Innovation and regulation in the age of PropTech
Although the PropTech sector is certainly booming in Europe, fragmentation ad lack of transparency are key challenges affecting the transformation of the industry.
Common standards, strong collaboration and transparency are seen as the way forward to protect the customers' experience and have common rules without hampering innovation and creative ideas, according to experts from the real estate industry, European policy-makers and the tech community speaking at the panel “Innovation & Regulation in the Age of PropTech”, hosted this year by RICS at MIPIM PropTech Europe in Paris.
Europe has a very rich and promising PropTech ecosystem, with almost 3,000 PropTech startups and 15 (multi)national PropTech networks. Those national networks are linking PropTech startups and national real estate corporates to help the sector innovate and ease its digital transformation. At the same time, more and more companies are changing their strategies and are looking for new diverse workforce and talent, with new technical skills and fonctions to become more efficient, sustainable and innovative.
However, compared to other world regions, such as the US and China, there are some important gaps in terms of competitiveness. To date there are 22 PropTech Unicorns (i.e. companies that have been valued by investors at more than one billion dollars): 10 are based in the US, for a valuation of b70$, and 12 are based in China, for a valuation of b25,4$. Whilst many Unicorns have their origins in Europe, they leave the continent as scaling-up is an issue due to fragmentation and lack of standardisation.
According to European Commission's Prof. Rudy Aernoudt speaking at the panel and the new e-book launched by Europe Proptech House Dimistifying PropTech, fragmentation is a barrier. Europe is a rich and diverse region composed of 28 national markets with different languages, skills, legal frameworks, industry standards, processes, …etc. But this also means that technology has to be built differently for different markets, as markets collect, store and share data in different ways.
Furthermore, there is, in Europe, a lack of Venture Capital funds focussed on later stages investments (series B, C, >10m), and more scale-ups are struggling to raise that amount.
Standards versus fragmentation
The PropTech sector needs transparency and trust to take the next steps.
RICS, as well as representatives from the real estate industry and those of the national PropTech hubs integrating the Europe Proptech House initiative are convinced that standarisation can only benefit the digital transformation of the property sector.
As explained by Jan Willem Santing MRICS, Senior Manager Deloitte Real Estate, at MIPIM PropTech, the key to unlock the potential of data in real estate is to have one single source of trusted real estate data throughout the entire life cycle of a building, with a common taxonomy for all.
Regulating the sector with global standards will be crucial to develop the Proptech sector. That’s why it is important European start-ups rise their voice and share their views with the industry. RICS public consultations offer all actors a great opportunity to build new common standards.
representing European PropTech House and the RICS Advisory Board in Poland
Andrew Knight, RICS International Data Standards Director, explained that the ability to understand the factors that drive the quality of real estate assets within and across global markets is of critical importance, and RICS welcomes the opportunity to work with all the PropTech actors to ensure we build global data standards that include all the attributes that need to be captured, verified and shared to make consistent and informed decisions.
"Our main purpose is to set and share global standards to cope with market fragmentation based on good practices and feedback from the industry," commented Andrew. "This is especially unique and crucial to mitigate risk, disparities and enhance benchmarking and transparency of data.”
RICS data standards enable all market participants to produce, receive and exchange data in a common format. It uses xml to produce an xsd schema that defines the architecture and format of the data defined by International Standards and RICS Professional Statements.
Panelists at MIPIM PropTech Europe concluded that the PropTech ecosytem in Europe cannot work in isolation. We need to work together for a common goal. Imagine the potential if each of the 23 national hubs of Europe could be aligned and coordinated, acting to ease the consolidation of the EU PropTech market.
This is why last year in Berlin these 23 associations joined forces and created Europe PropTech House, The Alliance of European PropTech Associations. The organisation funded by the EU wants to break silos and standardise the European PropTech markets for the benefit of the industry and EU citizens.
We’re looking to strengthen our collaboration with key partners, such as Europe PropTech House. We both intend to increase awareness and adoption of technology in the real estate and built environment sectors, bringing trust and benefiting both professionals and the wider market.
RICS Director of Corporate affairs, Europe, and moderator of the panel
As a global organisation we are opening our Tech Affiliate Programme (TAP) to the different players of the PropTech industry, from public to private sector to the different actors of the built environment, whether they represent the ”traditional” real estate and construction sector, to tech providers, investors, etc.
TAP provides an opportunity for companies to build professional profile, networking, shared knowledge but above all promote and use RICS global standards and best practice.
Article sign by Laura Lindberg.Head of Media & Communications, Europe - Brussels, Belgium, RICS
Laura has worked for RICS since 2007 and she is in charge of developing and maintaining a proactive media relations programme to raise the profile and credibility of RICS in continental Europe. She ensures accuracy and consistency of communications in cross-cutting messages to different audiences, provides support in the preparation of material for key delegates and dispenses newsworthy information to media and PR agencies.