Thanks to the advances in digitisation and innovation processes that have affected the entire economy, the real estate sector has also undergone a major evolution in recent years. This transformation is often referred to as 'Proptech', which comes from the fusion of two words, 'property' and 'technology'.
PropTech has all the credentials to change and innovate the real estate sector as we have known it so far. In fact, during the coronavirus pandemic, PropTech has already made its presence felt by bringing important innovations to the sector and contributing to a real change in mentality.
Basically, PropTech is a collective term used to define start-ups that offer technologically innovative products or new business models for real estate markets, solutions that often optimise and simplify the processes, behaviours and transactions that take place in this sector.
According to a recent Proptech Monitor study conducted by the Politecnico di Milano, the following areas of interest fall within Proptech:
· Smart Real Estate - facilitates the operation and management of real estate assets, using advanced digital platforms and systems.
· Shared Economy - defines ownership with respect to the use and sharing of space and real estate.
· Fintech - finance and technology, including activities such as brokerage, crowdfunding and auctions.
In addition to those listed, there is also another category, generally included more in the construction sector than in real estate: Contech, addressing the design and construction phases of real estate supported by the use of technology, but also smart cities and buildings, the sharing economy, home building.
The potential of PropTech
Although the real estate market is usually seen as an analogue and fairly traditional sector, in recent years a wide variety of start-ups have entered European markets (including Italy), introducing new digital access to the whole range of stages involved in real estate transactions and management. This has paved the way for the use of innovative technologies in new business models, suggesting far-reaching effects for the sector.
The potential of PropTech is enormous and the boundaries ever-expanding, thanks mainly to digital developments and the overcoming of bureaucratic constraints. Technologies such as blockchain or augmented virtual reality are helping to change the way real estate is built, managed, bought or rented.
PropTech companies are developing a variety of innovative services that apply to all types of properties. PropTech solutions can cover the most diverse areas, from managing the air-conditioning in a building, to sensors that detect water leaks, or access registration systems via phone apps, automated reception services or parking space management.
PropTech, therefore, makes it possible to solve numerous problems of property managers or owners and, at the same time, to increase the comfort of buyers at all stages of property management, from purchase/sale to use. In fact, the technological revolution is affecting the entire supply chain, from the way properties are valued with advanced algorithms using virtual reality, to property management through artificial intelligence and even in new construction through the use of intelligent materials, robots and drones.
PropTech, could become a new philosophy, a different way of conceiving the real estate market and the relationships between its actors: investors, developers, builders, intermediaries and consumers. A new conception of buildings themselves and, more generally, of the urban context of the future, which in the PropTech context takes on entirely new forms: intelligent buildings that are less energy-consuming and indeed help to rebalance resources, the sharing economy applied to Real Estate, a new conception of residential construction (the so-called ConTech), a new finance integrated with Real Estate that is more widespread (including crowdfinding), more accessible and therefore hopefully more ethical, co-working that is reshaping the office space sector, co-living that offers new environments to the residential market, and the now unstoppable home sharing for short-term or transient rentals.
The numbers of PropTech in Italy
At the end of 2021, according to the Milan Polytechnic's PropTech Monitor research, there were 184 PropTechs based in Italy or operating in our country. Of these, 59% are located in northern Italy, and many are based in Milan. Despite this strong regional connotation, PropTechs declare that they have already planned business expansion to other Italian regions (42% of respondents) and other European countries (37%).
Based on the activities they carry out, Italian PropTechs can be grouped into four main clusters: Real Estate Fintech (27%), Smart Real Estate (19%), Sharing Economy (22%) and Professional Services (32%). These are mainly small-sized companies (73% declare between 1 and 20 employees) recently established (43% were born in the last 5 years) and made by young people (on average, 61% of the employees of a PropTech belong to the Millennials generation).
The stimulus towards growth is also evidenced by the willingness to find funding to channel into new investments, mainly in the development of new technologies (83%), especially in the areas of Blockchain and environmental sustainability, and in the recruitment of new resources (63%). However, the start-ups included in the report consider the PropTech phenomenon to be not fully mature in Italy, mainly due to the low propensity of the real estate sector, the lack of a technological/digital culture, and the weakness of a PropTech ecosystem that has difficulty finding funding. Our hope is that platforms like 2meet2biz.com and debt.2meet2biz.com can help overcome these difficulties.