Value Creation Without Value Capture: The Misalignment of PropTech and Real Estate Industry

Thi Xuan Loi Dang and Olli Kytomaki

ERES from European Real Estate Society (ERES)

Abstract: The adoption of PropTech in the real estate sector is often seen as a key enabler to transform the sector into a more efficient and sustainable industry. However, despite its potential, the sector exhibits structural resistance to integrating PropTech solutions. This research aims to identify the value capture mechanisms within the commercial real estate sector when a new product or service are introduced to the sector, like PropTech. By applying path dependency theory and developing a conceptual value matrix, this study explores how underlying business or industry logic that shape the sector’s ability to utilize technology. The research employs qualitative methods, including interviews with key stakeholders—such as Chief Digital Officers (CDOs), CEOs, real estate investors, and representatives from industry organizations—spanning both private and public sector actors. The data is analyzed using axial coding to uncover patterns in decision-making, value creation, and technology adoption. The findings highlight the critical barrier which is the need of update existed valuation models to accurately capture the value created by PropTech in commercial real estate. In line with this findings, we also identified enabler which is the importance for technology supplier to provide scalable products, both economical and technology. The study provides a new and deeper perspective on PropTech adoption barriers, emphasizing the interdependence of real estate owners and technology providers in overcoming these challenges. By deepening our understanding of value capture as mechanisms to ease the adoption of new technology, product or services, this research contributes to the growning need for traditional sector to update their business model for adressing the discourse on technology role in reshaping the real estate industry.

Keywords: business model innovation; path dependency; Property technology; proptech (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-ure
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