Swiss PropTechs remains unimpressed by the interest rate turnaround
Building a customer base as biggest challenge
Pubisher
SwissPropTech GmbH
Hinterdorfstrasse 21 8314 Kyburg
T 044 931 20 24
info@swissproptech.ch www.swissproptech.ch
Data collection
Survey of companies in the PropTech sector in Switzerland between March and May 2024. Sent to around 420 companies. 54 people took part in the survey, the response rate was 12,9 %.
Market research institute
AmPuls Market Research AG
Am Mattenhof 16a 6010 Kriens
T 041 612 14 14
info@ampuls.ch www.ampuls.ch
Layout and proofreading graustufen gmbh, graustufen.ch
Inhalt
2………… Management…Summary
3………… Marktentwicklung
3………… Marktentwicklung
2………… Management…Summary
13……… Trends…&…KI
3………… Market…trends
9………… Finanzierung…&…Herausforderungen
2………… Management…summary
3………… Marktentwicklung
9………… Finanzierung…&…Herausforderungen
9………… Financing…&…challenges
13……… Trends…&…KI
13……… Trends…&…AI
13……… Trends…&…KI
16……… SwissPropTech:…Membervorteile
2………… Management…Summary
16……… SwissPropTech:…Membervorteile Mit freundlicher Unterstützung von:
Mit freundlicher Unterstützung von:
Mit freundlicher Unterstützung von:
With the kind support of:
16……… SwissPropTech:…Member…benefits
9………… Finanzierung…&…Herausforderungen
16……… SwissPropTech:…Membervorteile
Management Summary
You are now holding the seventh edition of the SwissPropTech Report in your hands. This annual survey was initiated in 2017 and is used to determine the status quo and take the pulse of the Swiss PropTech scene. This year, the report is published by SwissPropTech. We would like to express our sincere thanks to the responsible people at UBS (formerly Credit Suisse), who have been responsible for this publication in previous years.
This year‘s edition shows a fundamentally positive picture of the Swiss PropTech scene. Local players are unimpressed by the interest rate turnaround and seem to be growing unstoppably. This positive attitude is reflected in the creative approaches and ideas with which Swiss PropTechs are entering the market. PropTechs continue to be founded and new offerings launched. In addition, the PropTech
Lars Sommerer Managing Director SwissPropTech
companies surveyed will continue to hire new staff in 2024. However, it is not only staff numbers that are growing, but also actual and forecast sales.
However, the path to a digital future is not free of obstacles. PropTech companies will have to face a number of challenges. This applies in particular to the recruitment of key people for their own team. This insight was already gained from last year‘s study. What is surprising, however, is that financing the companies has become less urgent, which we interpret as evidence of a strong and self-confident Swiss PropTech scene.
This bold and confident attitude also reflects the mega topic of artificial intelligence (AI). Swiss PropTechs agree that AI will be a booster for their company. The benefits of this
new technology are primarily expected to be internal to the company, for example in the form of increased efficiency and automation.
The SwissPropTech Report provides players in the Swiss real estate industry with information from inside the PropTech scene. We are confident that it will provide a valuable basis for business decisions relating to digitalization and new technologies. Swiss PropTechs will continue to make waves in the future and accompany the Swiss real estate and construction industry on its path to a successful and digital future.
I hope you enjoy reading this report and would like to thank all the PropTechs and experts who contributed to our SwissPropTech Report 2024.
429 active Swiss PropTechs
Market trends
85 % of PropTechs expect an increase in sales in the current year
46 % of PropTechs are still in the scaling phase
+ 47 % more companies in the category
Construction
Swiss PropTechs remain unimpressed by the interest rate turnaround
The Swiss PropTech scene is bucking the general mood in the Swiss real estate and construction industry and is climbing to a new high with 429 active Swiss PropTechs (as of July 2024, Figure 1). The growth trend line has only known one direction for years: upwards.
Growth in Germany too
But the Swiss PropTech scene is not alone in this. A look beyond Switzerland‘s borders confirms these findings. The German PropTech scene recorded growth of 14 % last year, reaching a total of 895 active PropTech start-ups in Germany (source: Blackprint, 2023). This figure may be higher in absolute terms than that of Switzerland. However, if the number of PropTechs in Germany is set in relation to the number of inhabitants of a country, there is a large relative advantage over Germany.
