The PropTech industry is modernising the real estate sector through digital technology, with $20.41 billion (+19%) invested, according to the PropTech barometer initiated by the Principality of Monaco and ESCP Business School.
A significant wave of innovation in the real estate sector, PropTech (“property technology”), i.e. technology serving real estate and the quality of life of its inhabitants, is experiencing a solid acceleration in 2022 with $20.41 billion invested and 4,693 investors listed in 67 countries worldwide (+ 3 countries).
Most of these investors come from somewhere other than the real estate sector. This is what the latest annual PropTech barometer, initiated by ESCP Business School and the Principality of Monaco, reveals for the third consecutive year.
How Smart Real Estate Is Changing Monaco
Smart real estate in Monaco, a sector of excellence serving Monegasque residents.
The Principality of Monaco is at the forefront of innovation. It is one of the key players in the development of PropTech, in particular, to generate economic growth in the territory in a sector that accounts for over 20% of GDP.
For example, the Principality has developed the Digital Twin 3D of the entire region, a strategic management and decision-making tool to carry out territorial reforms and simulate the impacts of future transformations.
This 3D digital twin was presented at the 2022 World Expo in Dubai and is a testament to Monaco’s real estate expertise.
Monaco is also the first country in the world to have a Sovereign Cloud. As real estate is closely linked to the use of data, this infrastructure is a significant asset for the Principality.
Frédéric Genta, Interministerial Delegate for Attractiveness and Digital Transition:
“Real estate has always been a key asset for the Monegasque economy. In a changing world, we want to build on our strengths to make the Monegasque economy a perfect blend of tradition and modernity.”
“In a growing PropTech economy in Europe, as the barometer proves, Monaco must be a central hub.”
Financialisation Of The Market: 20.41 Billion Dollars Of Investment In 2022
The annual barometer shows a significant acceleration in investment, with approximately $20.41 billion invested over 2021-2022.
The total number of investors has also increased from 2021, with three influential investors each investing more than €1 billion: SoftBank, Vision Fund and Capital One.
The other general trend in the PropTech industry is the financialization of the market, with the number of M&A deals increasing from 53 in 2020 to 73 in 2022.
The PropTech industry appears resilient to the threat of a recession in 2023. PropTech investment firms are expected to absorb market impacts during the 2022-2023 business cycle.
Jaime Luque, professor of real estate at ESCP Business School, explains, “Even though our models account for expected slowdowns in the global economy, we expect investment in the PropTech sector to remain quite strong, especially among firms in the ‘building’ category of the PropTech industry.”
“Furthermore, when comparing our data to projections from fiscal 2019 and 2018, we still see significant investment growth over a two- to three-year period.”
The U.S. still dominates global investments with the emergence of new countries and players, including India and South Korea.
While the United States accounts for most investments, three other countries are also emerging for companies that have received assets in the PropTech industry: France, South Korea and India.
India is the highest-ranked country in the PropTech industry outside of North America and Europe’s established and developed markets.
By 2030, there will be a $1 trillion PropTech industry in India, up from $120 billion in 2017 due to its immense real estate market potential.
South Korea also attracted more than $1.5 billion over the 2021-2022 year, ranking second behind the U.S., while the country did not appear in the ranking last year.
The PropTech Industry In The EU: A Growing Sector
In Europe, the U.K. leads the market with the second-largest concentration of PropTech companies worldwide, followed by Germany, France and Spain.
Several innovations in European PropTech companies will continue to shape the future. Companies like Stonal, Colonies, Deepki and Luko in France are leading the way in developing a sustainable future for real estate.
Investors should expect to see a continued trend of increased innovation, especially in Western Continental Europe.
Robin Rivation, CEO of Stonal, Co-Founder of Real Estech, says:
“The Proptech industry in Europe is snowballing with a record number of mergers and acquisitions (M&A) in recent years. This trend is driven by the desire to address the fragmented nature of the market resulting from a multitude of companies attempting to dominate national sectors.”
“The major players have pushed the boundaries of technology and are leveraging the power of mergers and acquisitions to reach broader customer bases and expand their services.”
“For example, in 2020, U.K. real estate technology company ZPG was acquired by U.S. private equity firm Silver Lake for $2.2 billion, the largest deal to date in the European Proptech sector.”
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