How can PropTech bridge the real estate productivity gap?

2 May 2018

Policy area: Sustainability

By Patrick Brown, Head of Insights & EU Engagement, BPF and Stefan Webb, Head of Digitising Planning, Future Cities Catapult

Whilst the explosion of PropTech startups and new digital products and services that seek to improve the way buildings are constructed, acquired, operated and managed has been well documented – with numerous excellent studies, maps and infographics that chart the new businesses, products and services – much of the terrain is still unexplored.  For the British Property Federation and the Future Cities Catapult, it is key to understand how these new businesses can preserve and enhance the real estate sector’s contribution toward overall UK productivity.

Some assert that the real estate sector is one of the last industries to embrace digital transformation, and lacks immediate and inexorable pressures to overcome inefficient processes and unnecessary transaction costs. Perhaps, however, productivity gains lie here.  New technologies such as artificial intelligence, big data analytics and platform driven software have the potential to reinvent the way the real estate sector operates.  Yet, these technological breakthroughs do not seem to be feeding through to productivity in the real estate sector.

We have developed several hypotheses to explore which may explain the productivity gap, which include –

A lack of a holistic view of the property lifecycle leads to siloed innovation - which addresses some stakeholder needs but misses larger productivity opportunities.
Poor understanding of stakeholder needs and technological maturity leads to a misalignment of investment.
A clash of culture and practice inhibits adoption of new products and services.

As part of our literature review we have observed a potential lack of understanding in the market of what is implementable today and what is still the stuff of TED talks.  Are deals flowing to products and services that will only mature in 10 years? Equally, some PropTech companies have a potentially over-optimistic view of where advances in technology can make computable what have always been inherently human issues.  The use of AI by companies such as Leverton to create structured data from unstructured documents has huge potential but will AI really replace the many deeply human interactions that take place.

Critically much of the existing literature omits the role of government in removing barriers to productivity and providing the foundation for the sustainable growth of digital businesses.  With the announcement of the new Geospatial Commission, the AI grand challenge in the Industrial Strategy and Chief Digital Officer in the Ministry for Housing, Communities and Local Government, there is an opportunity to create a supportive data and regulatory environment that helps accelerate innovation and productivity across the sector.

The British Property Federation and Future Cities Catapult are working with leading players across the sector – and over the next two months, we will host roundtable events, conduct interviews and shape recommendations for government and industry.  We would like to hear from a diverse range of professionals and would like people to complete our survey at the following link:, where they can register their interest to be interviewed.