Revealed: UK PropTech investment hits record levels in 2021

Investment into the UK’s fast-growing property technology (PropTech sector) has reached record levels in 2021 and more than quadrupled since last year, as the growing sector matures.

That’s according to PropTech-focused venture capital firm Pi Labs, which analysed UK PropTech funding round data for 2021 and discovered that there had been £1.6 billion of investment into the sector so far this year, a massive 360% rise from the £347.79 million seen in 2020.

The figure is also more than 15 times higher than the £105.68 million of UK PropTech investment achieved in 2016, showing evidence of the long-term trend that the sector continues to grow and attract investment capital.

Some had predicted that PropTech had reached a natural ceiling, with too many operators competing for space, but this research suggests otherwise.

And the global landscape paints a similar picture, with over $20.57 billion (£15.52 billion) invested in PropTech so far this year, more than double the $9.37 billion (£7.07 billion) invested in 2020.

It is also almost a three-fold increase from $7.06 billion (£5.33 billion) in 2016, as further confirmation of the long-term appetite for PropTech investment.

The research says the creation of a broad range of technology solutions which address common issues in the real estate world have helped to drive the surge in PropTech investment over the past 12 months.  

Proptech start-ups are currently solving issues around sustainability, logistics, construction, robotics, workplace wellbeing, and bringing the metaverse to the built environment, to name a few key examples.

There has also been an increase in PropTech mergers and acquisitions (M&A), with Pi Labs’ analysis of M&A data revealing that there have been 152 global PropTech acquisitions so far in 2021. This is up from 92 in 2020, and the most global PropTech M&A activity since records began. 

Better capitalised and established players acquiring competing or complementary companies – in order to consolidate their position and gain access to new markets – has been the main driver of increased activity.

“PropTech investment is growing significantly year-on-year, as the real estate sector is increasingly aware of the operational performance gaps that have been unaddressed for a number of years,” Pi Labs’ chief executive Faisal Butt said: 

“As the UK real estate sector wakes up to the changes required to reach net zero targets, landlords, investors and occupiers are realising that technological adoption will play a crucial role in future-proofing assets and meeting sustainability pledges.

He added: “On the back of the large wave of capital raised this year, and accelerated adoption within the sector, many PropTech companies are now achieving scale and we can expect later stage funding rounds and M&As to drive investment growth in 2022. Generalist VCs, particularly tech-focused Silicon Valley investors, are also now starting to get in on the action – especially from Series A. For example, Updata Partners led the £42 million LandTech Series A round last month.”

He went on: “We are also seeing some of the world’s largest institutional real estate and tech investors enter this interesting intersection after identifying the tailwind for growth. Recently, Abu Dhabi’s Sovereign Wealth Fund Mubadala invested into London-based Plentific’s $100 million Series C round alongside Brookfield Technology Partners and other institutions.”