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PropTech: the digital transformation that will change our way of living in houses and cities

Giuseppe Donvito, P101 Partner | July 12th, 2018

Mipim, the real estate convention par excellence, discovers the new frontiers of technological innovation and disruption

The new frontier of real estate – and of Fintech too – is called PropTech. It’s tech disrupting a hyper-conventional industry like that of property: a promising metamorphosis from the point of view of Venture Capital, always looking for valuable business ideas. Today, commercial search engines and long-term/short-term poperty search engines are the ones receiving most funding by VC. But let’s take a step back and define what we’re talking about.

P101 has recently participated in Mipim, the world’s leading real estate event, bringing together the most influential international players in many property sectors (offices, residential, retail, healthcare, sports, logistics and industrial), taking place in Paris on June 20th-21st. At the centre of our speech was PropTech. According to a definition by the first PropTech Monitor, published in mid-June by the Milan Polytechnic University, “PropTech is the new FinTech.” More technically, it’s the ” digital transformation in the property industry. It is a drastically new approach to buying, maintaining and managing property,” in the words of James Dearsley, co-founder of the consulting firm Proptech Consult, which leads the digital transformation of real estate groups in the UK. The pioneers of this emerging industry are companies such as AirBnB, Nest, WeWork, Zoopla: each in a different branch of PropTech, from shared economy and short-term rentals, to connected home, to coworking spaces management and research, to long-term house sale and rental. In short, we are talking about something that is already overwhelmingly real and present in our daily lives.

The digital transformation of the property industry, which until just a few years ago was very unlikely – being that of real estate such a consolidated sector, very strongly linked to traditional ways of thinking and operating – is today irreversible. In order to transform business models, drive change and respond to consumer needs, digitalization has become necessary. At Mipim, P101 explained the guidelines to create partnerships and synergies that can produces positive results.

In Italy, where PropTech is still in its first stages, Milan Polytechnic University has reviewed 35 start-ups working in this industry, most of which are based in the north of the country (88%, mostly in Milan), 11 of them started in 2016. The oldest dates back to 2005: Immobiliare.it, operating in the field of property sale and rent research. Overall, 17 platforms are working in real estate tech: essentially, they are companies dealing with the management of commercial buildings, long and short-term sales and rental research, as well as property insurance and crowdfunding. 15 platforms are working in smart real estate – i.e. Facility management, home service, IoT home and construction management – and in shared economy.

What are the possible evolutions of what appears to be an extremely promising industry, whose growth in Italy has only just begun?

According to us at P101, these are the main developing trends:

  • in the next 5 years, Big data, analytics and IoT – which are able to create disruptive innovation – will have the greatest impact on real estate; possible applications are in traffic control, recycling, complaints filing, participation of citizens to public matters;
  • the applications of blockchain, with the possibility of preserving a chain of immutable and indestructible information, will create sectoral innovations that we probably cannot even imagine yet (one is that of completely digitizing registries and keeping track of all transactions);
  • PropTech will contribute, through these technologies, to the implementation and improvement of Smart Cities, which are based on the construction of intelligent, connected buildings, optimizing management costs;
  • collaborations with existing Fintech start-ups and also with traditional businesses will increase. These partnerships are win-win solutions in the opinion of all involved parties. Through these collaborations, just to make an example relating to the vast field of property research, traditional businesses will have the possibility to use tools created by start-ups that are based on intelligent algorithms, in order to carry out personalized and accurate researches, saving time and money. And start-ups will have the opportunity to draw on the experience and databases of big consolidated companies.

 

 

 

(Background image created by Whatwolf – Freepik.com)