The digitization of the real estate sector has evolved slowly in the last 20 years. However, the coronavirus pandemic has accelerated this process in recent months more than in previous years. The needs of investors and developers / builders remain the same, but the environment has changed. We chatted with Pedro Arroyo, CEO of icrowdhouse, who explains the evolution of the sector and the advantages that are born with the development of the new Saas from icrowdhouse.
Digitization is said to have become a top priority in the real estate sector due to the coronavirus pandemic. What do you think are the main reasons? In which area do you consider this digitization to be more necessary than ever?
Digitization in the real estate sector began with Idealista in 2000, 20 years ago, but its evolution has been very slow, until a few years ago we started talking about PropTech.
To the real estate portals and marketplaces, Peer to Peer, Airbnb were added in 2008, then Virtual Reality arrived and how we did not start with Big Data, until, in 2015, we started digital activity, the Real Estate Investment Platforms. The list continues with Real Estate Valuation, Digital Signature, People Rating, Project Rating, and adds and follows.
Digitally speaking, in these three months of pandemic I think we have advanced the equivalent of 3 years in a normal scenario, why? The answer is clear, of necessity.
Because if we cannot physically show a house we will have to do it virtually, because we have realized that we can do a one-hour webinar explaining to 15 prospects what it would have taken us in a week, and because an investor does not need to attend a collective presentation To analyze a potential real estate investment, you can do it from any device, anywhere and at any time.
How has financing in this sector evolved in the last year? What problems are the most recurring?
It is clear and evident that bank financing in the real estate sector is leaving to be attractive, if it ever was since 2008.
In the past, the real estate sector was supported by banks, because the interest was reciprocal, not so much for the project but for the end customer. IFRS accounting standards, the new mortgage law of 2019 and the concentration of banks in Spain are reducing interest year by year.
In the last year this problem has been accentuated, the bank requires a high level of demand for sales through pre-sale contracts, an increase in own resources, a significant reduction in the percentage of capital financed and increasingly demanding project monitoring control systems.
How did the idea of creating the new icrowdhouse Saas come up? What do you think is your main advantage?
It was born as a solution to a need for developers to attract alternative financing to bank debt, for the reasons explained above.
We are not substitutes for the bank, we are complementary, we can contribute with our Saas, recurring alternative financing, which the promoter himself strategically selects according to his needs.
We do not want to solve a specific problem of financing needs in a project, we want to integrate into the promoter's business model as another source of financing in Equity for projects where we can add value and that are interesting for our investors.
It is not easy to choose the main advantage among many of them, but you could say that it is a digital recurring financing formula, flexible and simple without obstacles, with an optimal cost.
What do the developers and investors of this software highlight? What forecasts do you have regarding its use in the real estate market?
The promoters highlight the possibility of having their own participatory financing platform, being able to attract their own investors, and above all the possibility of opening a round of financing of a project in a fast and simple way, all 100% digital.
Investors highlight the protection of the CNMV, anonymity, zero cost, confidence in the quality of projects thanks to the quality of the originators, transparency in information, usability of the application, accessibility and above all the proposal of return on your investment.
Our business forecast is the maximum recruitment of developers that include this long-term solution, always in balance with the recruitment of investors who maintain their investment recurrence, offering excellent product quality, that is, exceeding their expectations.
In any of the most optimistic scenarios, we will always have a minimal penetration in the national sector, and even more so in the international one, scheduled for 2021.
There are different software models: what main difference distinguishes each of them?
The main Saas is CROWD, which makes it possible to have a white label and thus have a digital ecosystem to manage investors and attract financing on a recurring basis.
We also offer PFP, when the need for fundraising is punctual and amounts less than € 300.000.
When the developer does not need to raise financing, but is passionate about the technological solution to manage their investors and projects, we offer PRO, which is the same digital ecosystem, but with a closed environment.
Last but not least, we have a tool for Financial Advisory Companies, called EAF, which allows the broker to make investments from its client portfolio in the projects exposed at icrowdhouse, all digitally and with maximum protection at cost € 0 .
Are you already thinking about improving it? Is it possible to advance some of the news in the short term?
Without a doubt, we have designed a road map that will allow us to invest our resources in our own technology in order to provide maximum value to our client. Continuous improvement is part of our DNA, proactively listening and investigating our clients and the main market players.
As a short-term advance, we can say, the liquidity option of Equity in the Secondary Market or the option of grouping the management of all the real estate projects of other platforms in ours to thus centralize the information.
And from the investor's perspective, we will be able to allow our Financial Advisory Companies to attract clients through our Platform. We cannot advise the investor, but if we can offer who can do this advice to increase their portfolio of accredited clients who already use icrowdhouse, we all win.