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Global sovereign wealth funds, traditionally seen as slower and more risk-averse, are among the most enthusiastic adopters of PropTech and technology data analytics, according to VTS Chief Product Officer Brandon Weber.
Meanwhile, venture capital firms are only just waking up to the potential for investment in the PropTech space.
Weber said sovereign wealth funds are keen users of PropTech and data analytics because these technologies allow them to analyse property data in a way that more closely resembles the bond and equities sectors, in which they have been huge investors for decades.
“We’re spending a lot more time with the capital, big pension funds and sovereign funds, and they are shifting billions of dollars into real estate,” he said. “They are getting more proactive in terms of management, they want more than a quarterly PDF saying you made a 7% IRR to see how their investments are doing anymore.
“They want visibility so they can understand the investments they are making and, as they face more transparency, validate the investments they’ve made to their stakeholders. They’re used to trading stocks and bonds and they want similar levels of information about their assets and performance in real estate.”
His views tally with moves among sovereign funds, where GIC, for example, has recently appointed its first chief data scientist.
Weber said he felt the venture capital community was only just beginning its foray into the world of PropTech.
“There are three areas of real estate that will be fundamentally changed and disrupted in our lifetime: the way property companies and brokers operate and run their business; the way we build and operate buildings; and the tenant user experience.
“We’re seeing a huge groundswell of interest in the sector, in the same way that happened in other sectors 15 years ago. VCs didn’t understand the sector. Property seemed slow and inherently inflexible. But that is changing and its potential is huge — as a sector PropTech combines finance, the way we build buildings and where we work and live,” he said.
Weber points to companies like Fifth Wall Ventures, an investor in VTS, which in May raised $212M specifically for PropTech investment.
“There are a lot of property companies that are investors in companies like us and others and are embracing the sector, and the first wave of investors in the sector are starting to show some strong results."
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