TECH INSIGHT: Real Estate Technology Trends to keep an eye on in 2022

by Editor

It’s crucial to recognize that the real estate technology universe reaches far beyond the proptech industry. New sectors will emerge that will disrupt the industry as we know it, such as contech, or construction technology.

Forbes has told real estate investors to watch out for eSigning, virtual tours, automated property management, conversational AI, big data, blockchain, the Internet of Things (IoT), and crowdfunding sites.

These new real estate industries already play a major part in the evolution of what it means to be a real estate company. As the pandemic moves into its third year, the real estate business is moving to an increasingly digitized process.

According to research by GCA Advisors, there were 40 merger and acquisition (M&A) deals in the proptech sector by the end of the third quarter, up from just 18 the year before, putting 2021 on track to see record levels of activity. In 2021, strategic consolidations accounted for 90% of all transactions.

Those M&A figures were boosted in part by a special-purpose acquisition company (SPAC) boom in early 2021, which was marked by high-profile mergers like the one between SmartRent and Fifth Wall Acquisition Corp.

Despite a slowdown due to increased monitoring, SPAC Insider says that 613 acquisitions were completed last year, many involving real estate technology companies. This represents a significant rise from 248 SPAC deals in 2020 and just 59 in 2019. SPACs will likely remain a popular way for proptech companies to go public without going through the usual IPO process in the coming year.

On the investment side, venture capital (VC) firms gave proptech startups a record amount of money this year. According to the 2021 Real Estate Tech Venture Funding report (download required), VC funding totaled $32 billion last year. This represents a 28% increase over 2020 spending and a 3.23 percent increase over the previous funding high of $31.6 billion in 2019.

According to the CRETI report, most of the money was invested in residential real estate, which got 49% of the money. Multifamily real estate, which got 20% of the money, came in second.

Given those numbers, it’s only natural to predict that mergers and acquisitions will continue to rise in 2022. It’s likely that most of these transactions will involve private equity (PE) and venture capital (VC) firms looking to diversify their portfolios. Existing real estate technology companies and more traditional real estate players are looking to improve their technological offerings.

Each year, the real estate business offers fresh prospects for innovation. As the pandemic continues to change life as we know it in 2022, the demand for real estate technologies will be higher than ever. As a result, this industrial category is expected to grow and expand in the coming years and beyond.

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