Guest article: The future is only possible with PropTechs, but which ones?

'We are experiencing a challenging phase for the entire property sector in Europe.

The reason for this is not only the macroeconomic conditions, but also the increased regulatory hurdles. This crisis once again emphasises the need for digital transformation in an industry that is notoriously reluctant to innovate. Therefore, instead of lamenting the crisis unilaterally, the industry should use it as an opportunity to drive forward new strategies.

PropTech companies epitomise this change. However, due to the current economic climate, many PropTech companies in Europe, especially young start-ups, are encountering challenges. Some have even had to file for insolvency. Now is precisely the time to prove their sustainable added value. The chances of this are good.

Past experience shows: Innovation alone is not enough to survive in a volatile market. Established PropTech players have also had to prove their adaptability in past periods of consolidation and show that they are capable of surviving protracted sales cycles. In the present circumstances, their advantage lies not only in their knowledge of the industry and its recurring problems, but also in their experience in adapting to, for example, ESG and other regulatory requirements.

Start-ups appear to have an advantage, at least at first glance, if they can get to market quickly with disruptive ideas. However, in the property industry in particular, start-ups face the usual challenge of raising sufficient capital as well as establishing themselves in a traditionally slow-moving and highly regulated market. Innovation alone is not enough without sound market knowledge.

The integration of very young PropTechs is also often associated with uncertainties for users. One key question is how to handle sensitive data. For example, what happens to the data that has been painstakingly entered into the system for a specific building or an entire portfolio if the company does not survive the next financing round? Can I then still access it or do I have to start the whole process all over again with another company?

These are justified concerns. Established companies have a clear advantage here, as they can convince with an established track record, long-term prospects and stability. Significant progress has been made in the long-term availability of data in particular. Until recently, it was common practice to store post-transaction data on USB sticks and transfer it manually. Today, however, secure, cloud-based solutions enable transaction data to be stored in online archives.

This modern approach not only significantly increases security, but also reduces costs. The legal retention obligations for data are immense but can be fulfilled efficiently with appropriate cloud solutions. Furthermore, data relating to a building, for example, can be easily retrieved by authorised users. Another advantage of this technology is the significant reduction in electronic waste helping to minimise environmental impact Around 1.5 mln sticks can be saved every year by using cloud-based storage solutions.

So, what the industry really doesn't need now is further uncertainty. This is precisely why stable PropTech companies play a key role in driving the digital transformation forward. They offer the right tools that can lead to significant simplification in areas such as ESG compliance and process optimisation.

At the same time, they are revitalising competition and challenging companies that refuse to continuously evolve their business models. This dynamic is crucial in order to adapt the industry to changing requirements and ensure its long-term resilience. But it will not work without the full support of the industry. There needs to be a strategic rethink that leads to a meaningful desire to innovate. This is the only way to master future challenges in the interaction between established and young companies.'