Innovation: how proptech are transforming the real estate sector

Over the past decade, the real estate sector has seen the emergence of numerous start-ups, known as proptech companies. How can we define them?

Philippe Boyer: Proptech companies are companies that use technological innovations to offer new products or services in the real estate sector. They are involved in a wide variety of areas, from building design to operation and the occupant experience. Their clients are primarily real estate players (property companies, developers, agencies, etc.).

How can their development be explained?

Philippe Boyer: Between 2015 and 2019, we witnessed a real boom in proptech linked to several cumulative phenomena. First, the dynamics of the real estate world backed by easy financing. We experienced a certain euphoria – sometimes excessive – among players in the sector towards them.

Then there was the emergence of new technologies, which undoubtedly played a positive role: these young companies relied on mature or emerging technologies (the Internet of Things, geolocation, predictive algorithms, digital modelling of buildings, etc.) to offer new services. At the same time, interest in digital solutions has also grown among all players in the real estate chain, rightly considering that real estate, in all its components, would become increasingly digitised and ‘datafied’ with the use of data.

Finally, and as a final factor favouring the emergence of these new players, we should mention the environmental issue, which has become widely accepted. Many proptech companies have developed with the value proposition that new technologies can help decarbonise real estate, for example by working on the control and detailed knowledge of buildings’ energy consumption.

Is the proptech sector still enjoying favourable conditions today?

Philippe Boyer: In recent years, the economic climate has been less favourable. The real estate world has had to face many challenges (rising energy costs, a less favourable financial context, etc.) and a crisis that is not yet over. All of this has also had a knock-on effect on start-ups in our industry. However, in very promising sectors such as climate change adaptation and AI applied to real estate (for example, to automate energy assessments and plan building renovations), we have seen the emergence of new proptech companies, proving that technology can bring real added value to players in the sector on very specific issues.

What relationships has Covivio forged with these proptech companies?

Philippe Boyer: Very early on, Covivio entered into targeted collaborations with proptech companies on specific operational issues: indoor air quality control, energy consumption metrology and management, electric vehicle charging station management, lift maintenance and diversification of catering services within buildings.

Today, in the three countries where the Group operates — France, Germany and Italy — Covivio collaborates with around 30 proptech companies. In each case, our approach is simple and pragmatic: the service or product offered must meet a clearly identified operational need and integrate effectively into the daily activities of our teams and our assets.

What solutions have been deployed thanks to these partnerships?

Philippe Boyer: For example, we work with WeMaintain, which maintains the lifts in our office buildings. It is a proptech company that focuses heavily on predictive machine maintenance.

Another example is our collaboration with Witco, a digital platform for offices that centralises space reservations (offices, rooms), occupant services (catering, mobility, events, maintenance) and communication with the manager or owner in a single application. Several Covivio and Wellio buildings, our managed office subsidiary, and therefore thousands of users, use Witco on a daily basis, which can be downloaded to a smartphone.

What are the conditions for a successful partnership with these start-ups?

Philippe Boyer: As in any partnership, the first condition for success is a phase of mutual acculturation. The decision-making times, operating methods and constraints of a large company are, by their very nature, not those of a start-up, and this asymmetry must be understood and accepted by both parties.

The relationship must therefore be built on a dual requirement of mutual knowledge and trust: the proptech company must understand the specificities of our assets, our business lines and our organisation, and adapt its solutions to these operational realities; at the same time, we must anticipate the conditions for integrating these technologies into our processes and business practices.

This alignment work, which is often underestimated, is nevertheless crucial. It requires time, education and a real ability to learn to work together, to ‘tame’ each other, in order to transform a promising technological innovation into sustainable value creation.

What are the major challenges that proptech will focus on in the coming years?

Philippe Boyer: Many proptech companies that have emerged in recent years, some of them successfully, have specialised in environmental issues, from an increasingly technological perspective, aided by the Internet of Things, data and, in recent years, AI. These start-ups are working on energy management, building resilience, the development of the circular economy and the use of recycled or bio-based materials in construction and renovation projects.

These issues are becoming increasingly important for all players in the real estate sector and, as a result, represent key themes for the future for these start-ups. We should also mention the deployment of AI and, with it, the progress made in the exploitation of big data and everything related to virtual reality. While we have known how to design buildings using these latest technologies for at least ten to fifteen years, what is new is that AI will enable us to go beyond the simple design phase to support the entire life cycle of buildings, from optimising construction choices to real-time management of their operation, refining their uses, energy performance, maintenance and, more broadly, the user experience.