Will proptech and flex space disrupt market transparency?
Global Real Estate Transparency Index, 2018
The real estate sector is facing unprecedented structural change, as new technologies and new business models disrupt traditional real estate players. While their full impact is yet to be felt, the growth of the proptech sector and the flexible office boom could have major impacts on real estate transparency.
The impact and adoption of proptech
Technology has often been viewed as a potential panacea for the real estate industry and transparency, in particular. Over the past two years, the proptech sector – where real estate and technology collide – has reached a ‘critical mass’. It has attracted more than US$6 billion in funding since 2016, and this doesn’t even account for the major investment traditional service providers and data firms have made in modernising their activities and services.
Technology now interacts with real estate in myriad ways, from ‘smart’ buildings filled with sensors to productivity monitoring software. The industry now generates vast amounts of data, with tremendous potential for improving transparency. The nature of the platforms also presents an opportunity for the best, most useful products to jump across national boundaries and between regions, spreading rapidly.
The United States, the Netherlands and Canada lead the way in the adoption of these tools, but less transparent markets also have proptech ecosystems that could fast-track them towards transparency.
However, there are concerns about the quality, consistency and reliability of new data, a natural side effect of techniques such as ‘data scraping’ and ‘big data’ collection. Generally, though, new tools have significant potential to drive transparency forward in coming years.
Adoption of Global Proptech Tools
The ‘hidden’ space in flexible offices
The proliferation of flexible office space, led by the likes of WeWork and IWG, is another major shift in the industry over the last two years. While the flexibility and working cultures of these platforms have been praised, there has been little discussion around the potential impacts on transparency.
Take London, for example. With almost 4% of total office space occupied by flexible office providers, the city is the world’s largest flexible office market. While we can track the spread of flexible office providers, we can’t track the use of their space, their members, or their pricing. It can be argued, therefore, that there is the potential for traditional market tracking to become increasingly less accurate. A worst-case scenario is a highly divided market, with real estate firms and flexible office providers closely guarding their own distinct datasets.