Real Estate Technologies (Russian Market) PropTech Property Technologies

• Main article: IT in real estate
• Digital Technologies in Construction
• BIM technologies (Russian market)

PropTech (from the English Property Technologies - technology in real estate) is a multifaceted phenomenon. It combines all modern innovative technologies and applied solutions in the field of real estate creation and management (transactions related to, real estate investment analysis, construction and design, development, real estate maintenance, etc.).

PropTech startups are developing in two main directions: they offer tools that can help real estate professionals improve their services or increase productivity, or they seek to replace professionals.

2023

Spending on digital real estate solutions in Russia increased by 21% over the year, to 38.8 billion rubles

At the end of 2023, the PropTech market turnover in Russia reached 38.8 billion rubles. This is about 21% more compared to 2022, when the cost of digital solutions in the field of real estate was estimated at 32.1 billion rubles. Industry indicators are presented in the BusinesStat study, the results of which were published at the end of September 2024.

The overview takes into account data on various segments: these are services and solutions for residents, systems for modeling and planning construction processes (BIM-technology), real estate management systems and construction management platforms (construction control and administration). Among the key players in the industry under consideration are named "Tsian Group" (LLC "Ayrieltor," LLC "Tsian," "Cian PLC"), LLC "Sodis Lab," LLC "Unicorn," "LIIS Engineering Solutions," "ASCON," etc.

According to estimates, in 2019, the turnover of the Russian PropTech market amounted to 24.8 billion rubles, showing an increase of 27% compared to the previous year. In 2020, an increase of 18.9% followed - to 29.5 billion rubles, and in 2021 there was an increase of another 14.6% with a final result of 33.8 billion rubles. Market development was supported by high construction rates: in 2019, the total area of ​ ​ commissioned housing increased by 6.2% compared to the previous year, in 2020 - by 0.2%, in 2021 - by 12.7%. Moreover, the COVID-19 pandemic not only did not lead to a decrease in the turnover of the IT solutions market in the field of real estate, but, on the contrary, accelerated the process of introducing new technologies into business processes.

In 2022, the revenue of market participants decreased by 4.8%, which is due to the departure of foreign companies from Russia against the background of a worsening geopolitical situation. The biggest drop was in the BIM segment, where solutions such as Autodesk and AutoCAD were popular. The sanctions of Western countries and a decrease in the purchasing power of Russians also had a negative impact.

However, already in 2023, the industry returned to growth. Rapid recovery was facilitated by the introduction of domestic technologies for all stages of the life cycle of construction facilities. In addition, there are significant opportunities for further expansion, since, according to experts, by the end of 2023, only 21% of developers used information modeling technologies in housing construction.

The growth of the real estate market had a positive impact on PropTech. Many developers and developers have turned to new technologies to accelerate the pace of construction, improve quality and offer better conditions and innovative services, the BusinesStat review said.

Analysts highlight both stimulating and restraining factors. On the one hand, the PropTech market in Russia is developing under the influence of state regulation measures. There is a demand for integrated solutions, projects with the introduction of artificial intelligence are being tested, the popularity of Smart Home services and systems for controlling the progress of construction is growing, unified ecosystems for customers appear along the entire route of working with services - from buying real estate to living. From July 1, 2024, the use of BIM technologies has become mandatory for developers of apartment buildings, and from 2025 it will become mandatory for low-rise construction.

But, on the other hand, many executives remain distrustful of the digitalization of construction and development. The high cost of the product, the labor intensity of implementation and the difficulty of accurately measuring the effect of digitalization act as barriers to a more active expansion of the Russian market.^[1]

Growth of the Russian IT solutions market for construction by 27.8% to 10.96 billion rubles

In 2023, the volume of the Russian IT solutions market for construction reached 10.96 billion rubles. This is 27.8% more than the result of the previous year, as stated in the Smart Ranking study, the results of which were published on March 22, 2024.

