Startups looking to improve the efficiency of the property sector with the support of technology are starting to emerge around the world. Local developers are already making their buildings smart, and the new wave of innovation generated by property technology firms will help the Romanian market develop further. Close to EUR 13 billions worth of venture capital funding went to proptechs in the first half of 2019.
Owners of buildings are already using digital tools that can help them manage the full array of operations, ranging from maintenance to tenant relations and reduction of energy consumption.
It is only a matter of time until modern technology becomes as important to a real estate project as building materials are today, suggested Geo Margescu, the CEO and co-founder of Forte Partners, a developer of office and residential projects in Bucharest.
Companies in the property sector are already using technology to improve energy efficiency and reduce operational costs over the lifetime of a building.
Globalworth, the biggest owner of office space in Romania, has already started to invest in proptech startups. The developer has a partnership with funds Early Game Ventures and GapMinder Venture Partners.
“We also plan to make additional technology-related investments in 2019, either in general technology funds or ventures focusing on real estate solutions in the field of smart buildings/smart cities, mobility and energy, property automation and real estate software,” says Dimitris Raptis, deputy CEO & CIO of Globalworth.
Startups in the real estate tech field raised USD 12.9 billion from venture funds in the first half of 2019, according to CREtech. In 2018, these startups got USD 9.7 billion, while in the previous year they had raised USD 12.7 billion from venture capital players.
Moreover, more than 20 proptech startups have reached a valuation of more than USD 1 billion since 2014, according to Fifth Wall. Between 2011 and 2014, Airbnb was the only entrepreneurial venture in the property sector that reached this valuation.
“I think it’s a huge market, and the stakes are not local but global. We see a lot of applicability in both the residential and office segments or even integrated solutions that meet the consumers’ needs for space (not necessarily property) according to the given context. Romania can play a role as we have specialists with a capacity to understand and use technologies, we have creativity, and I think we can see Romania-born success stories on this global market,” says Ovidiu Sandor, the CEO of Mulberry Development.
The development of proptech initiatives will come naturally alongside the delivery of smart buildings, adds Ionut Dumitrescu, co-founder of One Office, the office division of One United Properties.
PROPTECH INITIATIVES BY ROMANIAN ENTREPRENEURS
The first platform for proptech initiatives was launched in Romania last spring and has already hosted a demo day where entrepreneurs could seek the backing of investors.
Startup Bright Agency has developed a smart platform working as an all-in-one solution for the niche of temporary space leasing in shopping malls. The firm has developed an optimized process for the leasing and management of spaces by integrating machine learning and artificial intelligence, 3D web rendering and scalable infrastructure.
Another proptech solution is yeParking – Online, which does real-time tracking of the availability of parking spots in residential and retail projects. It features a reservation system for parking spaces that offers drivers the option to find shareable private spots.
Meanwhile, another team of entrepreneurs developed Inflection Point, a visual AI solution that can monitor the feed from surveillance cameras installed in shopping centers. The solution can be deployed to interpret various situations inside the shopping units.
“Proptech solutions imply a dose of creativity, a good knowledge of the market and the mastery of IT technologies. I think we are good at all these categories and we have young entrepreneurs who can think of innovative solutions, from property management to marketing solutions. We also have some well-positioned IT hubs where collaborative ideas can be born. I hope to soon hear of Romanian companies that innovate and bring solutions to the real estate market,” says Andreea Comsa, the managing director of Premier Estate Management, the property consultancy focused on the residential segment.
COMMERCIAL REAL ESTATE INDUSTRY GAUGES IMPACT OF PROPTECH
The proptech segment is becoming more popular among global investors surveyed by Deloitte. In fact, almost 9 in 10 believe that proptech players will have a moderate to significant influence on the commercial real estate sector.
Almost all the respondents in the Asia Pacific area were optimistic about the impact of proptech, while the biggest funding commitments came from investors in North America.
“Proptechs are using existing and developing technology to nurture new, innovative ideas that enhance operational efficiency, tenant experience, and information flow,” according to Deloitte experts. The survey further shows that 31 percent of respondents would invest in proptech companies, when asked about the preferred modes of engaging with these companies. Another 26 percent would partner with proptech companies and 20 percent mentioned participation or launches in accelerators. Less than 20 percent said they would use the proptechs’ services.
The innovative products and services pitched by entrepreneurs in this field cover a wide array of demands.
For instance, OpenBox promises automation services to real estate companies on a robots-as-a-service (RaaS) model. One of its functions allows automated data transfer from budgeting to valuation, saving hours of manual work. Another company called Leverton uses AI to extract and structure relevant information from complicated documents related to purchase-sale, lease, title insurance, and mortgage transactions, according to a Deloitte report. Elsewhere, an Israeli startup called SiteAware provides a drone surveillance service. Companies can use it to take digital images of construction sites to confirm that development plans are on track. Other digital platforms in the property sector aim to help homeowners sell their property faster.
Then there is the office sharing startup WeWork, which is also included in the proptech category, with a valuation of USD 47 billion. The company had more than 400,000 members who rented desks in 100 cities at the end of 2018. WeWork is also analyzing an investment in Romania, according to media reports.
“We can offer you everything from a desk to an office to headquarters or an entire fleet of buildings,” said Artie Minson, the company’s president and chief financial officer, according to Wall Street Journal. Locally, the coworking players have been welcomed by large office developers who leased generous spaces in the city center. Currently, the operators of flexible workspaces are clients of conventional office developers.
WeWork has been operational for 9 years and recorded a loss of USD 1.93 billion last year as it continued to invest heavily in expansion. Its biggest backer is SoftBank Group and its tech-focused Vision Fund. At the start of 2019, the fund invested another USD 2 billion in the startup.
“WeWork is the next Alibaba,” said SoftBank CEO Masayoshi Son. He says this startup is not just a renter of office space, but also “something completely new that uses technology to build and network communities.”