PropTech

Market analysis report

June 2021
 Contents
1
✦ About Builders
2
✦ Executive summary
3- 16
✦ Report
- Future of living
- Market size
- Market segmentation
- Market needs
- Market timing
- Investment activity
- Competitive landscape
- Key focus trends
- Trend 1 Tenant experience
- Trend 2 Buying & Selling experience
- Trend 3 Space usage
- Trend 4 Data analytics and management
- Trend 5 Omnichannel retail
✦ Contact us
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ABOUT BUILDERS

We maximise human capital by helping

future founders realise their full potential.
Builders is a Rotterdam based B2B SaaS startup studio that empowers
diverse and ambitious individuals to become exceptional tech
entrepreneurs shaping the future of work and living.

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 Executive summary

Thesis
As a result of the pandemic, the way people live and work has fundamentally changed and the real estate industry
needs to adapt to the new paradigm

Context
The pandemic and lockdowns fundamentally a ected the way we live. Suddenly, most people working in white-collar
jobs had to work from home. While the pandemic is coming to the end, some things are here to stay. The current
expectation is that the majority of the workforce will keep some of their WFH privileges even once the pandemic is over.
This puts signi cant pressure on both residential and commercial real estate industry as it has to adapt to this change.
The transformation of the real estate industry will certainly introduce several challenges that could be addressed by the
technology.

Market
The real estate industry represents one of the largest asset classes ($3.6 trillion in 2020 according to Global Real Estate
Market Report 2021), providing a huge market size potential. However, the sector is characteristic for slow adoption of
new technologies which are often not viewed as a key business driver. In addition, over the past decades, high
pro tability in the sector provided only a small incentive to real estate developers and operators to innovate. This pace
of change in real estate is starting to accelerate driven by trends related to remote work, sustainability, and ageing of the
population.

Focus trends
The key trends that are relevant to the studio scope and that o er promising business opportunities are: tenant
experience, buying & selling experience, space usage, data analytics and management, and omnichannel retail.

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 FUTURE OF WORK AND LIVING

The pandemic had a fundamental effect on the way we live and work
and real estate needs to adapt

SHARE OF WORKFORCE THAT WORKS FROM HOME

MULTIPLE DAYS PER WEEK
The future of real estate was thrown into uncertainty by the pandemic, both from its direct e ects on how we live
as well as speeding up pre-existing trends. To understand the future, we must focus on what real estate does for
people. Buildings are not constructed other than to serve people. We want shelter where we live. We need and
want goods and services that are produced or delivered in buildings. We work somewhere—often inside a
7%
building—to buy those goods and services. And we get pleasure or satisfaction from certain activities that take
2019
place in buildings, ranging from shopping malls to gyms. So a look at the future of real estate is simply a look at
how people will live, work, shop, and enjoy life.

The pandemic has changed the way the world operates and that has had a fundamental impact on the real
estate industry. COVID 19 has ushered in a new era of disruption that, ultimately, will shape the fundamentals of
the industry for years to come. There can be no doubt that COVID 19 has brought much uncertainty. But it has
also solidi ed several ongoing trends: the digitization of work; the transformation of physical retail; and the shift
towards environmental, social and governance (ESG) considerations. These trends are expected to have a critical
40 50%
in uence on how real estate markets will fare over the coming years. 2020 2021

PropTech will take a critical role in the industry transition to a future where buildings are sustainable, resilient,
social, liveable, and a ordable. But the technology alone is not su cient to bring signi cant changes to the
industry. Traditional real estate players will need to shape the future of the industry through the thoughtful
integration of technology with the physical space.

25 30%
2022

Gramling et al. (2021), “How E-Commerce Fits into Retail’s Post-Pandemic Future” 3
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MARKET SIZE

The real estate industry represents the largest asset class in the world

WORLD1 On a global level, the growth in the market size is primarily

3.6 tr. USD driven by Asia-Pacific region

EUROPE1
0.7 tr. USD The European region was substantially affected by the pandemic which led
to the reduction in size of traditional real estate segments such as retail

NETHERLANDS2
22.6 bn. USD
The Dutch Real Estate market is characteristic for a focus on the sustainability aspect of
buildings, as a result of governmental regulations and green financing availability