It is noted that the rapid growth is associated with the widespread introduction of smart home technologies, as well as the active digitalization of management companies and HOAs. They are increasingly looking to provide residents with a higher level of service and make it easier for them to manage the property. Smart home services, facility management, renovations and rental provision saw the biggest growth in 2023.

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Smart Ranking

According to the results of 2023, the market leader was the IT company Ujin - the developer of a cloud platform for smart buildings and devices [[Internet of things Internet of Things ()|IoT ]]] [[Internet of Things (IoT)|Internet of Things (IoT) for smart housing. The company's revenue in 2023 reached 959.3 million rubles, which is 66.7% more than in the previous year. In second place is the company "," an ASCON engineering developer, ON technological partner in the digitalization of industry and construction: its revenue was recorded at 750 million rubles. The project company closes the top three: according We-On to Smart Ranking, its revenue in 2023 amounted to 705 million rubles - 11.4% more than in 2022.

Most of all in 2023, the revenue of Pragma, the developer of the Pragmacore platform, increased by 437%, to 70 million rubles. This dynamics is largely due to the low base in 2022 (then revenue amounted to 15 million rubles). In second place in terms of sales dynamics is Iyno, whose revenue in 2023 rose by 200% to 56.7 million rubles. The Iyno platform allows customers to manage the cost of construction, general contractors - to control their margin. In third place is SimpLight, which provides solutions for building control systems and dispatching objects. SimpLight's revenue in 2023, according to Smart Ranking, amounted to 19 million rubles, an increase of 171.4% - from 7 million rubles in 2022.

Maria Tomchuk, director of business development and marketing at Sodis Lab, says that against the background of the current geopolitical situation, more and more companies in Russia prefer to use domestic software solutions to digitalize construction. Their goal is not only to replace analogues that have left the Russian market, but also to ensure data security. Tomchuk also draws attention to the growing demand from developers and industrial companies for digital services to optimize processes: this is, in particular, electronic document management.

This is relevant both for design and construction companies, and for operating organizations specializing in the management of commercial and residential real estate and industrial facilities, says Tomchuk.

Kirill Romanchenko, executive director of Unicorn, notes that all participants in the Russian real estate and construction market have shown interest in introducing smart technologies into everyday life. These are developers, management companies, specialized departments and end customers. According to him, a new industry is being formed in the Russian Federation, which directly depends on the level of digitalization and affects the comfort of citizens. At the same time, customers of solutions (usually developers) are guided by the use of ecosystems of software products that close several areas of real estate management at once. Preference is given to those products that are able to seamlessly interact with each other.^[2]

US Example of PropTech Global Market Analysis

Real estate plays an increasingly important role in economic activity. To successfully develop the PropTech direction, it is useful to study its interaction with the global economy. Yulia Khludneva - an expert in the field of PropTech, which launched the first of its kind application for housing and communal services, as well as, which has already become the leader in the Sochi market, an application for developers - analyzed the global real estate market, with a focus on the US market. Julia's understanding and experience in developing innovative technologies allows her to deeply comprehend current trends and the future of property management. In this article, the expert will consider how technologies affect the real estate market and what potential they open up for investors and industry professionals. Read more here.

Machine Learning helps estate agencies

Residents of Russia do not have access to data on property transactions, as is practiced in the West, but real estate agencies do not stand still and create high-quality databases using Machine Learning. This was announced on December 18, 2023 by Homeapp. Smart analytics allows you to collect, process and analyze huge amounts of information from a wide variety of sources. Not only algorithms process information, but also people. By analyzing the received materials, you can collect up-to-date information about market dynamics, trends and customer preferences.

Property valuations are one of the key opportunities provided by smart analytics. Unlike traditional methods, which are based on comparing similar real estate objects and can be limited and subject to a human factor, smart analytics allows you to simultaneously take into account a large range of characteristics: the size and location of the object, the level of infrastructure development in the area, location, as well as economic indicators.

