What We Mean When We Say Proptech

In the beginning, there was real estate technology.

Then, real estate tech. For about the last decade, the term “proptech” has come to be accepted as meaning digital innovation in the real estate industry.

However, even if everyone in real estate knows the term proptech, do they actually agree on how it’s defined and used? The answer to that question varies, but it seems many industry experts have strong opinions about what we mean when we say “proptech.”

If we say it at all.

“I never use the word proptech,” Michael Beckerman, an angel investor in the space and the CEO of CREtech, an organization that runs trade shows in New York City and London, said in a cheeky email exchange. “Ask the real estate folks if they understand what it means. Universally they will say ‘No!’”

Beckerman then explained his quick-twitch response further: “After nearly 40 years in commercial real estate — and a decade in CRE technology — I still don’t know what ‘proptech’ really means. Most real estate companies don’t either. We are simply technology — just like leasing, marketing, construction and finance. There’s no need for a buzzword. Technology is a fundamental function of CRE, not a trendy niche. The more the industry tries to dress it up with clever labels, the more disconnected it becomes from the industry it’s trying to serve.”

Founded in 2015, early-stage venture capital firm MetaProp has had a front row seat to the global evolution of the term proptech, said Aaron Block, the company’s co-founder and managing partner.

“I think there was already a bit of a head start, because it was known as proptech in Europe,” Block said. “It wasn’t well known, but folks were already using the term, and we made a conscious decision to try and unify everything and bring it into North America, primarily with a project you were involved with, PropTech 101.” (Full disclosure: This reporter worked on the book PropTech 101 while a partner at MetaProp.) 

“We were trying to give a primer to anybody who’s interested in the intersection of the built world and technology and investing.” Block said. “I think that helped. It had some small role at a minimum in catalyzing the unification and normalization of terminology.”

Drawing the attention of entrepreneurs who otherwise might not have been focused on real estate, construction, the built environment and technology turned out to be one of the most important aspects of proptech taking hold as the accepted term for innovation in real estate, Block said. The term also had an effect on venture capitalists.

“It helped with VCs, good and bad,” he said. “A bunch of people decided that they were going to get into a space because it had a name and it was a recognizable, kind of defined category. In a way, it tied together what was happening globally. And I think that was very successful. We still see the residual value of that today in many ways around the world, whether it’s in Asia, Europe or North America. The idea that there’s one term instead of 15 terms that is the understood, fundamental, foundational definition of what folks are working against.”

That definition is now understood to include the more advanced digital transformations of technology such as artificial intelligence and decarbonization through technology in the built space.

“Words mean something,” Block concluded. “Words are very meaningful. And I think that word has played a very meaningful part in the industry’s transition from the 20th to 21st century.”

However the real estate industry defines proptech, the broader business world tends to see it differently, said Jack Posthauer, U.S. vice president at Probis, a Munich-based cost controlling product for real estate developments.

“The U.S. has terms like ‘fintech,’ for example, but the proptech market is nowhere near what fintech is because it’s just known within the real estate community and industry right now, even with the venture firms that are focused on it,” said Posthauer. “But it’s slowly growing to where I can see in 10 years it will be on the same level in terms of people that have heard of it and know something about it.”

The use of the term proptech also varies by the size of real estate companies addressing it and by geography.

“I think that they much more commonly would say real estate tech, or just digitalization, in the real estate world, unless they’re one of those dedicated people working as a head of innovation with these major firms, who is going to be familiar with proptech,” Posthauer said. “When we talk to construction companies that are mom-and-pop operations, not these huge organizations, proptech is never really used. If we do bring it up, it’s usually unrecognized in these smaller-level companies.”

Similarly, Probis defines itself depending on the real estate audience.

“Right now we’re saying that we are in ‘contech’ — construction tech,” he said. “I would say that the term proptech is much more used and known in Europe. Part of the reason why we use it is because we’re a German company. But I wouldn’t say we don’t usually say we’re in proptech when it’s our venture partner that’s making an introduction to someone or if we’re going to one of the proptech venture arms of Blackstone or Tishman, or some other major real estate owners that have a dedicated arm to digitizing their portfolio. They are going to have more familiarity with proptech, and we would then use it.”

