Tech innovators aim to shake up property industry

Tech entrepreneurs are setting out to shake up the world of bricks and mortar - but the property technology sector has so far received a cautious welcome from an industry which has been slow to change.

Investors worldwide put a record $1.4bn into real estate tech start-ups in 2014 according to figures collected by start-up tracker Crunchbase. The US took the lion's share with $950m; the next-largest investments were made in India, China and Europe, of which nearly three-quarters was in the UK.

Over the past decade, innovation in the sector has been focused on consumers, shifting the power away from landlords and estate agents.

The launch of online property portals Trulia and Zillow in the US and Rightmove in the UK saw sales advertising move online.

Crowdfunding has also emerged as a way for small investors to become involved in property finance, competing with traditional lenders. Sites such as LendInvest in the UK and Crowdrise in the US cater to a range of borrowers from single-home purchases to multi-million-dollar commercial property deals.

Other websites such as eMoov, Rentify and SpareRoom act as the middleman between consumers by taking house sales and lettings online.

The new breed of property tech is about disrupting the way property companies deal with each other. LandInsight, for instance, aims to help developers to find land in the UK, identify its current owner, carry out a valuation and compare with other nearby plots.

Juliette Morgan, who until last year was head of property at Tech City UK, a government body that promotes the digital sector, said the urge to innovate is largely being driven by individuals who have been profoundly frustrated by the slow, old-fashioned ways of working they have encountered among property companies.

"Property companies want long leases but tech companies just don't have the financial resources to commit to that, particularly start-ups," Ms Morgan said.

Last year she joined property advisers Cushman & Wakefield as their UK tech lead. Cushman is backing Pi Labs, Europe's first property tech accelerator, which launched in London in February.

Pi Labs has raised more than £500,000 on crowdfunding website Seedrs. Britain's biggest estate agent, Countrywide, has contributed, as has former Dragons' Den star James Caan.

The move is not philanthropic: it gives the backers a front-row seat at the leading edge of the industry, Ms Morgan says. "Having insight into what this community is doing is really fabulous for our clients and the start-up companies can access feedback at a very early stage."

Pi Labs is funded by venture capitalist Faisal Butt, founder of Spire Ventures, who calls himself the most active property tech investor in the UK. Advisers and landlords are seeking out entrepreneurs in a bid to understand how their businesses might change in the coming years, he says.

"It is very difficult for tech companies to go out and meet the blue-chip property companies, so we thought we'd bring the blue chips here," Mr Butt said. "Pi Labs is turning into an externalised R&D initiative for the property industry. They want to know what offensive and defensive strategies they should adopt to cope with the changes in the industry."

East London landlord Canary Wharf Group has gone one step further, launching its own tech accelerator, Level39, in 2013.

For all their intentions to transform the sector, however, Rayhan Omar, founder of estate agent comparison site GetAgent.co.uk, said tech innovation was struggling to have an impact.

The scale of the investments to date "isn't going to move the needle", Mr Omar said - the weight of capital on the side of the bricks and mortar industry militates agaqinst any innovation being truly disruptive, he suggested.

"We need a lot more capital - £50m-plus per annum - to generate any kind of optimism that traditional property [in the UK and Europe] will improve or be disrupted," Mr Omar added.

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