By collecting information about prices, buyer preferences, real estate parameters and other factors, agencies gain a complete understanding of market changes and predict trends. All this helps to make informed decisions and make relevant offers to customers. Machine intelligence, for example, is able to recognize stolen photos of objects and non-existent apartments, predict transaction conversion, and even identify illegal rentals.

With a deep analytical approach, you can improve customer service and agent efficiency. In Russia, Machine Learning and smart analytics are used by the Homeapp real estate IT agency - for 6 years it has been introducing machine learning methods to improve forecasting of real estate liquidity. The created mechanism is a self-learning system that is constantly being improved, supplemented with data and equipped with technologies. Using the materials collected during this time, including calls, object views and completed transactions, the agency builds models that can predict the demand for a particular object. To improve the accuracy of forecasts, the work of realtors and the effectiveness of their transactions are also taken into account.

The company also developed a system for automatic valuation of apartments. It takes into account many factors, including location, layout, technical condition and proximity to important infrastructure facilities, and allows you to sell apartments with maximum benefit and in compressed lines. Within six months of implementation, ML helped the agency increase sales efficiency by 80%.

Machine Learning has a significant impact on the real estate sector in Russia - it increases the number of requests from buyers and their conversion into sales. The introduction of machine learning in the work of real estate agencies will help them quickly achieve the following results:

• collect the most complete data for each object - the number of calls and impressions, broker efficiency, value assessment, client loyalty;
• assess the synthetic probability of selling an object based on the behavioral characteristics of the client;
• Integrate algorithms for managing object prices
• select analogues for evaluation and cross-sales;
• attract new customers to buy and sell properties.

2022

Spending on real estate IT solutions in Russia has declined

The volume of the Russian information technology market in construction and real estate (PropTech) in 2022 turned out to be 32.1 billion rubles, which is 4.8% less than a year earlier. At the same time, at least four previous years, spending on such developments in the country has increased. This is evidenced by data from BusinesStat analysts, which were released in August 2023.

According to researchers, in 2018-2021. the Russian IT solutions market in the real estate sector increased annually and increased more than 1.5 times over the period: from 19.5 to 33.8 billion rubles. Growth was facilitated by the massive introduction of PropTech solutions into the activities of construction companies and developers.

The largest increase in 2018-2021 was shown by the segment of systems for modeling and planning construction processes (BIM technology). The volume of BIM segment increased 2.5 times: from 3.6 billion rubles in 2018 to 8.8 billion rubles in 2021. An important role in this was played by the introduction of a mandatory procedure for using BIM solutions in the construction process.

BusinesStat experts say that the sanctions imposed in 2022, although they led to a short-term decline in market volume, at the same time increased interest in domestic solutions from businesses and investors. Russia It has its own market leaders PropTech, such as Cyanogen"," "NMarket.PRO," TraceAir"PropTech Group," "Adept," Profitbase, Bimlib offering domestic systems for organizing most processes related to construction and real estate. Active interest in PropTech solutions begin to show developers, including "" and PEAKLSR"." Plane In the long term, this will lead to an increase in the share of Russian analogues software and accelerated market development, analysts say.

They divided PropTech developments into the following categories:

• systems for modeling and planning construction processes (BIM technologies) are technologies based on the use of a parametric 3D model during the design and management of construction progress. BIM technologies make the construction process more efficient by storing and using input data at all stages of the real estate life cycle. Companies developers of platforms for BIM modeling operate in the B2B segment and provide services in the format of selling non-exclusive rights to use software products. Clients are construction companies, engineering and service organizations, architectural bureaus;
• construction management systems (construction control and administration) are a set of tools that allow you to automate the management of the construction process at different stages. Software solutions in this segment include standard ERP systems developed by domestic companies 1C, Galaxy, Sail, Compass and foreign companies SAP, Oracle, and Microsoft. Also popular on the market are specialized ERP systems like Adept, cloud services, for example, Gectaro, TraceAir, Build Visor, etc.;
• real estate management systems are a set of tools that provide automated control over the functioning of engineering, security, fire protection and other life support systems of the building. Special technologies allow you to accumulate and analyze data, quickly eliminate problems that arise.
• services and solutions for residents - tools that ensure the interaction of owners with service companies and among themselves during the operation of real estate. For this purpose, a single dispatching system is created on the basis of BMS to inform about emerging problems.^[3]

SmartDeal's online signature technology allows intercontinental deal

The technology for issuing electronic signatures using NFC chips, introduced by the SmartDeal platform in conjunction with InfoTeCS Internet Trust, made it possible to conduct an intercontinental deal. This was announced on June 20, 2022 by the Practice of Success company. Read more here.

