Construction and M&A in Proptech are Booming

PropTech Outlook | Thursday, September 29, 2022

Construction and property management, two industries that attracted notable investments in proptech in 2021, are anticipated to receive more investment in real estate software.

FREMONT, CA: The following years will witness continued investment in embedded finance, project management software, and home improvement technologies. The venture-backed construction IT businesses garnered more than USD 3.8 billion in funding in 2021.

Embedded finance is already a significant fintech theme and is being used in the proptech industry. But it will likely be more noticeable in building tech the following year, particularly with embedded lending.

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As the construction sector strives to automate pre-construction workflows and financial management, project management software will replace spreadsheets and emails. Due to the COVID-19 pandemic, homeowners' focus has been on home repair. Since there is a lack of housing, rebuilding old and dilapidated buildings may be another approach to increase the availability of residences.

The proptech industry is large and diverse, with numerous tailwinds in the residential proptech sector. A new wave of companies in the construction tech space wants to combine design, offsite construction, and new building materials. These will likely be critical areas for investment: digital solutions that enable rent payments, door unlocking, virtual property tours, and lease signing.

Digital tours are becoming increasingly popular as consumers want to take a virtual tour of an apartment. Virtual tours and signatures have become more commonplace due to the COVID-19 pandemic, and there is now a greater chance to invest in technology that will appeal to Gen Z.

Proptech is developing, which is very positive. Additionally, there are larger corporations in the ecosystem that may potentially be business buyers. The industry anticipates more mergers, acquisitions, and initial public offerings (IPOs) in the coming year, particularly M&A, as industry consolidation provides the scale and scope necessary to serve the largest commercial customers.

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