Proptech (2024)

1. Green pressure opens the door for startups

   Regulators want new spaces to make neutral contributions to the environment by running efficiently, using limited energy and wasting little or no water.

   It’s not just new builds: the continents’ ageing building stock is in dire need of a sustainability overhaul. That will require innovations in building materials, data, sensors and environmental performance analytics.

   Investors are beginning to see the long term play: VC Pi Labs, for example, says 80% of its investments in 2023 had an ESG component.

2. Is landlord software making renters' lives worse?

   As house prices continue to rocket out of reach, especially for the young, many of us are stuck with renting.

   You’ll find few who’ll speak glowingly about landlords. However, startups are attempting to make life better for renters, such as apps aimed at improving the tenant’s customer experience. But are they actually any good?

   No, according to a report last year from US-based TechEquity Collaborative. The report calls out opaque tenant screening software for exhibiting bias; some of these same tools are the subject of discrimination lawsuits.

   TechEquity is asking for more transparency from the proptech sector. It released an “ethical practice guide” calling on companies to test products for unequal outcomes, minimise the data they collect and provide opportunities for consumers to appeal decisions.

3. Building flex

   The pandemic was the start of a wave of office space “matchmaker” platforms, which help workers book desks at coworking sites. There are so many of these startups in Europe and because they’re all mostly doing the same thing, we should expect to see consolidation or some falling away.

   But property managers are under pressure to find ways to extract more value from spaces. Vacant offices in city centres are disastrous for them, so it’s little surprise to see appeals to public authorities for more flexibility around how commercial spaces are used. Could a corporate auditorium by day be repurposed into a cinema by night, for example?

   It’s an opening for startups — like Norway’s Laiout and London-based Bright Spaces — that help real estate businesses digitally visualise and market their spaces.

4. First coworking, next cohousing

   Europe’s ageing population will force the emergence of new retirement-friendly housing models.

   Another likely thing we’ll see is the arrival of modern co-living arrangements for people who can’t afford to own their own houses. This isa particularly tricky model, as the idea to some suggests hippy commune-like living.

   For every new thing that the tech community comes up with, there’s also plenty of old wine in fresh bottles: anyone not keen on commune living could perhaps be swayed by a glossily rebranded “cohouse”.

5. How long will ‘wait and see’ last?

   The fastest pace of interest-rate hikes in a generation has been brutal for property, with borrowing rates rising and building values falling steeply. Transactions have ground to a halt with sellers unwilling to offload buildings at knockdown prices.

   Could 2024 be a turning point? Rates are unlikely to return to previous lows any time soon but will fall this year as recession clouds form over Europe (the UK has already fallen into economic decline). This should give real estate investors at least some clarity on where borrowing costs stand.

Who early stage startups are up against