By the end of 2022, real estate registration services will be transferred to electronic form

and at Moscow Government Federal Registration Service a meeting of the interdepartmental coordination headquarters, a "roadmap" was approved to improve the effectiveness of cadastral registration state procedures and registration of rights. The parties have established the joint work of their information systems and services, which will allow all registration services Moscow real estate to be transferred to electronic form by the end of 2022. This was announced on April 28, 2022, according Complex of economic policy and property and land relations of the city of Moscow (KEPiZO) to the Deputy Mayor for Moscow Economic Policy and Property and Land Relations Vladimir Efimov. More. here

The first electronic land lease agreement was concluded in Moscow

The first electronic lease agreement for a land plot has been concluded in Moscow. This was announced on January 12, 2022 by the deputy mayor of the capital for economic policy and property and land relations Vladimir Efimov. Read more here.

Launch of a deposit service for a purchased apartment at DomClick

In January 2022, the first deposit service in Russia for a purchased apartment was launched. This opportunity was given to clients of the DomClick service. Read more here.

2021

Ministry of Construction creates GIS to control the apartment rental market

On December 10, 2021, it became known about the decision of the Ministry of Construction and Housing and Communal Services of the Russian Federation to create a special state information system (GIS), in which landlords will have to register all contracts for renting apartments, apartments and parking spaces. Thus, the department wants to remove from the shadows the spontaneous housing rental market, from which 162 billion rubles of taxes per year are not received into the budget. Read more here.

The Federal Cadastral Chamber announced a tender for the creation of a modular machine learning system

On September 23, 2021, it became known that the Federal Cadastral Chamber as part of the Federal Service for State Registration, Cadastre and Cartography (Rosreestr) is ready to spend up to 36 million rubles. to create a modular machine learning system (MSMO) as part of the optimization of state cadastral registration and state registration of real estate rights. Read more here.

2020

Creation of a venture capital fund to invest in technological projects in the field of real estate "Proton Capital"

On November 24, 2020, it became known about the creation of the first venture capital fund in Russia to invest in technological projects in the field of real estate. At least, this is how the Proton Capital company is positioned by its creators - Trinfico and PropTech Russia. Read more here.

Real estate market start-up investment could double

On June 29, 2020, TAdviser learned that investment in startups for the real estate market could double in 2020, according to forecasts from accelerator experts from Glorax Infotech.

Real estate market start-up investment could double in 2020

The Russian PropTech market was quite conservative, but the pandemic became its catalyst: as of June 2020, there is an increase in interest in technologies for the real estate market.

Investments of specialized funds and developers in Russian startups PropTech in 2019 exceeded 700 million rubles, a total of 10 transactions were concluded. Already at the end of 2020, according to forecasts of Glorax Infotech experts, investments in technologies for the real estate market may reach 1.5 billion rubles. That's equivalent to 100% growth for the year.

The situation in the economy and an additional factor of complexity in the form of a pandemic stimulate companies to look for other models of work and interaction with customers. Often developers themselves develop original services and products. There are examples of successful cooperation between developers and IT startups, - said Andrey Birzhin, head of Glorax Group, head of the accelerator from Glorax Infotech.

So far, the volume of investments in Russian PropTech is less than 1% of the world and 1.8% of the European. Meanwhile, according to PropTech1 Ventures, the average annual growth rate (CAGR) of capital investment in PropTech technology in Europe is 45%. If 2014 million euros were invested in European startups PropTech in 77, over the next 5 years the volume of investment money in the market has grown to almost 500 million euros (a jump in 550%).

