[August 2023]
1 minute speech
Title : PropTech 3.0: The Future of Real Estate
Link : https://youtu.be/rzYuUNkcDk4
1. Summary
Andrew Baum, visiting professor at Oxford's Saïd Business School, discusses prop tech's evolution and impact on real estate. Prop tech combines property and technology, aiming to revolutionize the slow-moving real estate industry. It offers solutions like online property transactions, virtual tours, and blockchain applications. The rise of cloud services, blockchain's potential, and diverse startups indicate a changing landscape. Baum emphasizes the need for real estate professionals to adapt to technological advancements that may reshape the industry's core practices.
2. Script
I'm Andrew Baum. I'm visiting professor of management practice at the Saïd Business School, University of Oxford, and I'm also an advisor to institutional property investors about global property investment strategy.
I lead a real estate initiative at the University of Oxford. I teach an MBA class. I teach executives, and we recently completed our first research report on prop tech.
Prop Tech is jargon, and it comes from two different things. The starting point, of course, is property, and the second one is technology.
Real estate tech or prop Tech came out of FinTech. FinTech is the revolution that gave us banking online. It gave us the crowdfunding movement. It gave us peer-to-peer lending.
So the question naturally arose: When will we be able to buy and sell houses online? Why does it take three months to buy a house? Why isn't it possible to see what every house in the UK is worth online? Why do I have to go through paper forms to get a mortgage? Why does the bank have to send around a surveyor to go into the loft and measure the house? Why can't my contracts and my money exchange be done automatically without lots of lawyers giving them?
These questions and many others are at the root of the proptech revolution.
Real estate, by some measures, is half of the value of the world's assets. It's a very, very important investment class for pension funds. It's often 70 to 80 percent of our total wealth. It supports the vast majority of all bank lending globally, so it's an extremely important asset. It's also a very clunky asset. It's extremely slow-moving and it's lumpy. The people who manage real estate tend to be conservative.
Now all of that is changing through prop Tech, and it's one of the most exciting things is seeing this increased diversity of entrant into this industry.
The first signs of a proptech movement were websites like Rightmove or Zoopla, or in the U.S., Zillow or Trulia. We've become used now to the fact that instead of going around 15 different estate agents and picking up wads of paper describing houses of a sale, we can go online and find out pretty much everything that is for sale in a particular area.
We're now in prop tech 2.0 land where there are hundreds, if not thousands, of startups that are excitedly trying to disrupt this slow-moving conservative industry. To try to get to that point where we can buy and sell houses online. When I was preparing the report, there were two things that hit me most.
The big five companies in the US, the top five market capitalization businesses, or Google, Apple, Microsoft, Facebook, and Amazon, they're all growing at a rate of knots. The cloud is not up in the sky. It's data centers on the ground, million square feet. These are going to be invested in. The most interesting thing and this is prop tech 3.0, is the concept of blockchain. Which, if you've not heard of it, you may have heard of Bitcoin, which is a cryptocurrency. A currency which can be transmitted between people, subject to code being accepted by those people.
The use of blockchain for real estate and the use of possibly of Bitcoin for real estate or let's call it prop coin, a new currency which is just for exchanging property transactions. It's probably the most intriguing thing of all of these. It may just be that in five to ten years time, we'll be using blockchain and prop coins to buy and sell houses.
Real estate professionals absolutely have to develop a view about how far technology is going to change the nature of the industry that they are supposedly expert in. Also developers and urban planners need to understand the way in which cities are going to change. And it's pretty obvious that cities are just going to get higher. And we should all get ready for living in a high-rise building. Where there are drone deliveries to the top of the building. Where we travel vertically down to co-working space. Vertically again down to the gym, to the school, to the Medical Center, and to the shop. All of it is facilitated by technology.
Get ready for prop tech 3.0. That really will be very different.