Startups in building and property sector prove their influence, PropTech Germany 2022 finds
Drivers of construction and property sector
Prop-techs are gaining importance throughout the German property market and now have a clear footing on the market, according to the PropTech Germany 2022 study. Startups or grown-ups i.e., more mature new companies, offering technology-based solutions or innovative business models for optimising and digitising procedures are driving both the construction and property industry sectors.
The current study reflects the mood among prop-techs nationwide and offers an analysis of their importance, market position, prospects and success factors for their growth in Germany. A total of 229 prop-techs were surveyed online from March 2021 to March 2022 for this year’s survey.
Increasing degree of maturity: The number of employees has increased from 1 to 5 to 6 to 15 employees, annual turnover has increased significantly, almost 40% of the prop-techs surveyed have an annual turnover of more than € 1 million. Prop-tech solutions are undergoing several measurable further developments. All these combined factors reflect the maturity of such firms.
Optimism dominating mood and future prospects: Around 71.2% of prop-techs generated more new business in the fiscal year 2021. Almost 97% of prop-techs are optimistic about the future and their own development and indicates increased demand on the market.
Sales and marketing as success factors: A good technical product is essential, but is not enough for success on its own. More than 90% of the prop-techs surveyed said various aspects of good sales and customer communication are among the top five factors for success. A strong network, access to the appropriate contact persons and a strong sales team are crucial to penetrating decision-making structures among customers. Good communication and thus reaching the customer and satisfying their needs is key to success.
Venture capital accelerates development: Venture capital enables growth and is needed, for instance, to fund sales and communication activities. Around 80% of all the prop-techs surveyed had used venture capital. Venture capitalists are apparently more willing to invest with 50.7% of all prop-techs seeing a slight to strong increase.
Expansion becoming important growth factor: Prop-techs are expanding rapidly and are active in five different countries on average. Almost 79% of the prop-techs surveyed plan to expand into more country markets in the coming years. And they are also expanding into new product markets, for instance, into environmental, social and governance (ESG) data collection.
ESG as a factor of change and success for prop-tech sector: ESG regulations and changing customer demands e.g., more sustainability, are increasingly impacting digitalisation and innovation in the property sector. Most prop-techs' digital solutions already focus on ESG, which is thus a driver of success. Around 79% of all prop-techs’ solutions lead to more ESG in environmental and social terms. In terms of the latter aspect, emphasis is on comfort, health and user well-being. In terms of governance, prop-techs are focusing on more data transparency. ESG also poses new challenges for the property sector and has led to a change in the way clients are approached and a higher volume of orders, which can be managed through new collaborations and partnerships.
Overall, the mood in the prop-tech scene is good and the outlook is optimistic, according to the study. The relevance, maturity, market penetration and commercial success of PropTechs have increased compared to 2021. The pressure for more sustainability and ESG requirements as well as changing customer needs have led to new business and development opportunities. Prop-techs, in turn, are making a decisive contribution to more sustainability in the construction and property sector and will continue to do so in the future.
The entire study can be found on: https://proptechgermanystudie.de/ or as a PDF here https://proptechgermanystudie.de/wp-content/uploads/2022/07/PropTech-Germany-2022-Studie_final.pdf
PropTech Germany 2022 was published by IIWM of TH Aschaffenburg, brickalize! and blackprintpartners GmbH (blackprint).
