Lina Svaldenienė
A real estate startup is a company providing targeted services to real estate and related (construction, housing and commercial building management, building maintenance) sectors, whose essential feature is innovation. When the usual solutions in the real estate industry do not work, startups approach the issue in a new way and apply high technologies to solve it.
More than 50 proptech companies
„Since the real estate sector is relatively inert, slow to move in and adopt innovations, a start-up can be a catalyst that would speed up the progress,“ says Mindaugas Statulevičius, president of the Lithuanian Real Estate Development Association (LNTPA).
There are quite a few progressive real estate companies in the Baltic countries, as well as in Lithuania alone. Five years ago, the association began to bring together Lithuanian, Latvian and Estonian companies interested in real estate technologies under the umbrella of Proptech Baltic. After gathering the companies together, the map of the Baltic States’ real estate technology has become clearer: today more than fifty proptech startups are identified in the region and their number is gradually growing.
Human work will be replaced by technology
Technological RE companies can be divided into at least six categories according to the field of activity:
- technologies of market monitoring and analysis;
- technologies to promote sales;
- financing platforms;
- building management technologies;
- construction and planning tools;
- transport and parking solutions.
„In the future, these main six segments in which our startups operate should be filled with practical solutions dictated by robotics. We see a lot of investment in this area around the world: 3D printers are enabled, robots build buildings, robots clean or paint building facades. Where human labor is expensive or work is insecure, technology can do it more accurately and safely“, foresees M. Statulevičius.
Fintech and proptech
When looking forward, it is more likely that the success of companies in labor-intensive business industries such as real estate will be determined by technological progress. Industries that have already experienced a breakthrough are integrating with those that are still technologically developing. For example, the combination of fintech and proptech creates real estate financing platforms, several of which operate extremely successfully in Lithuania. The biggest Lithuanian startups that have offered strong financing/investment platforms to the market are Profitus, Rontgen, and Estate Guru, registered in Estonia but operating in Lithuania. The Lithuanian company „Numai“ helps to buy housing while renting it – a form of financing that helps to buy an apartment gradually.
Next to the main players of the Baltic countries, new ones are continuously appearing: for example, „Inrento“. It is a platform that allows private investors to earn from other rental properties – people finance the purchase of properties for rent. „This startup is showing pretty good returns, outpacing even current inflation at 16 percent and more. – says M. Statulevičius. „Lithuanians seem quite strong in the financing category, both in Lithuania and in the Baltic countries.“
Live emotion is irreplaceable
Technological progress affects various fields: not only financing, but also planning, architectural works, building management – in the long run, these processes will require less and less human resources.
Lithuanian proptech startups „Planner 5D“ employed artificial intelligence for planning, the company „ID3D“ also applied artificial intelligence to optimize housing layout and architecture solutions. In Latvia, a startup called „Giraffe visual“ works in this field.
Artificial intelligence is extremely important for the real estate industry. Algorithms are able to select a real estate project for a person according to his needs, according to his condition, his financial capabilities, according to his lifestyle and the city where he wants to live. If the AI has worked successfully, the user is offered an affordable, suitable and favorable project.
Although there is a trend towards purchasing buildings in the digital space in a user-friendly way, by tailoring the purchase according to personal needs, we must not forget that houses are a phenomenon inseparable from emotions.
„You have to see and feel the place, go there, get to know the company that will build you a house, because that requires a credit of trust. In the near future, we will not hand over everything to a robot or a computer. Should everything from choosing a plot to moving into a house take place on a virtual platform? Whatever the answer is, the sense of place and the emotion of love must not be lost. Digital tools help, but do not replace this process at all“, thinks the president of the association.
Theoretically, it would be possible to implement the fully digital purchase of housing: the tools to buy a plot, conclude a notary transaction remotely, register the property in the register, add signatures, design a structure on a specific plot already exist. But the full process still needs some time to be put together smoothly.
Startup success: attracting traditional business
Only units from tens of thousands of startups are skyrocketing and becoming unicorns. It’s no secret that most startups naturally die. „A start-up has an idea, but often does not have a team, because it does not attract specialists to help it grow that idea. It does not attract funding, so it lives on its own funds, stewing in its own juice. Thus, startup finds itself in a restrictive and unfavorable position for growth“, – the president of LNTPA mentions the difficulties of startups.
Although it is not easy, some of the new technological companies are successful – the startup survives for more than three years, receives funding, and attracts the interest of traditional business.
There are many examples: „Vilnius Project Map“, which started as a community initiative, became the market monitoring platform Citify in 2018. The real estate analytics platform „Citinow“, which entered the finals of Startup Lithuania’s startup battle in May, replaces long-known platforms such as aruodas.lt. Lithuanian start-up „Tiltus“ helps the home buyer, simplifies the home purchase process, „Topbroker“ makes the life of brokers easier by offering management software for sales, customer and project data. Serfy, a strong Lithuanian company, offers task management software for the professionals of building maintenance. “Pingin”, which has also attracted the attention of investors, has created a smart service for developers renting business centers and co-working spaces. The Estonian start-up „Moderan“, which also operates in Lithuania, also offers software for commercial real estate management.
Contech and proptech
Contech and proptech are like sisters: they are both part of the same building economy, it’s just that contech is applied at the design, modeling and construction stage, including the financial aspects, like preparing estimates.
Contech prepares the building, makes it as smart as possible at the construction stage, while proptech takes over the buildings at the next stage: applies technological solutions for the sale, management, and maintenance of the project. The more precisely the project is prepared for digitalization, the easier it is for service providers to take over its management and maintenance.