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A chat with James Dearsley – Where is PropTech now, and thoughts for the future

Everyone’s talking about PropTech. Well, perhaps not quite everyone, but it’s definitely a hot topic in the world of property management right now. With three weeks until the 2018 ARMA conference in London, we caught up with one of the event’s key speakers, James Dearsley, to hear his thoughts on the burgeoning PropTech sector.  

Speaker JD Web use square 600x600

Firstly, can you tell us how you came to be an authority on all things PropTech?

I’ve been in the property industry for going on 15 years now, both directly and indirectly. I started my career as a lettings negotiator for Foxtons, and then I ran one of the Foxtons offices in Putney before moving into the international real estate world. I got experience in domestic UK markets and international market at a time when Foxtons were going through their own digital transformation, moving from paper records to digitised CRM systems. It was a very exciting time for them, and I was right in the middle of that transition.

Then I was part of the recession of 2007 which hit the international property world and meant we had to change every single system we ever had, because we could no longer use archaic non-technological methods. We had to find new ways of doing things which were more economical.

We had to find new ways of doing things which were more economical.

Then after I left, I wanted to keep my fingers in the property pie so I started trying to bring the industry together and show that technology wasn’t a force for evil but a force for good, and that as an organisation you could get great benefit from a direct synergy between technology and traditional methods.

Would you say you were present at the genesis of PropTech?

Well, you can chart the beginnings of PropTech back to the 1990s, and even before that. Arguably some of the early software companies, such as right move and many of the legacy systems, were all PropTech, but they were around before there was a universal term for what they were. So I wasn’t quite at the genesis, but I was part of bringing it to everyone’s attention.

And ultimately I think this is because I didn’t have any commercial intentions. I was very lucky that for me it was a passion for both property and technology and trying to educate people.

I was very lucky that for me it was a passion for both property and technology and trying to educate people.

There was actually an initial move to call it “RealTech”, because America was very much at the forefront of real estate technology. And I like to think, along with a few other very vocal people, that I helped to ensure it was referred to as PropTech.

How many of the developments taking place in PropTech were borrowed directly from FinTech?

FinTech was far earlier than PropTech and that’s partly because the property industry is such a slow developer. What I do know is that there’s a very classic symbiosis between property and finance. FinTech would carry on regardless, but PropTech definitely needs innovation in financial technology to progress, so there’s definitely a natural symbiosis between the two.

But in terms of investment and maturity of the market, FinTech is way ahead, which, given that property is the second largest asset class in the entire world, means there’s an awful long way for us to go.

But in terms of investment and maturity of the market, FinTech is way ahead, which, given that property is the second largest asset class in the entire world, means there’s an awful long way for us to go.

Why do you think that PropTech has lagged behind?

I think if you look at the roots of the financial sector, it’s far more digitised. The way that the standard bank account was online very early on meant digital solutions could be built around it. Also, you can never underestimate the impact of world events, such as recessions, on technology and innovation. If you look at the early 2000s, during significant recessions in the UK and beyond, that period probably drove a lot of the initial FinTech evolution. And then again around 2007 as well.

Another crucial factor is the nature of the respective businesses. Banks are always driving forwards while property is a relationship driven market with a more traditional mindset.

Where do you think we are on the trajectory of PropTech?

If you look at the recent reports, I think you can conclude that PropTech is currently driving itself towards the peak of inflated expectations, which is a troubling time because we’ve got to make sure it fulfils its potential. In the speech I give at ARMA I’ll probably give a quote by a chap from the big data world, which said that big data is a bit like teenage sex, in that people are always talking about it, everyone claims they’re doing it, but actually no-one really understands what they’re doing. So we’re at that sort of stage at the minute with PropTech too.

In terms of the next stages, AI is such an intriguing technology that has the potential to really define the future of our industry in many different guises. You have to remember that AI isn’t just a single technology, it’s a whole group of different forms of intelligence that can combine to create one significant technology. So there’s no doubt that’s going to have a significant effect.

The property asset class is so vast and the technology is so vast, you can break down the technology into two different areas, endogenous and exogenous.

The endogenous form is technologies that will impact the industry now, which are generally designed by the industry for the industry. In other words, property professionals developing solutions because they know the problems that they’re facing. The exogenous form, meanwhile, is things like AI and Blockchain, and they’re more disruptive than innovative.