1 Statista (2021), “Value of listed real estate market worldwide in 2020”

2 CBRE (2021), “Real Estate Outlook 2021” 4
 MARKET SEGMENTATION

The real estate sector can be generally segmented into residential and commercial real
estate consisting of several subsegments

KEY MARKET SEGMENTS

Retailers are exploring new ways how to combine

brick-and-mortar and online retail

The pandemic has accelerated the pace of change in the

residential real estate as customers’ demands have changed

ce
Many businesses are likely to nd that they can operate just as
well without the overhead costs associated with owning or
leasing a physical o ce

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 MARKET NEEDS

The Real Estate market is heavily focused on ensuring regulatory compliance and increasing
profitability

Customer The focus of real estate developers and operators on improving

experience customer experience is still a small but quickly emerging field driven by
needs changing customer demands

customisation, communication,
purchase, retention

Cost-e ciency needs Real estate developers and operators prioritise

maximizing cost-efficiency of their buildings
property management, leasing and renting,
asset utilisation

Compliance needs Real estate developers and operators put significant effort into
ensuring compliance with governmental regulations and policies
standards, rules, policies, regulations,
requirements, security and privacy

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MARKET TIMING

The growth in the market is primarily driven by a change in the way people live and
work and digitalization of the industry

KEY REAL ESTATE CHALLENGES ADDRESSED BY PROPTECH

Building management Data management Performance measurement Compliance process

Technology can help in reducing the Real estate developers and operators are Tech could help with gaining a better Real Estate is characteristic for a
amount of manual work that building increasingly looking towards ways how to utilize understanding on how existing assets huge amount of regulations and
management generally requires technology to manage and analyse data are and could be utilized policies that need to be ful lled

REAL ESTATE AND PROPTECH MARKET GROWTH1

70%
62%
54%
53% 51%
46%
42%
35% 32%

18%

3% 3% 4% 3%
0% 1%
0%
2018 2019 2020 2021 2022 2023
Real Estate PropTech

1 MSCI (2021), “Market Size Report on Global Real Estate” 7

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INVESTMENT ACTIVITY

VCs see an opportunity in PropTech providing solutions that address the post
pandemic shift in the way people live and work

TYPES OF VC INVESTMENTS1
Investors
94% of investors believe that Covid-19 will accelerate the adoption Consumer / broker tech
7%
of PropTech while 59% expect a double digits growth in PropTech
Space management and usage
investments over the next year 16% Smart buildings
35%

Deals Finance and investments

20%
Investors are primarily interested in solutions that address
Construction
the shifts caused by the pandemic especially in residential 22%
and retail real estate

NUMBER OF VC DEALS1

600
Future outlook
450
Investors generally expect that the market will
eventually consolidate with a few category leaders 300
coming on top
150

0
2014 2015 2016 2017 2018 2019 2020

1 Raconteur(2021), “Future of PropTech”

Techcrunch (2021), “10 proptech investors see better era for residential and retail after pandemic” 8
 RESIDENTIAL REAL ESTATE LANDSCAPE

Residential tech is primarily oriented around solutions related to property

transactions and property management
Finance a home Close a property
Find a home

Listings & Marketplaces Digital Lenders Property Data & Appraisal

Zillow, Red n, trulia, Opendoor, homesnap Better, LoanSnap, Eave, Neat, Vylla, Lower HouseCanary, CoreLogic, Estated

Title & Escrow

Rental marketplaces Digital Brokers & Lender Lead Gen
Spruce, Qualia, Notarize, Fabrica
Zumper, Radpad, Bungalow, PadSplit Morty, Door, Sindeo, Breezeful, Habito,
Trussle, Bankrate, Digs
Home & Rental Insurance
Tech-Enabled Brokerages
Downpayment Assistance / Equity Hippo, Lemonade, Kin, Matic, Rhino, Jetty
Compass, Triplemint, Side, Flyhomes, Homie, Radius
Unison, Landed, Tangello, EasyKnock, UpEquity
Transaction Management
Agent Tools
Alternative Financing Glide, DocuSign, Preclose
BoomTown, OpCity, Verse, First, Glide, Amitree,
Remine, DocuSign, Real Scout, Matterport Ribbon, Flyhomes, Orchard, Divvy, Board
Manage a property
Sell a home Mortage a home
Maintenance & Improvement
iBuyers Loan Application & Docs HouseCanary, CoreLogic, Estated

