Fundraising in the PropTech industry around the world increased from US$3 billion in 2014 to US$18 billion in 2018, with 90 percent of commercial real estate investors believing that PropTech will have a moderate to a significant influence in the industry. In 2019, the entire PropTech market was estimated at a significant US$7.3 billion in North America, an increase from US$4.6 billion in 2016.
PropTech, or property technology, is the term used to define innovative ideas and technologies that transform traditional property management strategies and business models. Digital accessibility is one aspect of PropTech that bridges the gap between brokers and potential buyers. Real estate brokerage companies saw a 494 percent increase in requests for agent-led video home tours in 2020.
PropTech also refers to the use of data and technology-based platforms for essential building systems such as electrical, HVAC, utilities and telecommunications by building developers, construction companies and property managers. Examples of some of these PropTech companies are Crown PropTech Acquisitions (NYSE:CPTK.U), PropTech Investment Corporation II (NASDAQ:PTICU) and Universal PropTech (TSXV:UPI,OTCQB:UPIPF,FWB:8LH).
PropTech in commercial real estate
PropTech is already being used in a variety of ways by commercial, institutional and governmental real estate. In the B2C property market, cloud-based platforms automate finances for tenants, blockchain technologies simplify the property buying process and 3D mapping provides pinpoint accuracy on floor plans. PropTech also provides important solutions for the B2B market when it comes to shading and lighting levels, personalized thermal comfort and building configuration.
These various solutions can improve both B2B and B2C market interactions and experiences with different types of real estate by effectively increasing efficiency and satisfaction. The growth of PropTech is projected to be so impactful that real estate players that do not adopt these new technology-based platforms could eventually suffer increased operational costs and a loss of competitive edge as PropTech takes off.
Additionally, we’ve seen industry giant Airbnb (NASDAQ:ABNB) transform the entire vacation rental industry through its innovative vacation platform that optimizes every aspect of booking, client interactions and discovery.
However, despite innovations in accessibility, a new trend is taking the PropTech industry by storm. Demand for health-promoting workplaces is more critical and relevant than ever before as industries cope with and manage the realities of the post-COVID-19 world.
Shifting the focus to high-efficiency, health-first PropTech solutions
One way in which PropTech aims to solve this issue is with indoor air quality (IAQ) monitoring and air purification. In Canada, the pandemic has already created more demand for IAQ systems, including sophisticated smart systems optimized for automation, which have already been deployed in various commercial settings in an effort to limit the spread of the COVID-19 virus.
A Canadian company that is uniquely positioned to leverage the growing demands of the PropTech industry is Universal PropTech (UPI). UPI is an innovative control systems company focused on building optimization by utilizing its proprietary systems. UPI also invests in additional PropTech technologies and companies to expand its footprint.
In February 2021, UPI announced an investment in ISBRG to become an exclusive sales agent for its SpotLight-19 technology that is intended for use in large venues. This technology — pending Health Canada approval — generates rapid and comprehensive COVID-19 test results in under 20 seconds for around C$1 per test by non-invasively scanning a person’s finger.
Additionally, UPI has brought Fresh-Aire UV, AtmosAir and Air Sniper’s IAQ systems to market, which can disinfect and/or deodorize the air. UPI is also in the process of rolling out its trademarked Delta-X technology, a multi-factor authentication face and temperature recognition software for use in public, high-risk or restricted-access environments.
In June 2021, UPI received a purchase order with a value ranging between C$6.5 million to C$10 million for IAQ equipment, another purchase order worth ~$1.2 million from a Southern Ontario school board for mechanical installations and just recently another ~$750,000 for additional mechanical projects and services to more governments.
Looking forward, UPI is exploring expansion into the US market and is continuing to seek and invest in strategic partnerships that offer high-value PropTech solutions, including UV building sanitation, energy efficiency and management of artificial intelligence/machine learning, heat recovery systems, thermal optimization systems and fintech.
For now, UPI is continuing to expand market awareness of its PropTech offerings that meet the growing need for PropTech as public spaces reopen across Canada.
Takeaway
Propelled by the COVID-19 pandemic, PropTech has completely disrupted and revolutionized the real estate industry with its widely varied applications. As Canada looks towards returning to mask-less life, one can bet that PropTech is here to stay as it shapes a healthier future. With all these factors considered, PropTech proves to be an interesting opportunity for investors who want a share of the US$7.3 billion market that is likely to continue growing.
