With 6,000 firms and counting, the proptech industry is revolutionizing tenant services. It unlocks the value of client data to go beyond mere management of the real estate space.
Historically, the real estate industry has not been particularly innovative. This is due to that fact that property transactions are complex and because differences in local and international regulations make it harder for larger players to innovate across different countries and regions.
Thanks to the services supplied by proptech, this has started to change. To offer better and more relevant services, proptech startups have learned to collect tenant data on everything from a person’s workplace and transportation cost preferences to their social and energy-saving needs.
“Proptech is no longer the domain of startups, now it’s turning into a whole ecosystem," said Menno Lammers, the head of PropTechNL, a community of professionals in real estate and the built environment that promotes innovation within the industry.
Investment in proptech was the key theme of this month’s ‘Bricks, Bits & Investment’ event organized by Robeco and PropTechNL. Proptech makes up 22% percent of Robeco’s real estate portfolio and is viewed as a strong underlying growth theme. The companies in its portfolio include data centers, operators of laboratory space and firms that manage and lease industrial space.
Having started as providers of platforms for managing and listing properties, these days, proptech firms have to offer more than that to stay competitive.
For example, for storage space suppliers, “a warehouse is not a box anymore,” said Robbert Heekelaar, vice president 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 provides an array of energy saving options, such as battery storage for peak shaving, or reducing energy use during peak times. For environmentally-minded business tenants, it provides CO2-neutral buildings. Prologis also offers an asset tracking service.
“All these preferences are identified based on big data, for example on client priorities as regards transportation costs, labor availability, road access, and the proximity of economic networks,” Heekelaar said, adding that he believes the industry has high growth prospects. “Warehousing grows along with e-commerce, global trade and outsourcing trends,” he concluded.
Business tenants’ needs for community and access to a social network are another focus of proptech firms.
For example, a Rotterdam-based proptech startup Chainels is professionalizing the communication between businesses and tenants at real estate locations such as city centers, malls 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, provide information about their company and display their logo,” co-founder Sander Verseput said.
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 get to know other people in the building,” said Henrik Botten Taubol, transaction management director at WeWork.
Proptech offers the real estate sector ways to embrace the digitalization trend.
Through these and other services, WeWork is able to add value for the 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 the expected and actual occupancy rates, making their planning easier.
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 one such example. It relies on proptech startups for the 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 out of each 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 startup Transaction Connect to integrate customer loyalty programs into credit card payments. It also works with Malcomm, which provides mall tenants with a social platform on which they can interact with suppliers, sign up for events, and find maintenance help. And, via the app provided by Workwell, tenants get invited to community events and can connect with colleagues and book meeting rooms.
The proptech industry is evolving, and the areas considered hot by investors are changing as we speak. From an investor’s perspective, the most promising new directions in the commercial space are various kinds of automation models that increase the accuracy of property valuation with satellite image recognition, virtual reality and geolocation tools, said partner at Finch Capital Radboud Vlaar.
In addition, automation of mortgage processes and legal procedures related to property transactions in both residential and commercial space are expected to remain popular with investors, he added. Proptech firms that provide office management software that manages meeting rooms, parking lots, and other facilities also have an edge in the current market.
And, of course, connected and smart homes, along with the software that will enable the operation of smart, or interconnected buildings constitute an increasingly popular theme. A growing group of proptech firms now also offer 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, head of ProptechNL said at the ‘Bricks, Bits & Investment’ event organized by Robeco.
The key drivers of the proptech sector include several of the current social and economic trends. They range from growing online consumption, higher fuel prices and the growth of robotics to increasing e-commerce and 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, which raised USD 2 billion, online property sales platform Opendoor, which raised USD 400 million and home trade-in platform Knock, which raised USD 400 million.
The information contained in the website is solely intended for professional investors. Some funds shown on this website fall outside the scope of the Dutch Act on the Financial Supervision (Wet op het financieel toezicht) and therefore do not (need to) have a license from the Authority for the Financial Markets (AFM).
The funds shown on this website may not be available in your country. Please select your country website (top right corner) to view the products that are available in your country.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.