Opendoor, Orchard, Zillow, Sundae, Knock Blend, Roostify, Maxwell, Ocrolus, RealKey, Velocify
Rental Management
Loan Origination & Closing HouseCanary, CoreLogic, Estated
Manage a loan
EllieMae, Blend, Tavant, Firstclose, Snapdocs
Liquidity & Re nancing Maintenance & Improvement
Unison, Figure, Noah, EasyKnock HouseCanary, CoreLogic, Estated

Maintenance & Improvement

HouseCanary, CoreLogic, Estated

Wedlake (2020), “Market Map: 180 Real Estate Technology Companies Transforming Today’s Housing Market” 9
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 COMMERCIAL REAL ESTATE COMPETITIVE LANDSCAPE

Commercial tech is increasingly focusing on asset utilization within emerging

categories related to tenant experience
Find a property Evaluate & Finance Manage a property

Listings & Brokerages Property Data & Appraisal Leasing & Asset management
Crexi, LoopNet, CoStar, roofstock, HelloO ce, Spacelist Cherre, Compstak, Bowery, LoftyAI Knock, Aptly, CoStar, Funnel, livly, MeetElise, Doorkee

Broker CRM & Marketing Property management

Transaction underwriting
SlightPlan, Breezeway, Realpage, Proper, Buildium
Buildout, VTS, Reonomy, Chime, Digsy Argus, Spacequant, Prazel, AtlasX

Building automation & IoT

Viewing & Imagery Debt nancing
Iotas, SmartRent, Openpath, Enlighted
Matterport, Hover, GeoCV, REscan PeerStreet, LendingHome, Lev, Fineo, District

Amenities & Tenant Management

Build a property Equity nancing
Envoy, Realpage, Hello Alfred, Space ow
Cadre, Skyline, Fundrise, Republic, Landa
Planning & Coordination
PlanGrid, Rhumbix, Source, Ingenious, Fieldwire Asset Utilization
Transaction management
Juniper Square, Dealpath, Dealius
Construction Co-working & O ce space
wework, Knotel, Spaces, Breather, Room, Industrious
Katerra, Blokable, Prescient, Connect Homes

Co-living & Home sharing

Construction nancing
AirBnB, Sonder, Lyric, Bungalow, Common, Quarters
Built, Rabbet, Briq, Bild, Land Gorilla

Event Space
Convene, Storefront, Bizly

Retail & Industrial utilization

Stord, Flowspace, ShipBob, Uppercase, Storefront

Wedlake (2020), “Market Map: 220+ Technology Companies Reshaping Commercial Real Estate” 10
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 KEY FOCUS TRENDS

Five promising trends within real estate tech were identified that fit the studio scope
and offer relevant business opportunities

Tenant experience Buying & Selling experience Space usage

Both commercial and residential real estate is quickly The process of buying or selling a property is New forms of work and living arrangements in
becoming user experience business and properties need too complex, expensive, and time the post-COVID world will require exible use of
to be designed and operated with this in mind consuming o ce and housing space

Data analytics and management Omnichannel retail

Real-time data gathering from a multitude of sources means Retailers are increasingly exploring the ways to
better asset utilization and property cost-e ciency. Whether combine online and bricks-and-mortar options to
for property management, leasing, customer service and create exceptional customer experience
retention, all areas of real estate will be a ected

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 TREND 1 TENANT EXPERIENCE

Customers' demands and expectations for places they work and live in are rapidly
evolving beyond only providing a physical space

Real Estate customer journey

Pain point Lead generation

- Changing customer demands towards more social and exible living
and more exible o ce life

Negotiation & Selection

Why now Contract agreement

- The pandemic suddenly changed the way people live and work and the
real estate industry is still behind with adapting to this change
Onboarding

Notable companies Experience management

- Space ow - $2.4m raised in Seed, tenant experience app that connects buildings
with their occupiers
- HqO - $60m raised in Series C, end-to-end experience for commercial real estate O boarding
- MonBuilding - App for the improvement of communications, fostering the creation of
a community, and enabling all occupants to have access to all the available services
Post-stay management

