Real estate needs ‘deep-rooted’ change, say Investment in Tech panellists

MIPIM 2019: The real estate industry is struggling to work with early-stage businesses that are grappling to understand the issues they want to solve and how to integrate with large established firms, according to proptech innovators and leaders. Nick Kirby, managing associate at Mishcon de Reya, said: “You need deep-rooted change in our industry for real estate companies to engage more with start-ups, to give them that business knowledge to help them develop solutions around well-understood business problems.” Tony Doherty, head of investment solutions at Legal & General Investment Management Real Assets, added: “It needs to be a part our business plan, and a solution for any one of our stakeholders – be that our occupiers or our investors.” Doherty said proptech firms frequently underestimate the difficulties involved in integrating their systems. He said: “They’ve got great ideas, and they come along and think they can plug and play.” But, added Doherty, IT systems can be archaic, security is complex, and analytics and reporting are also a challenge. As a result, big tech has a significant advantage over smaller players, said Guillaume Fiastre, managing director of Altus Group: “The proptech world today is a thousand different types of companies doing different tasks and different jobs, and as a movement we’re seeing some big players really take the lead.” Enabling early-stage start-ups [caption id="attachment_972047" align="alignright" width="200"] Aaron Block[/caption] Aaron Block, co-founder and managing director of MetaProp.vc, estimates that proptech revenues will top $300bn in the next five years. He said intermediate advisory firms and incubators are essential for early-stage start-ups to access both capital and support. “The people who are leasing space in buildings don’t have time to talk to every new tech start-up out there, despite the fact that those tech start-ups frequently need that kind of engagement and help for their product, pilots and scaling,” said Block. He added that organisations such as the UK Proptech Association, residency programmes and incubators can also support new businesses. Block said that at MetaProp they try to lead start-up competitions and create acceleration programmes across all sectors and all geographical borders. “That’s what the real estate industry cannot do,” said Thomas Herr, EMEA head of digital innovation at CBRE. “The majority of mid-sized real estate companies find it hard to deal with the abundance of offerings, and they shy away from investing.” Herr said this meant that, while there were a huge number of technologies being adopted within other sectors such as tax, the real estate industry lagged behind. Understanding real estate challenges Andy Pyle, head of UK real estate at KPMG, said: “The industry hasn’t done a good enough job at defining the problems that it really needs help with.” He added that many in the industry struggle to articulate these problems. “There’s a whole bunch of start-ups that we’ve met who bluntly don’t understand the industry they are trying to disrupt,” said Pyle. Angelica Donati, venture partner at Concrete VC, said: “A lot of start-ups fail because they are solutions looking for problems, and not problems looking for solutions, and that is probably because a lot of stakeholders don’t know the industry that well.” Donati said a lot of the problems lie with the founders’ understanding of the market, alongside their ability to think innovatively. She commented: “It’s always a bit scary when there are people with a whole team that has zero expertise in real estate, because real estate is slightly different from other asset classes. “If you don’t have some experience within the sector, you will hurt yourself a lot,” she warned. The panel Tony Doherty, head of investment solutions, Legal & General Investment Management Real Assets Angelica Donati, venture partner, Concrete VC Guillaume Fiastre, managing director, Altus Group Thomas Herr, EMEA head of digital innovation, CBRE Nick Kirby, managing associate, Mishcon de Reya Andy Pyle, head of UK real estate, KPMG Chaired by Emily Wright, head of special projects and tech editor, EG Keynote from Aaron Block, co-founder and managing director, MetaProp.vc In partnership with   Knowledge partner       EG is proud to continue its role as official media partner at the world’s leading property market event. With a focus on promoting UK investment through a global lens, click here to follow the latest news, read EG’s new investor guides and keep up to date with social media. To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette