Valley Bank on Tuesday released its second annual Present and Future of Proptech Report, which summarizes industry trends and the impact of rising interest rates, remote work and economic uncertainty on the property tech category.
Investment dynamics in private markets for proptech remained more resilient than expected, given the sheer volatility of 2022. Quarterly tallies evidenced slowing momentum, however, so this year will remain key in determining whether the sector’s resilient factors outweigh any market jitters. Financing metrics suggest a significant uptick in caution overall, coupled with ongoing capital availability, though, at greater intensity of investor discretion.
Popular segments held strong, from property management to transaction solutions. Especially in a cautious, complicated environment, investment in tech that is seen as readily accretive to the bottom line will continue to attract capital.
Although the macro environment remains challenging, proptech players may enjoy more of a respite than other tech segments as inexorable market pressures push toward greener building and usage of real estate; moreover, consumer demand for autonomy and ease compel further adoption of and investment in proptech.
According to the report, the majority of proptech investment in 2022 was in venture capital, with 213 deals closed for a combined value of $4 billion. Transaction solutions and property management combined for a plurality of deal volume.
“Despite rising interest rates and volatile economic factors, proptech remained a strong investment category in 2022,” Stuart Cook, chief innovation officer, Valley Bank, said. “The shift towards sustainably built new structures and retrofitting existing assets is either in progress or being planned for extensively by owners and investors. Investors are likely to remain active given broader dynamics and longer-term horizons at play in regard to real estate.”
Read the full report here.
Key highlights from the report include:
- Private investment, primarily concentrated in venture given proptech’s maturation, is ongoing — remains a key force in propelling the digitization of many real estate workflows.
- Corporates joined in 45 completed venture transactions that aggregated well over $1.8 billion, while nontraditional players participated in 86 deals for nearly $3 billion in total deal value. These figures compare favorably to the past, indicating, that although they may join in fewer deals during tumultuous times, they will still participate in larger deals for more mature and established businesses — much like they have in the past.
- Curbing emissions of greenhouse gases and improving sustainability across all aspects of real estate is a priority, with players exploring and embracing innovation on all fronts. Builders are deploying more sustainable concrete and recycling waste into usefully adjacent products, such as gravel on construction sites and fill; property managers are updating monitoring systems to better improve energy consumption in residences and common areas; brokers are investing in more secure and transparent portals with improved visualizing and modeling systems; and remodelers are utilizing recycled wood and novel designs.
The report was developed in collaboration with Pitchbook; Chase Gilbert, co-founder and CEO, Built Technologies; Jeffrey Berman, general partner of Camber Creek; Chris Green, founder and CEO of GreenPoint Partners; Kurt Ramirez, general partner, Nine Four Ventures; and Bryan Kallenberg, vice president, Capital Markets.
