swiss proptech study 2020
COVID-19: Boom or bust for PropTechs?
The coronavirus pandemic has been something of a double-edged sword for PropTech companies: Over the long term, they are likely to benefit from greater awareness of digital solutions, but, in the short term, they are threatened by project delays, difficulty in acquiring clients, and financing bottlenecks.
The coronavirus crisis has also hurt PropTechs
While COVID-19 will go down in history as the event that finally forced the world to embrace digitalization, it does not automatically mean that the providers of digital solutions will be among the winners. The PropTech sector is facing a severe economic crisis although many PropTechs are still in their infancy.

Those active in the B2B business have seen their clients – the real estate companies – strongly preoccupied by crisis management over the last few weeks and months, and therefore presumably much less receptive to projects and ideas from the PropTech world. Nevertheless, only a tiny minority have been forced to take drastic measures, such as implementing redundancies or harsh cost-cutting measures.

In terms of demand, the pandemic has had very different repercussions for the PropTech sector. Overall 41% report a decline in demand figures, but only in very few cases does this exceed the level of 30% (Fig. 1). By contrast, 32% of the PropTechs surveyed report an increase in demand. Digital marketplaces and PropTechs from the software/CRM/data management category in particular have benefited from higher demand.
Source: Credit Suisse Swiss PropTech Survey 2020 (N = 88)
Due to the absence of events, trade fairs, and conferences, it has become much more difficult for PropTechs to raise their profiles.
More mature PropTechs better placed
PropTechs that have already managed to build up a solid client base and can boast a number of projects already under way are likely to feel the consequences of the pandemic less directly than companies that are heavily reliant on the acquisition of additional clients, pilot project launches, and network expansion.

The pandemic presented a serious challenge to both management and the operating units of many real estate companies, leaving little time to engage with future themes.

As a result, the acquisition of new clients can currently be quite a challenge. Generally speaking, it's more difficult to build up new relationships in an era of social distancing. Furthermore, due to the absence of events, trade fairs, and conferences, it has become much more difficult for PropTechs to raise their profiles.
Long-term opportunities outweigh the short-term risks
However, not all PropTechs find themselves in such a challenging situation. One of the lessons learned from the shutdown is that many more things must be digitalized in the future. In the long term, this could unleash considerable stimuli for PropTechs.

Hence the PropTechs surveyed view the pandemic much more as an opportunity than as a risk. Their assessment is supported by the survey
finding that the real estate industry has become more open to PropTech solutions.

Compared to last year's survey, interest in PropTech solutions appears to have increased, with 11% of PropTechs (compared to 7% the previous year) discerning a strong increase in receptiveness, and 70% (compared to 56% the previous year) recording a "certain" degree of receptiveness to PropTech solutions (Fig. 2).
Source: Credit Suisse Swiss PropTech Survey 2020 (N = 53) Survey 2019 (N = 55)
Due to the coronavirus crisis, investors have started to review their portfolios to establish whether they were fit for the future.
Will COVID-19 lead to consolidation?
COVID-19 hit the PropTech sector at a time when the wave of founding euphoria had already receded and given way to a certain degree of consolidation. IPO failures and certain corrections in the speed of growth of well-known pioneers in their field are visible signs that more rationality has found its way into the sector.

Due to the coronavirus crisis, investors have started to review their portfolios to establish whether they were fit for the future. This could lead them to be more selective going forward and to refocus their attention on PropTechs offering the greatest opportunities. Opinions on whether COVID-19 will lead to consolidation are divided, not only in the PropTech sector overall, but also within certain PropTech categories.

This is particularly apparent in the marketplaces and smart building/IoT areas. In both of these categories, as well as in the software/CRM/data management area, PropTechs believe consolidation is more likely than not.

In any case, the big challenge for PropTech will be to ensure their survival until the additional demand for digital solutions can fully develop again.

You will find a summary of the Swiss PropTech Study* 2020 here.

* This study is brought to you by swiss real estate innovation network SwissPropTech and its research partner Credit Suisse. Since 2018 the Credit Suisse Asset Management is also proud sponsor of the annual SwissPropTech Day taking place in Zurich/Switzerland.
If you like more information and insights on the latest Swiss PropTech Study 2020 feel free to contact us personally:

Fredy Hasenmaile (Credit Suisse) - fredy.hasenmaile@credit-suisse.com
Mario Facchinetti (SwissPropTech) - info@swissproptech.ch