Kicking off a three-part series on proptech, in its very widest sense, let’s look back first of all to the Stone Age.
Originally published December 2020.
Urbanisation has been a key driver for technological breakthroughs. But what was the catalyst for urbanisation and the rise of megacities, such as ancient Rome? Geography? Ruthless emperors? Good wine and fabulous food?
While all of these contributed, the real answer is property technology, or proptech, stretching back, literally, to the Stone Age.
Occasionally narrowly defined in an IT context, proptech is a much wider field and entails any technological advancements related to construction, real estate investment, asset and property management processes.
Without the first aqueduct (Aqua Appia, 312 BC), the use of concrete (100 BC) and indoor plumbing, modern cities are unimaginable.
This three-part proptech series will start off with a historical digression, then analyse the property industry’s’ innovation gap, and conclude with a review of the proptech landscape.
So, let’s get started with the brief historical digression.
Stone Age
Abandoning wooden and organic material-made tools, natural stone emerged as durable alternative. Elaborate stone structures, like the predecessor of Stonehenge, indicate a degree of prefabrication and geometrical knowledge.
Bronze Age
Bronze replaced stone for tooling purposes and the focus shifted to bridging distances between material sources such as quarries and construction sites using sleds and rollers. This allowed the selection of strategically relevant locations (heights, riverbanks) and a wider range of construction materials. Advanced knowledge of mathematics and geometry established the beam technology, a prerequisite for constructing extensive open spaces.
Iron Age
Mastering hardened steel for durable woodworking tools and fired and glazed bricks were major steps forward. Using advanced math and physics skills, the Greeks created pulleys and cranes, enabling the first ‘high-rises’ such as the 118m-tall Lighthouse of Alexandria. The Romans introduced enhanced cement mixtures enabling cheaper, faster construction and, with an eye for comfort, pioneered clear and mosaic glass windows as well as central heating. Being true tech pioneers, they added waterwheels, sawmills, aqueducts, sewage systems and sophisticated timber cranes to their long list of proptech achievements.
Middle Ages
While structural design models enhanced building safety and complexity, tooling advances like the pile driver improved foundation works allowing for increased load factors and building heights, especially in steep or unstable terrain.
Renaissance
Scientific advances established architecture as a standalone craft, and thus form began driving engineering.
17th-18th centuries
Plate glass technology allowed for more efficient glass production, thus supporting its relatively widespread use. Use of iron in large structure enhancements, bridges and fireproofing of industrial buildings was enabled by engineering and production advancements.
19th century (Industrial Revolution)
Towards the end of the 18th century elaborate optical surveying tools emerged (the first theodolite was used in 1784). Allowing positioning, subdivision and title assignment of land plots, these tools enabled the mapping of Great Britain, the western US territories and the first land cadaster introduced by Napoleon. All of these 19th-century advancements proved essential in the evolution of the property industry. Steam-powered machine tools and the use of explosives were other major breakthroughs. Mass-produced steel beams and reinforced concrete modernised construction technology, enabling broader and taller structures, while widespread use of indoor plumbing and glass panes enhanced comfort and safety in rapidly growing cities.
20th century – hard-asset innovation
Electrical elevators and sophisticated cranes enabled the construction of high-rise buildings, leading to increased city density, while heavy construction machinery and power tools resulted in productivity gains. Prefabrication reduced costs and enabled standardised and cost-efficient large-scale construction in the post-war housing industry.
20th century – financial innovation
Property-related capital pools supporting large-scale projects emerged, creating the real estate investment industry as we know it today. Previously dominated by owner-occupiers, capital pools created an investable asset class disassociated from particular purpose-driven owners such as manufacturing companies. The emerging asset management industry, focusing on diversified and uncorrelated asset portfolios, was another enabler for commercial real estate and infrastructure capital allocations.
20th century – IT innovation
Due to a mismatch between high mainframe computing costs and a fragmented property market, almost no major IT-induced innovations are noticeable in the property industry between the 1930s and 1980.
Starting in the mid-1980s, lenders began using mainframe computers to analyse and store data. Architects, contractors, developers and financiers used spreadsheet programs for project data and regression analysis, enhanced design efficiency and asset management purposes. Specialised analytics and data providers emerged. Internet-based services such as cloud-computing enhanced data analytics, while the mobile internet and a glut of financing drove real estate as a service and consumer-focused business models between 2008 and 2015. Since 2015, a market consolidation and the cautious rise of champion trend funding are observable.
That’s the end of our walk down proptech memory lane. Next week we’re trying to figure out whether the real estate industry is missing the boat, before bravely looking into the future of proptech a week thereafter.
Stay tuned!
