Latin America’s promising future for proptech

latin america’s promising future for proptech
latin america’s promising future for proptech

Contxto – Latin America has witnessed very interesting trends in the real estate industry over the past few years.

Institutional capital has shown a soaring appetite for this asset class across the region, especially in Brazil, Mexico and Colombia. These countries showcase all sorts of strategies, from core long-term investments to more opportunistic transactions.

This kind of dynamism has driven the integration of new technologies to an industry that has appeared somewhat stagnant to the exogenous effects of technology and venture capital.

These factors have already gained momentum in other so-called traditional businesses yet now expected to benefit the real estate industry as well. Proptech, as it’s called, can create new value for real estate in many ways – from construction to development and brokerage.

I talked to Pablo Errejón, Director of View Accelerator, a corporate accelerator focused on technologically-driven real estate startups. He shared with me some valuable insights about the region’s current environment for proptech firms.

Mr. Errejón sees big opportunities in Mexico, Chile and Argentina, where his venture capital fund, TyA Ventures, has already deployed some capital.

Global Real Estate firms, such as Jones Lang Lasalle, have launched their own alternative investment funds, seeking to strategically invest in this growing industry. JLL Spark Global Venture Fund raised US$100 million to invest in real estate-centric technology startups.

Here are some of the main areas where Latin American proptech players can disrupt the value chain:

Virtual Reality for Construction, Project Management, and Tenant Improvements

Working for JLL, one of the world’s leading commercial real estate firms, I’ve personally seen a variety of regional startups starting to offer high-quality services for project managers and construction companies.

Virtual reality technology allows users to visualize CADs or prospective projects in 3D-format without having to physically visit the property. This is being leveraged by a variety of architecture and furniture firms to give their clients a high-detail perspective of their proposals.

An example of a virtual reality startup in the proptech vertical is the Mexican firm Holii. The company is using 3D technology to show customers real estate and construction requirements.

Brokerage and Investments

Brokerage is one of the main income sources for real estate intermediaries.

Being one of the most competitive industries of the supply chain, players are starting to adopt different technologies to gain ground and market share. The main areas where brokers are using new technologies are in the way they interact with the clients and data management on the properties they promote.

Investing through digital platforms is becoming more and more common in the real estate sphere. Companies like the Mexican marketplace startup 100Ladrillos are making investments in fixed assets easier and more liquidated.

Not only for investing or buying properties, but some startups are improving the way people find and rent accommodation. Homie makes finding a property for rental and closing the deal easier for both parties: landlords and tenants.

Building Administration and Payment Methods

Building administration can be completely disrupted using new technologies. A Chilean startup innovating in this part of the value chain is Comunidad Feliz, a company focused on making building management more efficient. It allows users to better manage accounting and monitor expenses through a digital platform.

What’s Next?

Latin America’s real estate has always been a hot market.

Local investors have an undeniable appetite for tangible goods and fixed assets, such as buildings and land. Nonetheless, as other industries start to see the effects of technological disruption, entrepreneur and forward-looking investors are setting the pace for the property industry, as well.

Technology will definitely change the way things are done for the better. It will clearly favor entrepreneurs and investors, however, the real beneficiaries are the final consumers: the landlords and tenants.

Keep your eyes wide open for these exciting and disruptive changes to the property industry.

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