The New Challenge in the Real Estate Sector
There is a rapidly spreading new buzz on the real estate market: proptech. The Budapest Proptech Forum conference had a high interest which proves that we have to seriously consider this subject. The Cresa leaders participated at the conference and they reflect on this topic.
How much does the market understand what proptech is?
Valter Kalaus: This is a hot topic now for tenants, developers and landlords. Everybody is trying to understand what it means exactly for them, when and how much it would influence and change their areas in the near future. For most is not crystal clear yet what kind of applications and new technology-driven solutions exist and how these could benefit them. The conference provided a platform to discuss these topics and the various different views.
How Cresa can help clients with proptech?
Valter Kalaus: At Cresa we are prepared for this new challenge. We help our clients to navigate and find the potential right solution among the various proptech options available. After understanding their specific needs we propose available and suitable options and tools, based on international innovation examples. It is important to propose solutions that fit our clients’ business goals and interest the best way. Using the right proptech tools in the workplace can clearly help to be more attractive to employees – and the new generation is demanding this – but too much of it can easily backfire.
How open is the Hungarian market to this innovation?
Valter Kalaus: I think Hungary is somewhat behind compared to other mature, mostly Western European markets, but we can definitely feel the wind already. People want to know more and more about proptech in general and about the various available options. We are still in the learning phase, but the interest is growing fast. Proptech will definitely play an important role in the real estate sector, it cannot be ignored. The Hungarian market generally is price sensitive, therefore the price-tag can play an important role in the selection process of the desired solution. It seems, however, that we will need another year or two until the various proptech solutions will be commonly used on the Hungarian real estate market.
What was new on the Budapest Proptech Forum conference?
Péter Takács: Proptech is a buzzword – the market players are trying to discover what they could use property technology for in their respective field so that it benefits them. From the presentations it was clear that there are advanced efforts in all areas but there are not many solid solutions yet that can be widely adopted. Proptech can certainly have a significant impact on our sector, however property is a long term investment product, and we do not yet see its direct impact. But if we consider how the internet and mobile phones changed all aspects of our lives, proptech can be a similar milestone, and even if concrete cannot be digitised, the property sector needs to adopt tech solutions.
How does Cresa help clients with proptech?
Péter Takács: We follow the trends, new proptech products and services, we test them from our clients point of view, so that we can deliver the best solutions that fit their business interests and objectives. We introduce all the interesting new solutions to our clients, and often they turn to us whether a certain product, or solution would be beneficial for them. Up till now companies have been mainly interested in increasing operations effectiveness and to optimise cost, and only recently they have started moving towards creating a more attractive and efficient workplace environment. We believe that only those proptech solutions will be successful that will service both these areas.
What are companies interested in?
Péter Takács: Most of the clients are very much return-on-investment oriented, therefore proptech solutions will need to demonstrate solid ROI track record numbers in order for customers to engage with them, especially if they promise optimizing property costs. However we see more openness towards proptech solutions related to the workforce, because the value of competent and loyal workforce has increased significantly and as HR costs are still higher than property related costs, a lower return in investment in the prior represents more significant effect on the latter. And we are happy to see that HR managers who previously failed to successfully lobby with top management regarding workplace improvements are now more successful because ownership and management both understand that investing in the workforce is a must, and as they produce their added value in the office environment it is more important now how the workplace supports them, and this is where proptech can help the most.
Is proptech more advanced in the hospitality sector?
Péter Takács: Ultimately the hotel business is also a real estate business, however the internet and technology brought noticeable impact and simplified searching, booking and paying for a room earlier than in other property businesses. Leasing or buying an office for hundreds of people is a much higher value transaction and a more complex process than booking a weekend trip, however good proptech solutions should help in simplifying this complexity. Serviced and co-working offices show good examples, especially since not only startups and freelancers are using them but also larger corporations – exactly because the providers have standardised their offering enough to make searching, booking and paying more simple.
How long can be the protech learning phase?
Péter Takács: The learning phase is probably long, but it also depends on an organisation’s agility. If you are good with things staying as they are and do not invest now, and do not try new things, you save on the short term but you could fall behind in the long term. So it could take years, but it can also happen that a developer, an investor, a tenant or an advisor will bring a new solution tomorrow which gets adopted widely and will spread quickly. One thing is for sure: an attitude change is needed. In my opinion everybody will soon realise, that it is better if you try to develop or test new technology solutions, instead of waiting for everything to change by itself and hope this to be good for you. If we compare the learning curve to that in the hospitality sector then everybody should engage with technology as quickly as possible because in the world of hotels if you did not act or react quickly enough you lost significant competitive advantage. You don’t want that to happen to you now.