With 2023 now behind us, what will 2024 offer in the world of PropTech? We present our predictions as well as thoughts from five of our Verified PropTech companies.
If you want help making sense of the existing and potential PropTech in your building this year, we can help >
Trustek’s predictions
2024 is going to see Service Charges stretched more than ever, with technology being more heavily scrutinised before being purchased and implemented with owners, operators and occupiers wanting more data and evidenced information, not just sentiment, more than before.
VC and PE funding is going to be limited (Proptech investment dropped 42% last year) and investors wanting their pound of flesh are going to see returns lower than anticipated in the market as a result. We also predict the market will see more mergers and acquisitions than 2023 with products/solutions shelved or amalgamated into others.
Whilst this will inevitably create some uncertainty, real estate will continue to adopt PropTech, with a focus on ESG data and operational efficiency. We’ll also start to see more owners and operators questioning existing technology’s value and impact as budgets and Service Charges are scrutinised, opening up doors to alternative cost-effective solutions, and certain technologies will gradually start to become needs, not wants to ensure an asset or portfolio’s efficiency, value and attractiveness.
There are clearly going to be opportunities for AI to impact operational efficiency however, as per our audit data, many buildings are still missing some of the basics before they can start leveraging the power of AI.
Key Take Aways
- Customer Experience to differentiate assets remains critial and is not yet solved
- SFDR Article 8 / 9 / ESG / Net Zero Strategies will continue to dominate procuremnet considerations
- Data transparency from buildings to support investors and occupiers decision making
- Continued need for centralised data which can be easily shared
- Use of AI within buildings and operational teams
What will be the biggest changes or challenges facing owners and operators in 2024?
Guy Windsor-Lewis, Chief Executive of Locale: “Staying relevant and competitive is by far the biggest challenge for anybody in real estate. For owners, it will be to attract tenants who have shifted to hybrid working, and for occupiers, it will be to engage workforces where face-to-face meetings are rare and developing a workplace culture is far trickier.”
Ben Roberts, Utopi: “A major challenge for owners is of course buying, selling and the refinancing of assets, and relying on 3rd parties to provide the necessary data for informed decision-making. Operators face the ongoing challenge of managing operational margins, and maximising NOI during this winter season. But ultimately this is an industry based on money, and with interests rates higher than ever, it’s a challenge all across the value chain.”
Max Boon, Commercial Director, IBG: “For owners, compliance related to both sustainability and building safety will continue to be major challenges, as we have witnessed in recent years with MEES, The Golden Thread, Awaab’s Law etc. For occupiers, the key challenge is going to continue to be affordability with increasing rents and lack of ‘premium’ supply. For operators, remaining ahead of the curve and identifying/implementing the correct technologies will be key to help alleviate some of the operational headache and ensure the best outcomes for the estate and tenants.”
Rhod Morgan, COO, Vorboss: “We can expect changes in tenant behaviours, smart contracts, predictive analytics for property valuation, and growing demands for resilient connectivity in abundance. The aftermath of the COVID-19 pandemic will continue to impact the rise of remote work, with direct effects on the PropTech industry. 2024 will see an increased demand for technologies that support virtual collaboration, property management, and flexible workspace solutions, including seamless communication abilities.”
What kind of tech will help commercial real estate and support these challenges?
G W-L, Locale: “There is no doubt that technology can ensure commercial real estate can remain attractive, but with a persistent reticence towards tech adoption, we may see some opting for soft services – more community-focused events and ESG oriented programmes. The focus has to be on developing meaningful destinations and connected communities for occupiers, hence our exciting acquisition of Evergreen Reputation to bolster Locale’s experiential offering with a digital-first approach.”
BR, Utopi: “All SmartTech and especially IoT based PropTech like Utopi will support these challenges facing real estate. From real-time granular data from assets to digitalisation to drive efficiency – the answers are out there for the right businesses wanting to really understand the workings of their assets.”
MB, IBG: “Open protocol systems are an absolute essential. Fundamentally, there’s a need to connect the dots and ensure systems are connected rather than siloed to achieve optimal levels of efficiency. Ensuring a solid ‘Data Capture Strategy’ i.e. Measuring Instruments Directive (MID) submetering and monitoring, is a critical first step to accurately establish where we are today in regard to building & energy performance and provide the investment quality data required for ESG submissions.”
Thomas Proctor, NCG & NCG Energy: “Tech to support building experience will be front and center, making the whole customer experience smoother and letting community teams really connect with their members. Landlords and operators will invest in more efficient technologies that automate mundane tasks, improve communication and simplify data management.”
RM, Vorboss: “First and foremost, the use of advanced analytics and artificial intelligence to analyse large datasets will probably continue to grow and impact the real estate market. Virtual and Augmented Reality technologies, which are already being used for virtual property tours and 3D modeling, will reach further visualization capabilities and help in marketing properties, providing much more immersive experiences.
Finally, smart buildings and the integration of IoT devices and sensors are also most likely to expand. Energy and security management in buildings create overall efficiency and contribute to sustainability efforts, where there’s a global interest to invest in, for everyone’s future.”
Will there be a bigger focus on PropTech procurement from particular stakeholders?
BR, Utopi: “There is a growing interest in PropTech procurement, especially from Investors and Occupiers in the real estate sector. With advancements in technology and an increasing focus on efficiency and sustainability, they are recognising the value of implementing PropTech solutions in buildings. Using data and insights solutions like Utopi can allow them to improve overall asset performance.”
MB, IBG: “More than ever, Sustainable Finance Disclosures Regulation (SFDR) Article 8/9 Funds are demonstrating their commitments to achieving Net Zero Carbon and there’s a big push imminent on the retrofit side of the market. Operators with strong investor buy-in are looking ever more likely to engage solution providers to tackle some of their vertical challenges head on e.g. fair usage policies / gamification.”
G W-L, Locale: “Tech procurement has seen some growth, however, this not consistent, and has been led by developers and landlords rather than occupiers. At Locale, many of our existing clients who have traditionally focused on trophy projects are now opening up their portfolios to tech as they have seen first-hand the benefits of our proven system – some for over a decade. I would like to see leading agents promote tech more widely and meaningfully – there seems to be a lack of focus and direction contributing the deceleration in tech adoption.”
Will PropTech procurement be more need to have or want to have?
BR, Utopi: “PropTech procurement is becoming increasingly important in the real estate sector. In today's competitive and swiftly evolving ESG landscape under the likes of SFDR Article 8 and 9, it is no longer a ‘nice to have’ but a ‘must have to transact assets’. Funds are looking more and more to ESG credentials, so any PropTech that can prove ESG performance will become a real asset to Investors, Occupiers and Operators.”
MB, IBG: “A ‘need’ provided its done effectively and proactively with a clear solution oriented approach. Those that fail to adopt a strong technology strategy are at risk of falling behind. Not only in relation to their compliance but in their commercial performance also. The market is more competitive than ever, to attract a modern-day tenant is hard enough, to retain them is a whole other story. PropTech can help with both!”