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 TREND 2 BUYING & SELLING EXPERIENCE

The process of buying and selling a property is overly complex, expensive,

and time consuming

Seller Buyer
Pain point
Market analysis Contact
- The buying and selling process takes more than 90 days Find comparable listings, establish price, prepare Initial contact, commitment to agent, nancial
- A lot of value is captured by intermediaries listing description, nd agreement with agent quali cations
- Expenses often exceed 10% of property value
Listing Research
Listing on online sites, open houses, showing Market education, view property, write o er with
appointments, advertising agent

Why now
Purchase o er presented to Seller
- Digitalization of the industry provides new opportunities for tech to streamline and
improve buying & selling experience
- Increase in movement of people caused by the pandemic puts more pressure on Negotiation of terms
improving buying and selling experience Agent works as an intermediary

Accepted sales contract

Notable companies
- Opendoor - $1.9bn raised in several funding rounds, online home-selling Administration
service that aims to streamline the sales process down to a few days by Escrow, property disclosures, property
presenting home sellers with an instant, all-cash o er for their property inspections, loan process, title search
- Ribbon - $550m raised in Series A and Series B, enabling home buyers to bid
with cash backing, earn discounts, guarantee a move-in date, and secure
nancing before or after the closing Closing procedures
- Spruce - $60m raised in Series C, title insurance assessment and issuance to receiving cash proceeds, loan funding, title
records, handing keys
reduce the time needed to close a real estate deal

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 TREND 3 SPACE USAGE

Changing customer demands and higher focus on flexibility requires real estate developers
and operators to improve efficiency of their space usage

Pain point
- The process of renting and moving into a new property is too

-
ine cient
Real estate developers and operators often end up with
underutilized assets
30 40%
of o ce space is not occupied on a typical
work day

Why now
- The spread in working from home puts pressure on providing
more exible housing and o ces 5%
of rental apartments are empty

Notable companies
- Common - raised $113m over 4 funding rounds, community-driven residential company that brings

-
community, convenience, and exibility to housing
LiquidSpace - raised $34.5m makes it easy to discover, transact, and manage o ce space on
exible terms and puts the commercial real estate buyer in control
25%
- Basking - AI & WiFi-based workplace occupancy analytics solution for enterprise companies, of warehouse space is not used
enabling real-time attendance monitoring, safety compliance and portfolio optimization insights

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 TREND 4 DATA ANALYTICS AND MANAGEMENT

The potential for utilizing data analytics in real estate is huge while many use cases
are still unexplored

Pain point

36%
- Manual process of collecting and analysing date is costly and time
ine cient
- Data protection policies present additional burden on real estate
operators of real estate operators and developers consider Predictive
analytics and Big data as a number one technology they plan to
further invest in

Why now
- Digitalization of the industry brings up new opportunities to
utilize generated data and identify actionable insights
Big Data bene ts in real estate

Risks reduction
Improved customers’ engagement
Notable companies Accurate appraisals
AI-enabled decision-making process
- Reonomy - raised $127m over 7 funding rounds, providing individuals and companies with
Enhanced marketing strategy
access to property intelligence
Data-driven insurance
- Skyline AI - arti cial intelligence investment manager for commercial real estate
- Enodo Score - evaluates whether upgrades and improvements to an apartment or house
would be rewarded with commensurate rises in property values

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 TREND 5 OMNICHANNEL PRESENCE

Transformation of traditional retail will impose certain requirements on the

real estate industry

Pain point
- Finding ways how to combine brick-and-mortar with online retail to Omnichannel process
create excellent customer experience

Order touch points

Online, order through mobile, telephone,
order at the store

Why now
- The pandemic accelerated transformation of the retail industry
while real estate is still slowly adapting Delivery type
Locker pickup, store pickup, home

Notable companies
Ful lment channels
- Saltbox - co-warehousing for retail
DC to store, store to store, store to locker,
- Shopi - , seamlessly integrating the physical store with digital experiences vendor to store
- Brandbox - o ering digitally native brands a programmatic approach to
open, operate and scale stores as a complement to e-commerce

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 Let’s de ne the next wave
of tech entrepreneurship
Michael van Lier, Founder & MD
michael@[Link]

Medium — LinkedIn — Instagram — @[Link]

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