Digitization of the industry is lagging behind
However, although the number of Swiss PropTechs has increased again, digitalization as a whole is still lagging behind: the Swiss real estate and construction industry‘s digitalization score is between 4 and 5 out of 10 (source: Digital Real Estate, Pom+, 2024).
Break-even mostly not yet reached
A closer look at the various phases in which the Swiss PropTech scene finds itself confirms that the majority of Swiss PropTechs are still in the scaling phase. This phase accounts for around 46 % of all responses. A look at the expansion plans of Swiss PropTechs confirms the implicit assumption that downstream expansion is not yet a high priority for most PropTechs. The majority of the Swiss PropTech scene is therefore still dependent on financing and has not yet reached break-even. The impression is that good ideas and interesting solutions are perhaps not being marketed and sold enough.
Increase in construction and smart building
A look at the Swiss PropTech categories (Figure 2) shows that the category «Services» continues to lead the field by some distance. It includes all service providers that cannot be assigned to any of the other categories. In second place and with growth of 47 % compared to the previous year is the category «Construction», closely followed by the category «Smart Building», which has grown by 19 %. Both categories have seen strong growth recently. This may also be
due to general conditions that have changed over time. For example, it is only a matter of time before the EU‘s taxonomy targets also affect the Swiss real estate and construction industry. The category with the largest recorded decline is «Rental», which has shrunk by 19 %. One possible reason for this decline is the fact that some prominent PropTechs in this category no longer exist.
Figure 1: Development of PropTech companies 2016 until 2024
Source: proptechnews.ch
Figure 2: Development of the PropTech categories 2023 / 2024
Source: proptechnews.ch
Regional structure: Expansion within Switzerland is preferred
Swiss PropTechs prefer to expand in their own country rather than internationally. Even though some Swiss PropTechs have already had a taste of international business, the majority continue to operate nationally and are expanding into other cantons or language regions (Figure 3).
More than half of all Swiss PropTechs are already active in another language area. Even if there were concrete growth potential, national demand is currently sufficient to keep Swiss PropTechs busy.
Proximity to universities is crucial
Geographically speaking, Zurich is the beating heart of the Swiss PropTech scene: the majority of all PropTechs are based here. The region around Lausanne ranks a distant second. One reason for these two top positions may be the proximity to the two national technical universities and the good universities in general. This centralization can also be seen in other nearby countries. In Austria, for example, there is a strong
focus on the capital city of Vienna: around 70 % of all PropTechs have their headquarters in the imperial city (source: Austrian PropTech Report, 2023). The situation is similar in Germany: just under 25 % of German PropTechs are based in Berlin and around 20 % in Bavaria (source: Blackprint PropTech Report, 2023).
Figure 3: Current Operating Environment
4: Number of employees in the next 12 months
Will the number of employees in the next 12 months increase or decrease? Please provide an estimation in % (full time equivalent). Statistical basis: 2024 n = 54
5: Recruiting staff – most needed skills
Regarding recruiting staff, what skills are needed the most? Shown is the frequency of the skill ranked first. Statistical basis: 2024 n = 54
Figure
Figure
Recruiting: Swiss PropTechs are actively looking for personnel
Swiss PropTechs are keen to hire and, according to their own statements, the majority would like to employ more staff in the next six months (Figure 4). Nevertheless, they are cautious when it comes to staff increases and are keeping personnel growth at low percentages. This may also have to do with the high fixed costs associated with a high headcount. It is clear that the demand for specialists will continue to rise and PropTechs will not be exempt from this.
Are Swiss PropTechs in love with technology?
The question about the most soughtafter skills in Swiss PropTechs leaves no room for doubt (Figure 5): Programming skills and technological skills in general are the most soughtafter. This suggests that the priorities of Swiss PropTechs lie more in technological product development and less in actively selling their own solution. This statement contrasts directly with the most frequently cited challenges of Swiss PropTechs: 28 % of Swiss PropTechs state that expanding the customer base is the biggest
entrepreneurial challenge. In view of this, it might be appropriate to focus employee skills more on marketing and sales.
