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Real Estate Proptech: how much the Real Estate market is growing

Real Estate Proptech is more than just the innovative rib of the Real Estate industry: with its unstoppable growth, we can now say that the driving force of the sector lies in this phenomenon. If technological and digital tools are literally redesigning the sector’s operations on one hand, on the other they are also redefining its contours and dimensions: Real Estate is expanding, exploring new frontiers, creating new jobs and bringing unprecedented potential into play. Italy is not lagging behind in this scenario: in Europe, it is one of those countries in which Real Estate Proptech is growing the most.  

Real Estate Proptech: a market overview  

Thanks to Real Estate Proptech, the numbers of the Real Estate market are showing a promising positive dynamic. According to the 2022 edition of the Italian Proptech Monitor (IPM), published by the Italian Proptech Network of the Politecnico di Milano, the numbers are particularly encouraging.  

In fact, 2022 has seen an increase in the number of innovative start-ups in the sector: if in 2021, there were just 184 realities mapped, in 2022 the share has risen to 273, with a 33% increase compared to the year before. And while Milan is confirmed as the capital of Proptech for the fifth year in a row, Professional Services and Real Estate Fintech are the real protagonists of the boom.  

Broadening our gaze, the global Proptech Unissu community reveals that the number of companies in the sector, present in 66 countries, has exceeded 10,000, with a turnover expected to grow from $18.2 billion in 2022 to $85 billion in 2032. 

Despite the significant estimated growth in China (23.7%) and Japan (26.5%), the United States is currently the leader in the Proptech market, with nearly 2,300 companies engaged in the sector (59.7%). In Europe (27.2%), dominance is contested between the United Kingdom (780 companies) and the DACH region (Germany, Austria, and Switzerland) with 515 active companies. France (494), Spain (334), and Benelux (269) also contribute significantly. The volumes of the European market are experiencing strong and rapid growth, with Spain leading the way, recording investments of $2.5 billion in 2022. 

Furthermore, Europe is witnessing significantly larger funding rounds and a growing interest in the market from international investors and venture capitalists. 

Real Estate Proptech: focus on Italian start-ups  

Returning to the Italian market, the details of the startups surveyed in Italy reveal that they are mostly small businesses (80% employing a maximum of 20 people), generally young (composed of 72% belonging to Gen-Y and Gen-Z), primarily focused on the collection and processing of big data through the use of advanced technologies. 

Among these, the most commonly used technologies are Big Data Analytics, Data Science, and Data Sharing, closely followed by Artificial Intelligence (AI), Machine Learning, and the Internet of Things (IoT). There is also a significant rise in the use of virtual reality (VR) and augmented reality (AR) to offer virtual tours of properties, replacing the traditional in-person visits – a revolution, especially for those investing in Real Estate and needing to optimize time and resources. According to a 2023 Matterport survey, virtual tours lead to positive negotiations and result in contract signings 31% faster, selling up to 9% more. 

In terms of sub-segments, Italy’s Real Estate Proptech focuses its attention mainly on Real Estate services, whilst still immature in terms of confidence with the harder services of Real Estate – i.e. construction, robotics and materials. This is also due to a certain lack of demand.  

A growing attention, within this framework, concerns the green transition. It is no coincidence that many of the most innovative applications of Real Estate Proptech concern precisely the use of technology to facilitate the transformation towards a more sustainable ecosystem. Data, for example, is invaluable in assessing the functionality of a building and has a high capacity to correct or modify distortions at source.  

In addition, their processing, combined with the technological advantages of cloud computing, makes it possible to more efficiently manage the environmental impact and sustainability of buildings as a whole: all unprecedented potential on which Proptech Real Estate models are working hard, with effects that in the future could benefit the entire Real Estate market.  

Still a local vision  

Interrogated for the Italian Proptech Monitor 2022 regarding their expansion strategies, 70% of Italian startups reveal that their current focus is limited to consolidating their presence in the national market. 

This confirms the trend already noted in the 2022 IPM report, where Italian entities mostly operate with a predominantly local vision. However, internationalization aspirations seem tangible: 19% state that they have planned to expand their activities in Northern Europe, 28% in Central Europe, and 22% in Southern Europe. Meanwhile, 16% are looking at other countries worldwide, while only 9% admit to not having planned any expansion strategy. 

Ecosystem: this is where the challenge of Italian Real Estate Proptech lies 

Italian Proptech Real Estate with the wind in its sails, then? The numbers say yes, but analysis reveals that challenges remain. While the Real Estate market is being boosted by the new lifeblood of innovative entrepreneurship, the development of the ecosystem is still (partially) on hold. A significant gap, considering a more mature environment – in terms of culture – is able to guarantee the conditions to support the full digital transformation of Real Estate.  

Highlighting the widespread cultural backwardness are the start-ups themselves, which have repeatedly pointed out how difficult it is to receive funding and economic interest from large national players in Italy. The reasons are certainly to be found in a lack of propensity for innovation on the part of Real Estate operators, but also in the lack of digital awareness in the sector.  

Last but not least, the weakness of the ecosystem, which today represents the most pressing challenge involving the Real Estate Proptech and, consequently, the entire Real Estate market.