The most active venture investors in terms of the number of transactions in Russia are funds such as IIDF, AFK Sistema, AltaIR Capital, Pulsar Venture Capital, Runa Capital, ImpulseVC, RVC, The Untitiled. At the same time, the largest total investment in PropTech market companies came from the following funds: Rusnano Sistema Sicar, Sistema Venture Capital, Larix, Hartmann Holdings, IIDF.

In Russia, in 2019, the bulk of investments fell on only two transactions, Made and Attic. In addition, only one exit was made - Occipital Corporation made a withdrawal from GeoCV, the transaction amount was $7 million.

"Made" was founded in 2014 and is engaged in the overhaul of apartments, the design can be selected on the site using an online designer from ready-made combinations. The number of completed projects is approaching five hundred. "Attic" is a storage service for residents of Moscow, founded in 2018. The service packs and picks up things, takes them to a secure warehouse, provides online access to all things and brings them back on demand.

So far, in the structure of the PropTech market in Russia, more than half of the companies are marketplaces for the purchase and lease of real estate or the provision of services in real estate or construction. A significant share falls on companies in the field of design and construction (Apis-Cor, TraceAir), as well as startups in the field of valuation, data analysis and collective investment (Aktivo, Geointellect, Habidatum) and companies in the field of finished facilities management (Wired Board, Throne).

The Russian market has a strong interest in startups in the field of Big Data and AI, but there is no clear leader. In this race, the one who will create the most convenient algorithms for analyzing big data, for example, to simplify the interaction of participants on marketplaces, will win.

In addition, the consequences of the pandemic and the development of remote interaction between companies and customers in connection with the requirements for social distancing stimulate the PropTech market to create other segments and niches. This happens in all segments of the real estate life cycle, from design and construction to sales and management.

Since there are no universal solutions in the market, this opens up a large number of opportunities for the development of startups. This year and 2021, we will see steady growth in the PropTech industry. Those early investors who invest in the foundation for platforms of interaction between market participants, in the creation of universal solutions, will be able to occupy a leading position in the market. We launched an accelerator from Glorax Infotech to help the most promising startups enter the market and contribute to the digitalization of the real estate market, - said Andrey Birzhin.

2017-2018: KPMG study

The results of a survey of KPMG, conducted in the summer of 2018 among the leading players in the real estate market, showed the following: 97% of respondents believe that digital and technological innovations will in any case have an impact on their business, while 60% are convinced that this impact will be significant. 78% of respondents noted that such an impact has already increased over the past 12 months^[4]

Most survey participants (73%) rate PropTech positively, considering this trend as a new opportunity for the development of their business, but 25% see it as a kind of threat. Recognizing the inevitability of innovation and its overall positive focus, 56% of respondents admit that they cannot yet talk about the "digital maturity" of their companies. Only 7% of respondents are convinced that they are at the forefront in this area.

30% of survey participants noted that startups are already investing or planning to invest in PropTech, and 66% indicated that they do not yet have a clear idea of ​ ​ the prospects for using digital and technological innovations, nor do they have appropriate strategies.

I wonder how over the year the survey participants' ideas about what kind of achievements PropTech will have an impact on the activities of their companies and on the real estate market as a whole have changed. Thus, most participants in the 2017 KPMG survey (53%) suggested that in the next three years their companies are likely to take advantage of PropTech's innovations in the field of 'big data' (from the English Big Data - structured and unstructured data, distinguished by outstanding volumes and diversity processed by certain software tools) and analytics.

Speaking about which PropTech trends in the next five years will have the greatest impact on the real estate market as a whole, 44% of respondents also allocated big data, 16% noted the capabilities of the Internet of Things (from the English Internet of Things, IoT - a single network, objects connected to each other via the Internet, able to collect data and exchange them. Such objects may include household appliances, cars, etc.), and 15% - the development of artificial intelligence.

Notes