«Many thanks to the editors for sticking with it - it‘s great that the SwissPropTech Report is being continued. The report is the only annual publication that deals exclusively with PropTechs. Together with the weekly articles on proptechnews.ch and the SwissPropTech Bi-Weekly, it provides the real estate industry and PropTechs with guidance in the jungle of digitalization. The Swiss PropTech scene is large and robust, even in comparison with other countries. This is confirmed by the entries on the PropTech Map Switzerland. However, growth is flattening out in traditional areas such as process automation and virtual worlds. In general, PropTech risks being overtaken by new areas such as ClimateTech – ESG sends its regards. This would have a particularly negative impact on further financing rounds. The money simply flows to where the wind is blowing - or where the ambitions are greater, for example in terms of internationalization.»
Heinz M. Schwyter, PropTech News
Financing & challenges
70 % of PropTechs were able to increase their sales last year
More than half of all Swiss PropTechs are financed from their own resources
28 % of PropTechs see building a customer base as the biggest challenge
Surprisingly positive picture for financing
The Swiss PropTech scene is tending to generate more turnover than a year ago. This is also reflected in the characteristics of the individual categories into which turnover is divided. However, the majority of all PropTechs are still generating modest turnover and have not yet reached a phase in which they have actually broken even. They are therefore still «burning money». Half of Swiss PropTechs do not generate more than CHF 500 000 in revenue per year. Only a few Swiss PropTechs were able to set themselves apart and confirm their leading position. These are individual outliers that are characterized either by strong organic growth, successful investor acquisition and / or a low cost structure. Nevertheless, 70 % of Swiss PropTechs were able to increase their turnover compared to 2023 (Figure 6). The forecast for revenue development for the current year is particularly encouraging: no fewer than 85 % expect revenue to be higher than in 2023 (Figure 7).
Swiss PropTechs are mostly… self-sustaining
For the majority of Swiss PropTechs, the challenge of «financing» has become less important than in previous years (Figure 7). A comparison of this statement with turnover and sources of financing reveals a surprisingly positive picture in terms of financing. For example, a significant proportion
state that they are financed either with their own funds or with the founders‘ original capital pools. Strategic investors and venture capitalists make up a smaller proportion. The situation is different for planned expansions: Here, a larger proportion of Swiss PropTechs rely on cooperation with venture capitalists.
«PropTechs have become more mature and professional. They are still very selfconfident, but no longer as playful and in love with their product as they were in the early days. This was necessary because PropTechs have to hold their own in a fast-moving and competitive environment, grow quickly and still keep an eye on costs at all times. They therefore deserve my full respect for every year they survive. Not all of them succeed equally well, as the disappearance of some well-known names proves. Today, PropTech managers are increasingly at the helm rather than CTOs. The focus must be on customer benefit and nothing else, because the shakeout is not yet over and money is no longer so loose. However, the proximity to PropTechs is worthwhile for every real estate company, because it is mainly PropTechs that consistently use new technologies and provide innovative solutions.»
How has the annual revenue 2023 changed compared to 2022? Please provide an estimation in %. Statistical basis: 2024 n = 54, 2023: n = 56; * not asked in 2024; right: increased n = 39, decreased n = 1
7: Expected sales development for 2024
How do you expect sales to develop in 2024 compared to 2023? Please provide an estimation in %.
Statistical basis: 2024 n = 54, 2023 n = 55
Figure
Figure
Challenges: Specialists and building up the customer base
Although the majority of Swiss PropTech companies are optimistic, they face numerous challenges. The biggest challenge identified by respondents is building up a customer base (Figure 8). For many, this is not happening fast enough. Recruiting key personnel for the company (management staff, C-level representatives) is also a major challenge. The shortage of skilled workers was already an issue in the previous year and was viewed critically; however, the problem
has become even more acute due to market developments in the past year. According to the Swiss PropTechs themselves, the focus when hiring new staff is primarily on people with technological skills. For example, experts in application development are in high demand. The search for new capital or new financing only appears in fifth place among the greatest challenges and in this sense has become less important for some PropTechs.
