Proptech Reduces Risk Increases Value

Restrictions for innovation in real estate

The real estate sector is not known as an innovative sector. The growth in labour productivity in the

sector has stagnated for a long time and, in comparison to other sectors, there is hardly any investment in R&D.

Important explanations are:

• Long operating life of real estate: which means that new technologies are slow to replace the old.

• Capital intensive: This makes entry difficult for starting entrepreneurs with good ideas.

• Intransparent market: Each real estate object is unique. This means that there is less direct competition on the real estate market, which reduces the drive to innovate.

New technologies increase innovation in the real estate market...

New technologies (such as sensors, big data and data analytics) enable the real estate market to innovate more. Under the name PropTech, there are new technological applications to improve the use, sale and hire of buildings and make this more efficient. That’s why investments in PropTech companies increased considerably in recent years and the expectation is that these will further increase in the coming years.

...this really makes the market more transparent...

PropTech really makes real estate more transparent. Further development of digital market platforms for real estate will enable market parties to find each other more easily, resulting in lower transaction costs. Data analytics also makes it easier to determine the value of buildings.

....and results in improved occupancy and additional

services through Smart Buildings Considerable steps can also be taken to digitis

e the administrative process. Occupancy in offices can, for instance, be further optimised and service provision improved (such as indicating via an app where free workstations are still available in an office).

Opportunity for higher value through PropTech

PropTech can ultimately increase the value of real estate through:

• Higher rental returns because the tenant is prepared to pay a higher price per m2. Efficient occupancy means that fewer m2s are needed, the quality improves and Smart Buildings result in lower energy costs.

• Lower risk for real estate investors. Big data improves real estate valuation. What’s more, the liquidity of real estate increases through the further development of platforms.

Finally, Smart Buildings reduce the risk of vacancies, as these buildings are made more attractive to tenants.

Mainly the user benefits

If we look at all the PropTech applications, we can see that it’s mainly users who benefit. A Smart Building better matches their requirements and can better manage the occupancy. Leasing platforms enable shorter leasing periods and lower transaction costs.

Threats and opportunities for real estate agents

The traditional role of real estate agents is most under pressure. Platforms can further digitise and take over this role. Real estate agents can attempt to operate as a platform themselves and digitise transactions.