Will Proptech be the savior of the real estate market?

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

Proptech is developing at a great speed, proposing innovative solutions to the market and with growing interest among consumers, eager for lower costs in access to housing, and among investors, eager for opportunities based on technology.

The construction sector is one of the least innovative real estate sectors in the last thirty years," says the Intelectium website, a startup accelerator behind the successful Kiwi Homes, which is dedicated to "manufacturing houses or modular buildings as if they were cars."

As in other sectors, the application of technology is transforming the value chain of real estate, facilitating the massive entry of new agents into the market and forcing the most entrenched companies to find ways to defend themselves against the loss of power against technology.

Proptech is the union of property and technology. The term showed up in 2014, although its explosion did not occur until 2018. It refers to those start-ups and companies that aim to provide, through the use of technology, new solutions and additional added value to the real estate sector. Some definitions say that "Proptech refers to any company that uses technology to refine, improve or reinvent any service within the real estate sector," according to the Intelectium website.

This definition includes proposals such as platforms for the search and marketing of homes for sale or rent such as Fotocasa, Pisos.com and Habitaclia; to home automation systems that allow the most efficient management of heating, electricity and security as in the case of Wattio or Libelium, which has become a world reference for appliances and devices in the home to connect with each other by applying what is known as Internet of Things and work more efficiently and sustainably; or to the application of digital tools that allow democratizing access to real estate investment and diversifying the investment portfolio from very low amounts (collective investment or crowdfunding) as in the case of Housers, Brickstarter or Privalore.

Of the 22 proptech unicorns that exist in the world, 10 are from the United States with a valuation of $70,000 million, and 12 from China with an estimated value of $25,000 million. Although one of the key factors in its development is the regulation of its activity in a traditional sector, the truth is that the ecosystem does not stop growing. And because of its dynamism, it is not only a threat to traditional agents but also an incentive for the transformation of the sector for the benefit of the consumer. Finnovating, which was held in September, announced that more than 100 CEOs, investors and entrepreneurs in the sector were in attendance.

Traditional real estate companies are trying to find the formula that allows them to regain consumer confidence and approach the customer with easy-to-use, transparent and safe products and services.

"The use of technology is not yet as massive in the sector; there are many segments in which greater investment effort is needed and, above all, awareness of those who work and manage the sector from traditional companies. Until then, the real impact of technology in the sector will be expected."

— Alfredo Diaz-Araque Moro, a Spanish representative of the European PropTech House

It is not technology - which is at the base of innovation - but a value proposition based on implementing new products and services and, above all, on improving the user experience.

"The technologies that have the most impact on real estate are the ones that have the easiest adoption by the user," says Francisco Moreno, Founder and CEO of Clicpiso.

When it comes to proptech, the users: choose, analyze and hire. Technology brings speed, simplicity and transparency to the real estate sector. There is a transition from a historically opaque sector with very large margins, to a more transparent market, which seeks to improve efficiency and knows how to grow with smaller margins. "Protech is allowing for joint offers from suppliers, encourages the verticalization of services and where the customer wins with a much more concrete offer, saving costs and/or execution times," concludes Moreno.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

Join us November 13-15 for the Property Portal Watch Conference Madrid 2019.