Trends to Watch in 2025
2024 brought volatility to the property technology sector, particularly as economic uncertainty continued to weigh on the market and stall activity. Despite some areas of the industry facing the brunt of these challenges, we also saw a slight uptick in venture investment and the continued growth of several emerging technologies, all of which we suspect will drive the industry forward in the years to come.
While market uncertainty persists, RET remains optimistic on the market’s future performance and expects to see these key trends take flight in 2025:
Venture Capital’s Poised to Bounce Back
- While venture capital investment faced extremely slow activity in 2023, the Federal Reserve’s September interest rate cuts helped improve investment activity in 2024. With interest rates having declined and now holding steady — providing access to cheaper capital — and the real estate and tech industries beginning to stabilize, we anticipate this trend will continue in 2025.
From A Tight IPO Market and Tightening Liquidity Emerges Opportunity for PE
- Private equity continues to have a record amount of dry powder (~$1 trillion). As today’s market faces a narrow IPO market and shrinking liquidity, private equity firms sitting on abundant cash will fill in the gaps — providing capital to high-quality investments.
- Specifically, early-stage investors will be better insulated from pricing pressures — as they benefit from low entry prices — while conversely, later-stage will be more exposed to down rounds and discount pricing.
AI to Continue Astronomic Rise in Real Estate Tech
- AI is ubiquitous, permeating nearly every industry, and has long been a dominant trend within the real estate technology space. Capable of performing various operational tasks from managing resident experience to anticipating maintenance needs, AI’s impact is expected to grow significantly.
- As the AI market becomes more crowded, however, low-value, shallow solutions that lack strong ROI will see pushback. AI solutions that rise above will be those that provide a clear operational return to owners.
From Point Solutions to Integrated Platforms
- In today’s market, owners are prioritizing mission-critical software infrastructure (i.e. shifting away from point solutions to focus on integrations) that provide seamless onboarding and immediate operational benefits.
Construction Tech will Pick Up Steam
- Over the last several years, the construction industry has faced significant labor inefficiencies. In the face of these challenges comes an opportunity for emerging construction technology solutions, specifically, those geared toward improving efficiency and centralizing project management.
- As the industry continues to struggle to make real estate development deals profitable, centralized solutions that can reduce waste will be high in demand among developers in the year ahead.