THEMA ARTIKEL
LOGISTICS & MANUFACTURING
MAGAZINE FOR EXECUTIVES & DECISION MAKERS
Innovation is combination — by Prof. Rudy Aernoudt
PROPTECH WILL ROCK THE REAL ESTATE WORLD Proptech? Never heard about it. Well, this is definitely going to change. Just like fintech, proptech is an acronym describing a movement whereby new technologies lead to new opportunities for the ‘property’ sector. Let’s dig into this new phenomenon, today relatively marginal, but with a huge potential to become mainstream and with a certainty that it will rock the real estate world.
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chumpeter defined innovation as combination. Proptech is an example as it combines real estate with new technologies such as artificial intelligence, virtual reality, internet of things, big data and blockchain. The technology can span software (property portals), hardware (such as the sensor business), materials (such as the solar bricks replacing the solar panels) or manufacturing (such as the 3 D printing). The combination makes the real estate smarter. Hence, we could speak about smart estate. We can distinguish five subcategories of propTech: Invest & Finance, Design & Build, Market & Transact, Manage & Operate and Live & Work. Besides the technological issue, proptech is often based on the collaborative economy. Use is more important than ownership and the community prevails over the individual. Why should I own a car if I can use one at any time? Why should I buy a bike, even an electric bike, when I can rent one on any street corner? By the same philosophy, why should I own real estate when I can simply use it? Why should I pay for real estate when I don’t use it? Empty offices rarely used become increasingly a cost that can be avoided. For the giants of the real estate business who think that proptech is only a gadget for starters, let me again refer to Schumpeter. Innovation, he claims, is a process of creative destruction. Creation of the new goes along with destruction of existing models. So, the question for the real
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estate sector is not if (or if not) to get involved in the proptech scene, but when and how; as a leader or as a follower. In the latter case, it may even be as part of a survival strategy. Big business Today proptech is already big business: the investment to be deployed in proptech worldwide, before 2025 is estimated at 165 billion dollars. As proptech is at the crossroads of digital and green, they might be one of the biggest beneficiaries of Europe’s’ Green Deal. Some of the proptech companies have already become unicorns, meaning that they are valued at more than one billion dollars. Let’s have a look at some major examples: Lijaina is a Chinese brokerage service founded on cloud-based big-data analytics and artificial intelligence. It also applies virtual reality and augmented reality. This completely alters the business model. While a classical real estate agency collects data and provides it to customers, charging money for each closed deal (generally 3%), Lianjia uses a selling room whereby the owner/seller - when entrusting its property - receives the promise of a sale within a certain period of time. If Lianjia fails to deliver the sale within that period, it returns the property to the seller along with the payment of liquidated damages. Created in 2001, Lianjia controls 40 per cent of transactions in the rent and sale market across China and is estimated at 8 billion. WeWork, a platform offering workspace solutions based on shared office space, started in
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