On April 13th, 2023, we listed the Global X PropTech ETF (PTEC) on the NASDAQ. PTEC is designed to provide exposure to property technology (PropTech) companies that are positioned to benefit from technology that optimizes the way people buy, sell, rent, design, construct, manage, research, and market residential and commercial properties.
It’s true what they say that there’s no place like home, but technology makes home an evolving concept for buyers, renters, and the agents who facilitate their transactions. Right from the discovery of the home through financing, deal close, move-in, and maintenance and service, the entire process is ripe for technological disruption through software, the Internet of Things (IoT), and FinTech.
In our view, shifting consumer buying and rental behaviors as well as the rise of short-term vacation rentals create exciting opportunities for the PropTech theme. All told global real estate comprises over US$325 trillion in assets, and we believe the addressable opportunity for disruptive technology within this industry is massive. The Global X PropTech ETF seeks to capture this opportunity.
Technology can usher in a new disruptive era in real estate
Technology is discovering countless frontiers to disrupt and streamline the business of the real estate. For example, the digitization of real estate access solutions and asset monitoring systems and the use of research and analytics are creating new opportunities to transform the industry. In addition, FinTech solutions are disrupting housing-related payment processes, including rent payments, insurance purchases, lending against equity, and more. In 2022, nearly US$20 billion went to funding private technology-based ventures in the real estate space, an increase from US$12.6 billion just five years ago.
With technology capable of increasing efficiencies and lowering operating costs, professional real estate management companies are also increasing their digital spending on technology at a record pace. U.S. real estate software spending topped US$9.34 billion in 2020 and is expected to grow at a 9.7% compound annual growth rate (CAGR) through 2028.
A Deloitte survey of CFOs from major real estate brokerages indicated that spending is set to remain strong in 2023. 48% of North American respondents said that they plan to increase tech spend in 2023 vs. 2022, with another 27% planning to keep spending in line with the previous year.
The breakdown of real estate technology spending can vary by market and company; however, typically, it can be segmented by solution and property type. Among solution types, property management software, financial services tools, marketing technology tools, and IoT systems for property monitoring and management comprise the largest share of real estate technology spending currently.