Data-driven services move the PropTech of today
With 6,000 PropTech firms in the world today, the industry is moving in the direction of unlocking the value of client data to offer tenants services above and beyond managing real estate space. The real estate industry has seen little innovation before as property transactions are complex. Also, there are differences in local and global regulations that make it harder for larger players to innovate across various geographies.
With services supplied by PropTech this started to change. To offer better and more relevant services, PropTech startups learn to collect tenant data that ranges from employee workplace and transportation cost preferences to their social and energy saving needs. “PropTech is no longer the domain of startups, now PropTech is turning into a whole ecosystem” said Menno Lammers, the founder of PropTechNL, an ecosystem that empowers ambitious leaders – active in real estate and the built environment – to take their business to the next level and make positive impact on society.
Investment was the key theme of this month’s ‘Bricks, Bits & Investment’ event organized by PropTechNL and Robeco. PropTech makes up 22 percent in Robeco’s Real Estate portfolio and is viewed as a strong underlying growth theme.
Proptech firms keep reinventing themselves
Having started as providers of platforms for managing and listing properties, PropTech firms of today have to offer more to stay competitive. For example, for storage space suppliers, “a warehouse is not a box anymore,” said Robbert Heekelaar, vice-president, Architecture & Emerging Technologies at San Francisco-based warehousing automation firm Prologis. Based on the data it gathers, Prologis now offers energy consumption information and energy saving advice as an additional service to its tenants. It also offers an array of energy-saving options, such as battery storage for peak shaving, or reducing energy use in peak times. For environmentally-minded business tenants, it provides CO2-neutral buildings. Prologis also offers asset tracking service.
“All these preferences are defined based on big data, for example on client priorities on transportation costs, labor availability, road access, and proximity of economic networks,” Heekelaar said adding that he believes the industry has high growth prospects. “Warehousing grows together with e-commerce, global trade, and outsourcing trends,” he concluded.
Social and community needs of business tenants are also a focus of PropTech firms. For example, a Rotterdam-based PropTech startup Chainels serves to professionalize the communication between businesses and tenants in real estate destinations such as city centers, mall, and shopping districts. To this end, Chainels offers a cloud-based platform for information exchange. “With our app tenants can report problems, have a forum for discussion and demonstrate their company information and logo,” the co-founder Sander Verseput.
A New York-based flex office space operator WeWork offers community spaces and an internal social networking platform. “One of the services WeWork provides to business tenants is curating communities so that employees know other people in the building,” said Henrik Botten Taubol, transaction management director at WeWork. Through these and other services, WeWork is able to add value to building owners and developers that it works with. As a result, it generates up to 25% of premiums for them. WeWork also offers business tenants and building owners information on predicted and actual occupancy rates, making their planning easier.
Corporates tap into PropTech universe
Larger mall and shopping space operators now offer services ranging from parking sensors to online food delivery orders, all done via business apps supplied by the proptech sector. Paris-based shopping mall and airport operator Unibail-Rodamco-Westfield is an example of such a company. It relies on PropTech startups for extra services it needs to offer tenants, and decisions on these services are made based on client data collected by the mall operator.
“We leverage tenant data to increase the value we get from the same square meter,” said director Julie Villet. To this end, the company invested EUR 40 million in venture capital funds, to strengthen its sourcing of services from PropTech and other startups. Unibail-Rodamco-Westfield now works with Transaction Connect startup to integrate customer loyalty programs into credit card payments. It also works with Malcomm, which provides mall tenants with social platform via which they can interact with suppliers, sign up for events, and order maintenance help. And, via the app supplied by Workwell, tenants get invited to community events, connect with colleagues and book meeting rooms.
Proptech branches out in a few novel directions
The proptech industry is evolving, and the areas that are considered hot by investors are changing as we speak. From investors’ perspective, the most promising new directions in the commercial space are various kinds of automation models that increase the accuracy of property valuation by supplying satellite image recognition, virtual reality and geolocation tools, said partner at Finch Capital Radboud Vlaar.
Added to that, mortgage automation processes and automation of legal work related to property transactions in both residential and commercial space will stay hot for investors, he added. Proptech firms that provide office management software that manages meeting rooms, parking space, facilities also have an edge in the current market. And, of course, the theme of the connected and smart home is in, along with the software that will enable to operate smart, or interconnected buildings. A growing group of PropTech firms now also offers virtual reality tours, and this service continues to be popular.
All in all, proptech offers the real estate sector ways to embrace the digitalization trend. “Proptech is the evolution of the built environment in the direction of digital transformation,” Menno Lammers, founder of ProptechNL said at the ‘Bricks, Bits & Investment’ event co-organized by Robeco.
‘Bricks, Bits & Investment’ event on prospects of proptech
The interest in the proptech sector led Robeco to organize an event on the future opportunities within the sector. Companies in its own proptech portfolio include datacenters, operators of laboratory space and firms that do management and leasing of industrial space. The proptech sector has strong drivers among the current social and economic trends, ranging from growing online consumption, higher fuel prices, the growth of robotics to increasing global trade.
Last year was the strongest year so far for this growing theme as it saw a few of the largest funding rounds ever. The winners were three US-based ventures with global reach. Office proptech firm WeWork has just raised USD 2 billion, the online property sales platform Opendoor has raised USD400 million and home trade-in platform Knock has raised USD 400 million.