Overview of the Irish Proptech Sector 2018
Written by Carol Tallon, PropTech.ie
“The Irish proptech scene is nowhere close to coming of age, however, after a painful start, it’s first teeth are clearly visible. It’s incredibly exciting to be a part of this unfolding.”
Carol Tallon, Founder of Proptech Ireland, November 2018
Time is a relative concept. Two years is merely a snapshot of the property cycle and not nearly long enough to measure a cultural shift, and yet, a shift is exactly what we are experiencing as property consumers demand a more digitised property offering.
The industry has been markedly divided in the approaches and attitudes towards implementation of new technologies, with construction companies taking a surprising lead. The majority of estate agents, while slow to catch on initially, are now picking up the proptech mantle - some more grudgingly than others.
In the early years, there was simply no way to gauge the extent of Ireland-based innovation within this space. By 2017, Proptech Ireland was engaging with and following the progress of 47 endemic proptech companies, mainly at startup stage. 12 months on, this figure has risen to 65+ and is increasing monthly.
To quote the Irish State Minister for Housing, Planning and Local Government Eoghan Murphy speaking at a recent political event “I don’t think we have ever had a functioning property market in Ireland”. While this is debatable, it certainly highlights the scale of opportunity for new thinking, new approaches and new solutions to, what are, relatively new problems.
One of the more exciting developments that we have seen in 2018 is the rise of industry-led innovation. In the early years, much of the innovation was consumer-led. This tended to be in the area of creating solutions to new problems or to address issues of concern to consumers, though perhaps these were not identified as issues for the industry. Examples of this include crowd-sourced review platforms, weatherproof secure bicycle storage for the home and workplace and designated access within 24/7 shared spaces, regardless of whether this is for living and working.
Conversely, industry-led innovation tends to focus on digitising the operations, marketing and business development functions of real estate businesses. In Ireland, the introduction of online bidding platforms in 2017 and early 2018 was the benchmark of digital best practice that many independent estate agents aspired to. In this regard, our larger agencies and franchises were well behind the curve. It is certainly a truism that we tend to overestimate the organisation, yet we underestimate the individuals within it. This is most clearly demonstrated by the rise in independent estate agents (many ex-franchisees) and their growing share of the market.
In the quest to streamline the bidding and negotiations stage, estate agents had to learn how to be transparent and work with contemporary buyers who have contemporary demands i.e. for verifiable, real-time bidding information, 24/7 from their smart devices. This exposed a whole series of cracks or gaps across the property offering, however, participating agents genuinely tackled these traditional and systematic challenges in an encouraging way.
Proptech Ireland is currently tracking more than 65 indigenous proptech companies (with founders of any nationality), the majority of which are at startup stage, that is, established within the previous three to four years. Unlike in the UK, Irish proptechs either target new issues for the consumer or improve operations for the industry, they do not seek to remove agents from the process - although, arguably, they could. This is an arbitrary observation based on a recent composite article listing the top 15 proptechs in the UK. Upon analysis, six or seven of those had at their core, the aim of excluding estate and/or letting agents from the transaction. This aim is not so prevalent amongst Irish proptech innovators. One explanation for this might be that Irish agents, while certainly coming under fire for lack of transparency, are broadly trusted more now than they were during the crash - albeit this is rising from an exceptionally low bar. Also, a decade ago, when the Irish marketplace was at its most chaotic, a host of ‘sell it yourself’ type services and platforms entered the market. They were hailed as a consumer revolution yet all failed to gain traction or achieve any critical mass. 10 years on, business angels or VC investors are now slow to back this particular horse, and who could blame them?
On the flip side, this experience might have incorrectly informed or influenced the position of resistance taken by the industry as the proptech movement started to gain momentum around the world back in 2014/5.
Ireland has been coasting on a ‘punching above our weight’ reputation when it comes to startups, however, statistics simply do not support this on a global or even European scale. VC investment of any real significance and the potential for scale is not on our side (our unicorn database is pretty dismal). One of the strategies used by Proptech Ireland from the start in order to counter this was to reach out to property developers with an appetite for investing in startups and to affiliate ourselves with international proptech-specific funds. It is a temporary stop-gap at best.
Reflecting on this emerging sector in Ireland, we must acknowledge that industry adaption for domestic and international innovations was slow. While this is certainly changing, it is not cynical to question the motivation of the industry starting to respond now. The real question is whether this a reactionary and protectionist move, or might it be a dawning realisation of the sheer potential that proptech offers?
Looking ahead for 2019, we are seeing a trend towards innovations that speed up the delivery of new homes to the marketplace, offsite construction technologies, improved co-living offering and enhanced use of AI-influenced data to drive development decisions.