Two years ago, Jonathan Goldberg left the fashion tech industry and became a founding member and vice president of HHX, the innovation division of Howard Hughes Holdings. His perspective on the term proptech is influenced by his change of career.

“Even in my tenure, I’ve seen the term gain more universal adoption with all the constituents than from when I first started,” said Goldberg. “Granted, there just is no better way to say something about everything that’s going on in real estate innovation that’s interesting, including what we do at Howard Hughes.

“As you get into these conversations about proptech, the first question I have for people is: ‘Define what you mean by proptech’ — because I think everyone has a slightly different definition. But, by and large, I think the term has gained tremendous steam as sort of advancing the cause for innovation in real estate in a way that seemingly no other term has. And I do think in today’s world that soundbite is important and interesting.”

Venture capitalists have their own viewpoints on proptech terminology.

“Within our industry, real estate tech and proptech are used equally by entrepreneurs and investors,” Aaron Ru, a principal at RET Ventures, said in an email. “However, outside of the industry and for generalist firms, proptech has become a more recognizable term.

“Within the real estate industry, technology initiatives are still largely referred to as innovation or technology investments. Very few real estate owners-operators would say they are implementing proptech, but rather they are implementing or investing in innovation and technology to solve real-world problems.”

Gavin Myers, managing partner at early-stage investment firm Prudence, sees a negative connotation to the term.

“I think when people think of proptech, they think of not a lot of successes and a lot of capital consumption,” said Myers. “Now, that was never our definition of proptech. We are speaking about the built world and define the built world as real estate, construction and infrastructure. We think about it purely through the lens of a software experience, and specifically data and AI automation. That’s why we always have to spend time telling people how we define what we do and the service area within which we operate.”

A quasi-tutorial is often in order then. 

“When I speak to growth-stage investors,” Myers added, “a lot of them will say, ‘Yeah, we’re not really focused on proptech.’ To which I’ll say, ‘If you’re thinking of proptech as the first wave of companies that were capital-consumptive, focusing on residential real estate, then neither are we. We agree with you.’ And, so, it takes a little bit of work to walk people through. We used to be generalist investors, and now we’re trying to invest in technical founders using technology to really drive productivity gains and huge enhancements to the built world.”

However, as proptech angel investor Matt Knight said in a pithy email response: “What’s the alternative?

“People have tried other variations and they never seem to stick. The term has staying power because it’s short (two syllables), easy to spell, easy to pronounce, and immediately tells outsiders what it is. Building tech and real estate tech are too long. RE tech seems to falter because not everyone outside of real estate knows ‘RE.’ And BuiltTech is trademarked.”

Entrepreneur Yeves Perez, CEO and chairman of Workbnb, a travel-booking platform for workers, is much more bullish on the term proptech.

“I think it’s the perfect term,” said Perez. “There’s no shortage of hybrid-type technologies — or hybrid between proptech and, in my case, travel — but I will say that more people identify with proptech and they come to us rather than to travel tech.

“I actually think proptech is having a breakout year in 2025. It’s going to be a prolific year for the term. What I’m seeing are traditional real estate investors adopting technology into their investment portfolio, as well as properties, and they are identifying as proptech angel investors.”

Stefan Schwab, CEO at Enlighted, an Internet of Things smart buildings and lighting proptech company, takes a 360-degree view of the term.

“Companies in the ‘proptech’ sector have been using the term for several years, and it’s largely recognized by the tech and business community as a whole,” Schwab said in an email. “However, in my experience proptech is not yet universally understood by most incumbent real estate companies, with the exception being the ones who have taken the time to educate themselves on industry tech innovations. Sensing the CRE market need and opportunity for innovation, VCs and equity investors are excited about the term and receptive to companies in the proptech space. I believe this interest will continue to be strong in 2025.”

Ultimately, though, said Schwab, it doesn’t make a difference what it’s called. 

“Commercial buildings will continue to invest in property technology as they increasingly realize it’s a sure path for them to reach their goals around energy efficiency, occupant experience and building operations optimization,” he said. “While there is a lot of hype around AI in proptech, I don’t see the technology as integral to its success as it is for other industries at this time. That could change, but it’s still early days for AI in proptech.”

Call it what you will — ultimately, the term “proptech” will likely face the same challenge as any property technology: Acceptance and adoption will depend on whether it benefits its users.

Philip Russo can be reached at prusso@commercialobserver.com.