Here’s a business sector where inflation may actually provide a boost to its appeal – PropTech.
There has been a surge in mergers and acquisitions involving property technology firms, a broad category that covers everything from software used to facilitate real estate closings to platforms designed to help manage short-term rentals, according to Hampleton Partners, a global corporate finance and M&A consulting firm based in the U.K.
There were 55 PropTech deals across the world during the first half of 2022, the firm noted in a new report.
That’s up 57 percent from the first half of 2020 and 12 percent from the first half of last year, according to Hampleton. It’s the highest deal count since the second half of 2019 when there were 63 PropTech deals.
Inflation and rising business costs are just a couple of factors why PropTech companies are attracting so much interest on part of investors, with the real estate industry scrambling to find ways to cut costs and boost efficiency, the M&A consulting firm notes.
“The PropTech market doesn’t appear to be slowing down, despite recent market volatility, as capital continues to flow in and the market remains thirsty for technological innovation, especially where it drives operational efficiency,” Axel Brill, Managing Director at Hampleton Partners, said in a press release.
Given the cost pressures faced by companies that own and manage multifamily properties, property management software is in particular demand right now.
Deal volume in this particular PropTech niche has surged, with the acquisition of Momentum Software Group in June by Aareon showcasing the trend.
Stockholm-based Momentum builds property management and energy monitoring software, helping real estate companies “manage units, develop housing, monitor energy data, and analyze consumption behavior,” according to Hampleton.
Deals involving real estate fintech have also been a particularly active niche in the overall PropTech segment.
In the U.S., Porch Group shelled out $86.5 million in late 2021 to buy Floify Inc., a software firm that specializes in automated mortgage origination and management SaaS.
Meanwhile, Altus Group last May scooped up Rethink Solutions, a Canadian firm, in a $28.8 million deal. Rethink helps real estate companies deal with their property taxes with its AI-powered software. Rethink’s software can help do valuations, forecasting, and budgeting, while also tracking tax savings and handling overall property tax management.
Also, in high demand have been real estate software firms specializing in facilitating digital paperwork by enabling things like e-signing and document management.
For example, Spanish firm Idealista bought InMovilla and Smiling Cloud to beef up its capabilities in “CRM software, real estate marketing, invoicing, and virtual property visits,” the Hampleton report notes.
Closer to home, The Warren Group has a long history of serving PropTech companies.
The Warren Group also provides a wide range of data solutions designed for the real estate, mortgage, and financial industries, enabling clients to analyze mortgage activity and dig down into property data, deed & mortgage data, foreclosure data, HOA data, and probate data.
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