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.
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?
Within the category of proptech there are services that range from the classic web portals which are specialized in real estate services to the strategies based on the use of disruptive technologies such as artificial intelligence and virtual reality. Among some of the examples of proptech services, we can point out the peer to peer marketplaces, the crowdfunding real estate, crowdlending, the sale of houses with smart contracts, the marketing of properties through the use of big data and geolocation, the use of virtual or augmented reality to "visit" a flat and the design of smart homes through the use of Internet of Things.
The Spanish market is not as developed as other proptech markets. However, there are many examples of companies in Spain which are part of this field: Housers, Privalore and Inveslar are specialists in real estate crowdfunding, Libelium in the design of intelligent buildings, Urban Data Analytics and Betterplace in the application of big data and geolocation solutions and Fotocasa and Idealista in the buying, selling and renting through their web portals.
One of the great advantages of betting on innovation in the patrimonial business is that it is possible to break with the old rules, since this sector has always been resistant to change. This fact may impact on the opening of other ways and new lines of work which not only make possible to attract more clients, but to improve the processes. Proof of this is that proptech removes physical barriers, thanks to the use of virtual reality or web portals, and intermediaries, through marketplaces.
However, we should not forget that although the packaging is important, so is the content. Proptech is a lure for customers, partners and collaborators. A firm commitment to innovation is always attractive. However, companies that want to aim at this new trend should be aware that proptech is not a simple marketing technique, but a comprehensive approach.
At The CEU IAM Business School, we believe that to offer an effective and complete training it is necessary to be up-to-date on the trends of the business world, as well as within the Real Estate Sector. That is the reason that has led us to design our Advanced Program in New Management of the Real Estate Business. Discover which are the trends that will mark the future of the patrimonial business!