However, anyone who tells you that something like Blockchain is going to revolutionise our sector, there is an element of truth for sure in that, but there’s nothing proven yet. And I’d say the same of AI. In fact I’ve said before that AI and Blockchain are the silent unicorns of PropTech. It could be true, but right now it’s speculation.

Has your experience been that consumers are typically quicker adopters of new technologies than industries?

If you look at the bell-curve, traditionally you have the lagards and the early adopters, but normally that tends to be kept very universal. You’re either early adopters or lagards. I tend to believe that there’s three different touch points on technological innovation. There’s the tech companies themselves, there’s the industry and there’s the consumers. And generally those three bell curves will overlay each other at different rates. So a fast moving industry will be very quick on the uptake of the technology and if they’ve got very engaged consumers they’ll be very quick to adopt these technologies.

The property market is a difficult one, because we’re one of the last to really digitise, and it means we’re in this peculiar situation where if the industry isn’t careful the consumer is going to start demanding the changes that the industry has fought so hard against. There’s now an expectation, not just with consumers but also employees, who expect things to be efficient, quick, seamless, and if they’re not they’re going to start questioning why, when they know in their personal live it’s entirely possible to do these things very easily.

So I do think the property industry has got to start looking at itself and understanding the drive from the consumer, otherwise the consumer is going to start knocking on the door far quicker.

Do you think the imperative to save time and money, especially in a time of economic uncertainty, will drive progress in PropTech?

It will certainly drive PropTech adoption. As in any other recession we’ve been through, when the market drops the industry has to look at its bottom line and work out if there’s anything better out there to change and adopt. I’m currently analysing over 6,000 different PropTech companies across the world in over 100 different countries, and there’s going to be significant correction in those numbers.

So if you look at things like biotech and other technology sectors where there’ a significant fall out of tech businesses in their growth stages, something like 90% of businesses fail. So even though I think there’s going to be a significant correction of PropTech businesses in the next five years, there’s also going to be an adoption of these PropTech businesses into the traditional marketplace, which will make those that get adopted most likely to survive because they’ll have the scale to grow.

What have been your experiences in the area of home/building access in relation to PropTech?

Well it’s arguably one of the most competitive markets, because access to one’s home is both a significant security angle but also a significant friction due to the rise of delivery through Amazon, as well as the increase in both adults going out to work now. It means access into the home is becoming a real challenge for the general public. So there’s an obvious demand for it, of that there’s no doubt, but I think it’s getting that significant trust angle into the product that the consumer will obviously demand.

Do you think technology is helping to change attitudes in terms of consumer behaviour?

I think the understanding of what technology is enabling is changing attitudes for sure. Because I think it’s about getting a permanent record of what’s going on. Let’s take delivery drivers as the example. There’s no real record of what that delivery driver has done and when he’s done it. If I’m out I don’t want to have to go to the post office to pick up my package, but I’m also not comfortable with it being left outside.

So that’s obviously what this technology is solving and people are becoming more comfortable with it, because it’s the lesser of two evils. I want my parcel, but I don’t want to have to go and get it.

I want my parcel, but I don’t want to have to go and get it.

What do you see as the path ahead for home access in terms of its B2B potential?

I think you almost need to create a vision for the B2B industry where they realise one of the biggest hassles they’ve got is keys, tracking down keys, working out who took the keys last time, etc. And if you’re able to remove that hassle it will be a lot easier.

Finally, what are you hoping to get out of ARMA this year?

This is an industry in transition and it seems to be sleepwalking into the changes that it needs to be implementing. So if nothing else, I’m just hoping to help the people in the room understand the challenges their industry faces and some of the solutions it might be able to incorporate into their business models, Because whether they like it or not, change is definitely coming, they just need to be awake to see it.

To read more from James and see his work, have a look at his site here and sign up for his up and coming new project Unissu.

Klevio will be exhibiting at the ARMA conference at at the Park Plaza Westminster Bridge Hotel on 18 October. Visitors can come and try out a live demo door, as well as chat to the Klevio team and ask any questions about our product, business, or anything else. And finally, you can read more about Klevio here

 

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