Proptech disruption won’t hit any time soon – The Property Chronicle
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Proptech disruption won’t hit any time soon

The Professor

Proptech evangelists would have you believe that emerging digital technologies can and will be applied imminently to any real estate use, in the process resolving all of the industry’s current inefficiencies overnight. However, as the saying goes: if something sounds too good to be true, it usually is!

Gartner’s hype cycle (figure 1), explained below, conceptualises the maturity and adoption of emerging technologies, providing a sound source of insight to manage their deployment within the context of specific business goals. 

Figure 1: Gartner’s hype cycle

•          Innovation trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist, and commercial viability is unproven.

•          Peak of inflated expectations: Early publicity produces a number of success stories, often accompanied by scores of failures. Some companies take action; many do not.

•          Trough of disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.

•          Slope of enlightenment: More instances of how the technology can benefit the enterprise start to crystallise and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.

•          Plateau of productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.

Table 1: Proptech applications’ position on the hype cycle

Table 2: Proptech clusters

Each year, Gartner conducts extensive research to accurately position emerging technologies within its hype cycle framework. Table 1 details those technologies it has listed in the last two years and which are also frequently mentioned in the real estate media, including their predicted time until mainstream business adoption will begin. Note that it can then take longer for these technologies to find their specific real estate uses and become proptech innovations. While blockchain, for instance, was first developed in 2008, it was not until 2017 that it reached the top of the hype cycle, and novel real estate startups began to experiment with its industry applications around the same time.

Not content with this indirect analysis, at Oxford University’s Future of Real Estate Initiative we decided to explore more specific proptech diffusion trends using machine learning techniques on funding data from Crunchbase, an online startup directory, and organisational data form Unissu, a database of more than 7,000 proptech companies. The full results from this analysis can be read in our recently released ‘PropTech 2020’ report, while the following results offer a 2019 snapshot of the maturity of the proptech market and its various subsectors.

Figure 2: Funding trends for different proptech clusters

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