US Market Entry by European Proptech Companies
Updated June, 2022
One of the recent phenomena in the world of proptech is the burgeoning entry by European companies into the United States market. This may not come as a surprise, because the US market is flourishing right now, making it an ideal place for EU proptech companies to introduce their global solutions.
European companies with unique offerings, that aren’t already covered by US businesses, are doing whatever they can to fill in the gaps. Many of those brands aspire to make themselves into a proptech unicorn in Europe, defined as a start-up company that is privately held and valued at $1 billion or more.
Most of the funding of proptech companies is in the United States, although the United Kingdom, Germany and France are catching up. Getting into the US market is a bold step toward global expansion, and many companies are taking that gamble. The market in the US is currently extremely interested in proptech and many are looking for new solutions.
The Difference Between the US and European Proptech Markets
The United States is the market leader when it comes to proptech, and there are unique differences from Europe. Since Europe is broken up into many countries, planning stages have more complexity to work through. Since Europe has its own issues to work through with proptech and they are distinct from the ones we think about in the US. For example, there are multiple languages and cultural considerations, a variety of legal systems, and different standards that need to be taken into account when building real estate solutions. Although regulations vary by state in the US, markets are more fragmented in Europe. With so many locations with diverse needs, localization has been heavily tested. This experience facilitates expansion into other markets.
Funding is also a different situation in Europe compared to the United States. In the United States, proptech companies can raise 30 times the funding they would in Europe, which is a critical factor in start-up growth and success on a long-term basis. A larger base is looking for proptech in the United States, where it is quickly becoming the norm.
This last factor plays into the reason that European proptech companies are making moves to other locations, specifically the United States. The move toward the US has even sparked initiatives like ESCALAR and the German Proptech Initiative. Although the government and real estate organizations realize that the US offers opportunities, they are encouraging companies to maintain their EU home base.
Changes in Proptech Since COVID-19
There has been major growth in the United States for proptech, despite economic challenges including inflation and rising interest rates. While COVID-19 was a setback, the industry has realized how to take advantage of unmet needs created by this crisis.
The United States is the hub of real estate deals today, with four times the number of Europe. The US is already established as an excellent location for innovative tech startups and has been growing in the real estate sector for several years. According to PropTech Global Trends 2021 Barometer, the top 4 investment origin countries are USA, Japan, UK and Switzerland. The top 4 investment destination countries are USA, Spain, UK and India.
In terms of global proptech investments, Fintech Global ranks New York on top, followed by London, San Francisco, and Berlin. New York City is a global leader that already has ties to the finance and banking sector, as well as an impressive real estate market. Many companies looking to establish satellite offices in the US will likely do so in NYC, Silicon Valley and Austin.
European Proptech Trends Useful for Professionals in the US
As of 2020, the Real Estate Innovations Overview notes several areas where innovation can occur for EU proptech companies. Some of these include innovative construction, digitizing processes, sustainable innovations, 3D mapping and virtual reality, healthy homes and workplaces, flexible workspaces, new methods of funding, and the Internet of Things.
We’ll look at 3 trends that are significant for both the Europe and United States markets.
AI-Supported Data-Based Solutions
All real estate market stakeholders want a source of reliable and accurate market data and analysis. New forms of proptech often incorporate this type of technology through innovative means of data collection and processing. For instance, one tool might offer data analysis based on artificial intelligence to help with brokerage tasks. Another could help insurance providers and financial experts utilize AI to make some tasks easier for real estate managers and investors.
Real estate data and algorithms from various sources can determine precise current rental and market prices for properties at any time. This provides information that is useful when making real estate decisions for your portfolio. In addition, automation can help with administrative tasks that have to be done time after time.
Daily Task Digitalization
A large amount of repetitive work is performed on virtual platforms rather than using physical tools. European proptech companies are focusing on innovative methods to get things accomplished efficiently. For instance, the HqOS app focuses on the management and networking of commercial and office properties. Similar to the technology used in smart homes, apps can focus on the management and networking aspects involved with managing commercial properties.
Some of these tools also make it easier to create smart spaces that tenants want to spend more time in. Adding a digital dimension to real estate is far from new, but adding the perspective from UK proptech authorities could lead to meaningful changes to existing technology. Tenant management and data analysis are key parts of real estate strategy that companies can help with.
Virtual and Digital Processes
Moving to digital and virtual tools, apps, and software can conserve and optimize resources. In addition, it takes into account the way consumers' behavior has changed over the last few years. This includes everything from electronic signatures, to building management, automation and digital property tours. The last is especially crucial in the COVID environment.
Many providers in the EU specialize in the area of virtual and digital processes, since it offers significant benefits for real estate professionals. For example, tools that digitize and virtualize processes make it a cinch for individuals to add properties, complete with videos, photos, and 3D elements, to online platforms. These are often created as smartphone apps that anyone can use in place of expensive equipment.
One app might make it easier to find experienced photographers for a project, and then incorporate AI technology that helps retouch and optimize the images before they appear in a listing.
An Example of What the Future Looks Like for EU Proptech
One recent happening in EU proptech that falls into the move to the United States involves Patrizia Ag. This huge partner for global real estate has created a partnership with the North American venture capital firm, Camber Creek. Its latest fund closed at $155 million and focuses on proptech companies across the leasing, management, development, and construction value chains of real estate.
When Patrizia chose to invest in the United State, it increased its global reach to include the United States, Asia, and Europe. This move into the US market strengthens the company as one of the leading companies in the real estate world, with coverage of many key sectors and locations in proptech.
While the EU has been creating proptech for some time, the market is unique, and they’re working to catch up with the leaders in the US, in terms of revenue and reach. This is just one example of transitioning into a new market that is on fire, and currently offering vast opportunities. For instance, bien’ici offers unique 3D mapping tech to enhance property research experiences. Sensorberg digitizes physical developments in hotels, offices, and other spaces for interactive methods to reserve meeting rooms and manage employees and visitors.
Whether offering tools for real estate research, investment, financing, or building operations, Europe proptech is moving into the United States. Competition is always healthy, with looming partnerships and collaborations in the future.
Final Thoughts
The recent move by European proptech companies into the United States is unprecedented, but has benefits for both European companies and real estate professionals in the US. Top trends in Europe like process digitalization, crowd investing, and AI and data-supported solutions can be sold in a new location for enhanced revenue, access to a new market, and brand recognition.
Companies from across the pond can get their solutions into more hands and a different market than is currently available in Europe. Professionals in the states can make use of tech that might not be available from companies in their home country. Even when the tools are there, European companies create additional options.
As long as the US has a hot real estate market, it’s likely that European companies will continue to market their products and services in the US. This provides more choices for consumers and may lead to competition that pushes the boundaries of technology.
