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How The New Kids On The Block Compare With Traditional Real Estate Companies

Levent Künzi is Co-Founder and CEO of Properti, a tech-driven real estate company dedicated to modernizing residential real estate in Europe

According to CB Insights, global investment in proptech businesses and real estate startups reached $8.9 billion USD in 2019, far above the $1.7 billion in investment just four years earlier. This global trend of investing in startups in the real estate sector has also been visible in Switzerland. With the country’s real estate sector traditionally rather slow to change, these startups are still the new kids on the block. However, thousands of them are already sparking a revolution in the country’s economy. With an additional boost from the pandemic in 2020 — which brought digital ways of working to the front — startups are set to grow in Switzerland.

In the real estate sector, proptech startups have been mushrooming out of the ground. They are competing with more traditional realtors for space in the market. By using modern technological tools, it appears that proptechs are already ahead in the race. They appear to be able to tackle all aspects of the ecosystem of housing.

The 2020 SwissPropTech Survey

Newest developments in Switzerland show that even large companies such as the UBS Bank are jumping aboard the trend toward proptech. The 2020 SwissPropTech Survey (download required) by Credit Suisse and SwissPropTech shows what I find to be the most important developments in the real estate sector:

• Proptech startups in Switzerland have the chance to solve issues brought up by Covid-19.

• They have a role in changing and disrupting the value chain in the property sector.

• By focusing on scalability, many proptechs are thinking big, going for sustainable and long-term changes.

• Tentative numbers show that the Covid-19 lockdown has not affected Swiss proptech startups as badly as other industries.

• There are new opportunities arising from the effects of the 2020 pandemic.

The agility and flexibility of proptech startups is crucial to their success. With their clean slate, they focus on improving processes and making them cheaper and more efficient. This has led to the steady growth of startups over the last five years and contributed to proptech companies covering every part of the real estate value chain.

At the same time, innovative new businesses like UBS Bank’s Key4 platform show that they are learning from the new kids on the block. In this case, by offering digital mortgage platforms and related services cut out for digital natives. This development shows that proptech is gaining a foothold in the country.

The Playing Field For Proptechs In Switzerland

Real estate management seems to offer the most room for improvement. Asset management, property management and facility management can easily be simplified by using software and the internet of things. This also applies to the marketing of properties, which is increasingly done through VR tours and intelligent databases. CRM software is also an important contribution that many startups contribute to the real estate sector.

Many proptech startups active in Switzerland today have been founded after 2013. More than a third of the proptech sector participated in a recent survey (download required), showing that while many are established companies, a number were founded just in the last three years. It’s not difficult to see that companies hit by Covid-19 were likely to be in their initial market research phase or in the process of scaling up their efforts.

Despite their novelty, proptech start-ups can benefit from these factors:

• Agility

• Small and efficient teams

• Willingness to take risks

• Use of new technologies

• Many venture capitalists and business angels in Switzerland

At the same time, there are some challenges for the new kids on the playground. Many older, more established firms may see them as tech guys with too little experience in the real world. This leads to missed business opportunities. By inviting team members with more experience into the startup, proptechs can counteract this challenge and become more respected in Switzerland.

Blockchain As An Opportunity

Blockchain offers a good example of how many new startups use modern technology to their advantage. While countless older companies may be lost when it comes to this term, proptechs are already using blockchain to enable online contract signing, online mortgage ordering and other transactions. Especially in times of Covid-19, this has created a significant advantage for startups.

By paving the way for the trend away from paper transactions and toward secure online transactions with blockchain software, small startups can fill an important gap in the market. While blockchain is still struggling to gain trust from more industries, proptech and other startups already work hard on implementing blockchain in their businesses. Therefore, they are positioning themselves as experts for when the time comes to switch from a more traditional business style to virtual technologies.

Currently, Switzerland is adapting its legislation step by step in order to make blockchain for various financial transactions. The real estate sector is one of the first sectors that will use this technology since it allows for big transactions to be conducted easily and from a distance if required. Thus, startups can contribute to making the real estate sector future-proof. Soon, they will not be the new kids on the block anymore, but indeed the only kids knowledgeable enough to offer blockchain and other smart solutions.

More than 425 companies from the crypto industry are already running in the Swiss town of Zug. Breaking through, as “crypto-valley” in 2014, it has incubated many companies vested in blockchain technology. With more than 800 total companies in Switzerland, the industry that supports blockchain technology is alive and well.

The Future Of The New Kids On The Block In Switzerland

Proptech startups in Switzerland before Covid-19 experienced growth thanks to increased investment year after year. While the pandemic presents challenges, the flexibility of startups combined with the urgent digital needs within the real estate industry combine to provide a solid playing field for proptech businesses. Despite Switzerland’s traditional real estate market, the industry is ready for modernization. I’ve seen this in my own company as it’s grown in its first year to a team of 38 employees helping close on acquisitions and sales.

Step by step, the country is changing. This applies to the real estate sector, too. Soon, the new kids on the block will have won the competition against more traditional companies, making the digital revolution of the ecosystem of housing unavoidable.


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Source: Forbes – Business

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