Furthermore, Swiss PropTechs will continue to struggle in 2024 with the fact that customers have long decision-making cycles and it takes months, if not years, for a solution to be implemented. In addition, standardized solutions often have to be adapted to individual customer requirements, which requires additional financial and human resources.
Enlarge client base (sales) fast enough
Recruiting key people for the core team
Long decision-making processes at our customers
Adaption of own product to individual customer needs at reasonable cost
Secure financing
Lack of awareness of our solution in the market
Adapt organisation to fast growth
Tough competitors
Other
Which main challenges are you currently facing? Shown is the frequency of the main challenge ranked first.
Statistical basis: 2024 n = 54
Figure 8: Main challenges
Trends & AI
79 %
see the benefits of AI primarily in internal optimizations
Lack of expertise
is given as the main reason why AI is not yet used in their own company
54 %
see AI as the biggest current trend in the PropTech scene
Artificial intelligence is also affecting the Swiss PropTech scene
The buzzword of the moment, artificial intelligence (AI), has now also arrived in the Swiss PropTech scene. More than 50 % of survey participants state that AI is currently the biggest trend in their market (Figure 9). With regard to this finding, it should be taken into account that the focus of recruitment is on programmers and technologically skilled personnel, as shown above. AI has even overtaken the strong trend towards sustainability. This may also be due to the fact that ESG is still understood in very different and less standardized ways. It is still unclear how big an impact AI will have on future personnel requirements. At best, the tense personnel situation will ease somewhat thanks to this technology. By contrast, the «metaverse» trend that was highly touted a few years ago has now completely disappeared from the consciousness of the Swiss PropTech scene.
Potential in internal optimizations
PropTechs are currently very optimistic about the use of AI. The majority of survey participants believe that artificial intelligence will primarily improve the efficiency of companies. (Figure 11).
The effects of AI are therefore primarily seen in the internal area; in particular, it is hoped that it will optimize internal processes. Solutions for customers, on the other hand, are still hardly seen. Accordingly, AI is still rarely used to offer customer solutions.
«Artificial intelligence (AI) has been with us for some time now. Advanced maturity and connectivity of models have facilitated access to users and expanded the potential for use cases. PropTechs play an important role in the transformation of services in the construction and real estate industry using AI and can turn existing business models upside down. Quick wins can be found in efficiency improvements, complex analytics and customer engagement. Establishing sustainable AI customer solutions is likely to take some time. In addition to the challenge of data availability, other factors are decisive for success. In addition to the quantitative benefits, these are the security, transparency, integrity and reliability of the AI solution. A key driver of success for PropTechs with AI offerings is therefore the relationship of trust with customers.»
Beat Seger, Chief Digital Officer KPMG Switzerland
Figure 9: Trends in PropTech
Artificial Intelligence (AI)
Sustainability / ESG
Decarbonization
Big data
Metaverse
Other
No answer
What are the biggest trends in PropTech right now? Shown is the frequency of the biggest trend ranked first. Statistical basis: 2024 n = 54
10: Challenges of AI
Lack of knowledge
Finding the right technology supplier
Difficulties in financing
Low customer acceptance
Other
None
Not using AI
No answer
What challenges do you face when using AI in your business? Shown is the frequency of the challenge ranked first. Statistical basis: 2024 n = 54
Figure
11: Opportunity of AI
Increased efficiency
Higher customer satisfaction
Lower costs
Improved corporate image
Higher employee satisfaction
Other
No answer
How do you plan on benefiting from AI? Shown is the frequency of the opportunity ranked first.
Statistical basis: 2024 n = 54
Machine replacement
Technological dependability
Pressure to higher financial investments
Ethical and/or moral problems
Employee resistance
Other
No answer
How could AI threaten your business? Shown is the frequency of the threat ranked first.
Figure
Figure 12: Threats of AI
SwissPropTech: Member benefits
Visibility
Networking
Events, Meetups, Conventions, Exhibitions
Insights
Logo Presence, Media Presence, Database Entry, Social Media Presence
