Impact of COVID-19 Varies Across Proptech Verticals, Finds New Swiss Studyby Fintechnews Switzerland June 26, 2020
The negative fallout of COVID-19 and the resulting lockdown have spread to Swiss proptech companies, with those in the categories of asset management, construction, services, and, in some cases, marketplaces, being the most affected, according to a new study produced by industry trade group Swiss Proptech in partnership with Credit Suisse. By contrast, proptech companies in software/CRM/data management, finance, and flow-plans/augmented and virtual reality/3D (AR/VR/3R) were less affected, the study found.
Like other industries, proptech companies in Switzerland are not immune to the COVID-19 crisis, and the impact of the pandemic on the sector has been reflected on the measures taken by companies in the space.
Results from a survey conducted as part of the research found that 94% of Swiss proptech companies responded to the pandemic in one way or another. Only a tiny minority were forced to take drastic measures such as implementing redundancies (1%), while 5% resorted to freezing recruitment and 8% introduced short-time working. A similar number also initiated cost-cutting measures (8%).
In addition, several Swiss proptech companies turned to fundraising to help them weather the crisis, with 11% having applied for a federal guaranteed bank loan, 5% raising additional funding, and 10% strengthening communication with investors.
But the most widely resorted to of all measures were the intensification of selling activities (16%), intensified communication with employees (14%), and a greater focus on core clients (13%), the survey found.
With the sales of many proptech services and products slowing down and new projects being delayed, many young, cash-strapped proptech startups will not make it through, the report says, and unsurprisingly, the more matured ones with solid client base are likely to feel the repercussions of the pandemic less directly.
That being said, if there is one thing that the pandemic has made clear is that digitalization will be key for the Swiss real estate industry to remain relevant and stay competitive. Proptech companies are well-placed to benefit from this as incumbents will continue ramping up their digital capabilities, the research says.
Proptech companies that help real estate players work in a location-independent way are already directly benefiting from the lockdown, with fields that have gained traction recently including digital document managers, providers of digital access systems, and providers of digital communication solutions between landlords and tenants, the report says. Another area expected to witness growth is smart building technologies and AR/VR solutions.
Despite the initial shock and contraction inflicted by COVID-19, the surveyed proptech companies view the pandemic much more as an opportunity than as a risk, with not a single of them classifying COVID-19 as a major risk.
The Swiss proptech ecosystem
Switzerland is currently home to about 175 proptech companies, with 44% of them located in Zurich, according to the Proptech Switzerland Innovation Index 2020, released earlier this month by Proptech Switzerland.
Construction, property management and marketplace are the three top verticals, with 54% of all Swiss proptech companies operating in these sectors.
Locatee is a workplace analytics solution that transforms complex data into space utilization insight, and Archilyse operates a service for holistically analyzing and evaluating urban and architectural situations.