Savills Aguirre Newman presents the "PropTech 2019 Report"

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

The PropTech ecosystem

The year 2018 closes with a figure of 238 start-ups dedicated to PropTech in Spain.

The digital transformation experienced by the Spanish real estate sector is reflected in the notable increase in the creation of new start-ups between 2013 and 2018.

In the last six years 174 companies have been created, of which 20 appeared in the last exercise. It supposes an adjustment in the annual average of creation of companies, that in the five previous years it was placed in 30 companies. The saturation of the market, more pronounced in certain categories, has slowed down the appearance of new start-ups.

The maturity of the sector is appreciated by the incorporation of new technologies to the market and the increase of the usability of these in the real estate field, such as virtual reality or the Internet of things (IoT), as well as the implementation of crowdfunding to finance new Projects.

The entrance of these new technologies in the real estate world has changed the perspective of many market processes (access to supply, management, mortgage simulation, etc.), which has favored the creation of more flexible and efficient ways of making of decisions.

Categories and location

By category, the most frequent activities among companies focused on the residential market are marketplaces, management and peer2peer (P2P) or collaborative economy, which covers more than 70% of this sector.

Active start-ups with actions in both the residential and tertiary markets are mainly focused on visual activities (virtual reality and augmented reality), financing, investment and mortgages, IoT and Big Data.

Only 16% is dedicated exclusively to the tertiary sector. The most active categories are framed in marketplaces, management and Big Data.

In terms of location, Madrid is the main focus of the PropTech map in Spain. The capital meets 39%, followed by Barcelona, ​​where 34% is located. Between them, they bring together more than 75% of the country's PropTech activity.

The rest of Spain concentrates 23%, with Valencia, Malaga and Alicante as banners of secondary nuclei. In the last five years, 32 of the new start-ups were created outside Madrid and Barcelona, ​​of which almost 50% were distributed among these three provinces.

On the other hand, the remaining 4% corresponds to companies based outside Spain, but operate in our country.

As for its target segment, PropTechs that only operate in the residential market represent 51% of the total. 33% work in both the residential and tertiary markets, while those that focus exclusively on tertiary segments represent 16%.

Employees

The report also points out that the number of jobs in Spain that derive directly from this sector reaches almost 5,500 jobs at present. By categories, the most workers are marketplaces, with 2,000 employees, followed by P2P and management, with 1,100 and 650 posts, respectively. It is necessary to keep in mind that Idealista, and Spot-a-home, the fastest growing PropTech start-up in Spain, in the category of marketplaces, are those that reach the greatest number of employees.

Evolution of the PropTech sector

The generalization of the use of the Internet in the year 2000 brought with it the creation of eight technological start-ups related to the real estate market. To mention some of the most relevant ones, we will mention the portals of Idealista and Fotocasa, which provided consumers with access to the available real estate product.

These tools were very innovative in their beginnings, and quickly became indispensable in the search of offer for rent or for sale.

Between 2008 and 2012 there was an increase in the supply of services in the real estate sector, as a result of which the P2P (collaborative economy) platforms appeared, such as AirBnB, which increased the diversification. In the same period, Big Data tools emerged in parallel.

In 2013 the popularization of the P2P and Big Data platforms in the market took place and the importance of digital transformation in the real estate sector began to be assumed.

Since 2017, the participation of investment funds, developers, patrimonialists, socimis and consultants in the PropTech ecosystem has been reflected in greater professionalization of the sector. It is no longer about innovating to be different, you have to innovate to survive. They began to forge mergers, acquisitions and collaborations, generating more knowledge and giving greater visibility to the technological change that the sector is ready to lead.

Consolidation of the sector

The Proptech market is showing signs of consolidation. The decrease in the creation of new companies would be directly related to the increase of competition in the market, which has caused, on the one hand, the disappearance of some companies, and on the other the merger or acquisition of others.

The entry into the market of new players is increasingly difficult, especially in categories such as marketplaces, P2P or visual (virtual reality and augmented reality) oriented only to the residential sector.

Perspectives

Analyzing the evolution of PropTech allows us to determine which technologies and solutions will be the ones that will allow us to advance in the digitalization of the real estate sector.

Savills Aguirre Newman foresees that in the next 24 months there will be an important growth in the number of technological companies specialized in the tertiary sector, specifically in P2P and IoT.

Peer2peer companies deserve special mention. It is estimated that 90% of these companies focus on the residential sector.

Everything points to the fact that from 2019-2020 they will open their operating radius to start participating, in the office and retail segments, thanks to the increase of coworking spaces, flexible offices and openings of pop-up stores.

Through this same process, the IoT start-ups will pass, but in a slower way, because in this area large multinational corporations already operate and the level of competitiveness increases when entering.

The consolidation of the PropTech sector will continue to generate interest from investors. The financing rounds of 2018 reached more than 150 million dollars and investment in PropTech in Spain is expected to evolve in parallel with the global market, which is growing exponentially, reaching a total of 20,000 million in 2020.

It should also be noted that foreign capital is becoming more important. In 2018 the largest round of financing of PropTech in Spain - $ 40 million raised by Spotahome - came from a venture capital of Silicon Valley.

Download the full report here.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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