When the Real Estate Sector aims at proptech

Monday, 14 january 2019 | Redacción CEU

With the emergence of new technologies and the popularization of the digital transformation concept, a change takes place. The different business models can no longer avert their gaze elsewhere. The current business world is compelled to seek new technological solutions and adapt to modern digital times. Although the Real Estate Sector has been historically known for keeping a traditional and tight approach, it needs now to adopt a new perspective which is more focused on innovation. Today, at The CEU IAM Business School, we analyze how this sector is facing this challenge. What does the concept of "proptech" mean exactly? Who are those who bet on it?

A few months ago, we mentioned in an article that most business disciplines, if not all, are in the middle of a "tech" revolution. Inspired by the development and consolidation of new technologies, sectors such as those belonging to the legal field, agriculture world and insurance businesses now complete their names with the suffix “-tech”. The terms lawtech, agritech or insurtech are already part of the new business glossary and are introduced as the major trends that will set the pace in their own sectors. Within this digital ecosystem, there are also fintech companies. They are better known for having precisely been the pioneers, the first ones to open the way.

The Real Estate Business is not unaware of change either, as it is experiencing its own "tech" revolution. Although this phenomenon has not taken off in Spain yet, proptech (acronym of property and technology) is a movement that is emerging with strength in this sector. Also known as Real Estate Technology or Real Tech, this trend defines the application of new technologies in patrimonial businesses. The idea is that this commitment to technological advances will serve as a lever to boost this type of business whatever their approach is: asset management, financing, investment, buying and selling, design, sustainability, construction, etc.

Spanish companies and proptech

According to the data that were provided by Finnovating at the end of last year, in Spain there are  236 companies specialized in the proptech world, there are 86 more than those recorded in the first quarter of the previous year. These companies employ approximately 5,000 professionals. The consultant firm extracted this data from a survey which was conducted to get to know a little more about the future of this field and in which 120 of proptech companies participated. According to this study, these emerging companies predict to create 2,500 jobs in 2019.

Whether they reach this figure or not, it is clear that startups are the ones that are putting the foot on the gas pedal in terms of innovation. This is due to the recovery that was experienced by the market, the entry of foreign funds, the impulse of venture capital and the increase in rental operations, among other things. However, although these emerging firms are the ones that most strongly bet on  proptech, it does not mean that the rest of the real estate companies are not interested in new technologies. In fact, according to Finnovating, 75% of startups in the proptech sector collaborate with real estate companies. Most of them claim to have three or more agreements with these enterprises.

There are three main aspects that make traditional companies become interested in proptech: new technologies multiply their business opportunities, meet the demands of customers who are now  demanding and request personalized and immediate services and enable them to be competitive.  If the traditional Real Estate Sector does not adapt to the new digital times, it will not only be losing market share, but also the opportunity to compete. But, when we talk about propecth, what do we mean exactly?