For most of modern history, the real estate industry has moved steadily along like a zeppelin or freight ship, rarely altering course from its chartered path.
It has remained largely unchanged for a pretty simple reason: it’s quite profitable as is.
However, one of the benefits of an industry that has maintained status quo for so long is that, for the daring, the opportunity for disruption is noteworthy.
These means of disruption might not always be obvious, but we’ve seen many companies come along in the past decade-plus that not only left their mark on the industry but put wheels in motion to forever alter it.
For the longest time, real estate has been used as a more stable investment avenue due to it being largely sheltered from the ups and downs of stock markets. This is truer now than ever, as we are currently in the midst of a bear market.
However, with these aforementioned shifts in the industry, there is increasing sentiment among investing communities that real estate can be much more than simply stable.
Identifying Unaddressed Opportunities
You needn’t look further than the success of Airbnb in recent years to demonstrate the immense upside of companies with disruptive thinking. Prior to this startup, short-term rentals were largely reserved for a week-long vacation stay.
However, the now-enormous proptech company leveraged the supply of home owners around the world and introduced a new type of short-term rental. Both convenient and disruptive, it proved that this antiquated industry was very much receptive – and ready – for change.
Today, Airbnb is worth a hair under $60 billion. In 2009, it raised $20,000 at a measly $2.5 million valuation. Talk about a solid return on investment (and reminder of why investing in startups should be part of your wealth building strategy)…
You see, in an industry that fattened up by sticking to the status quo, one could argue there are more unaddressed market opportunities here than in other modern, tech-driven industries.
This could be a reason why proptech has been one of the hottest sectors for early-stage investment in all of the business world.
Booming While Others Brake
In the first half of 2022, investment in private proptech startups totaled $13.1 billion, a 5.7% increase from the same period in 2021.
While the current macroeconomic conditions could delay potential IPOs of startups in this sector, there’s little indication that these companies are struggling to secure capital.
And there are a wide range of different types of proptech investment options. Whether talking about industrial and residential real estate, hospitality, commercial real estate, construction, or some other offshoot, the opportunities for founders – and therefore investors – are many.
That’s a big reason why the number of proptech startups have increased threefold in the past decade.
Now, they’re not all going to be Airbnb. But that’s not to say there won’t be similarly huge investment opportunities from this industry in coming years.
This is an industry to keep your eyes on.