Valley Bank’s second annual Present and Future of Proptech Report summarizes the resiliency of the sector despite a volatile 2022, with the strongest category being venture capital deals, with 213 closed for a combined value of $4 billion.
The data builds on the information from last year’s inaugural report, and analyzes industry trends and the impact of rising interest rates.
In the current high interest rate environment, the 2023 real estate market is faced with a number of different challenges, including growing debt loads. Because the current economic picture lacks a clear consensus, flexibility is crucial when it comes to dealmaking.
“To get ahead of future interest rate increases by central banks, markets have begun
to price in higher interest rates. This has accelerated the deflationary effect on market valuations and slowdown in general market activity that central bankers have been looking to achieve,” stated Ori Kaufman-Gafter, Head of International & Tech at Valley Bank.
“That said, the interest rate environment that we currently find ourselves in trends very close to historical averages, so this is not something novel for experienced industry veterans,” Kaufman-Gafter added.
Private market proptech investments have slowed quarterly, making 2023 pivotal in determining just how resilient the sector is, according to the report. Transaction solutions and property management posted the largest deal activity last year, accounting for over 50% of all proptech dealings.
Other key details highlighted in the report:
- In a cautious and complex environment, investment in tech still continues to attract capital.
- Corporates joined in 45 completed venture transactions that accumulated over $1.8 billion. Nontraditional players were a part of 86 deals that totaled nearly $3 billion. These numbers show a positive trend, displaying that while people are going in on less deals, they will still participate in larger deals for established businesses.
- Reducing the emission of greenhouse gasses and improving sustainability across the different segments of real estate is a priority with players looking to explore innovation.
The report was developed in collaboration with Pitchbook; Chase Gilbert, Co-Founder and CEO, Built Technologies; Jeffrey E. Berman, General Partner of Camber Creek; Chris Green, Founder and CEO of GreenPoint Partners, Kurt Ramirez, General Partner, Nine Four Ventures and Bryan Kallenberg, Vice President, Capital Markets.
About Valley Bank
The principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $57 billion in assets. Valley operates across New Jersey, New York, Florida and Alabama.
