24 Mar PropTech in Finland: Origins, Present, and Future
Finland has been a leader in property technology – or PropTech – for a decade now. The country now has one of the highest numbers of PropTech companies per capita. As the coronavirus pandemic subsides, the industry is attracting renewed interest from international investors. The time is right for another wave of expansion.
Innovation at the Core
PropTech is a relatively new approach to all aspects of real estate transactions, including managing properties, selling, researching, buying, or renting. Bringing the benefits of technology to a normally traditional industry has created numerous excellent initiatives and new solutions.
As Finnish PropTech startups were beginning to make their mark on the property industry, international investors took note. They recognized the potential in the early-stage companies and supported them in their development. The industry flourished.
While things slowed down over the past two years, we are on the brink of hearing and witnessing inspiring stories of scaling from the Nordics.
The Origins of PropTech in Finland
Long before the term PropTech was coined, the Finnish construction and real estate industry understood the benefits of technology. Since the 1980s, Finland championed Building Information Models (BIM).
Those highly technical models became the foundation of today’s fast-developing and diverse PropTech industry. The sector’s first period of boom lasted from 2012 until 2018. During those years, more than 50% of today’s PropTech companies were founded, many of which became success stories.
One reason behind Finland’s large amount of technology startups is Nokia’s bridge program. This gateway program emerged when the telecommunications giant needed to reduce its operations in-country. Nokia launched the bridge program to help people with an entrepreneurial mindset start their own company. In addition to programs like Nokia’s, PropTech-related corporate incubators played a key role in letting startups grow.
PropTech Today: Collaboration is Key
Finland’s BIM roots might have set the country on the path to developing a world-leading PropTech sector. The technical expertise and collaboration-focused mindset of Finnish founders are two more crucial pillars behind today’s successes.
The result is a unique ecosystem where startups, corporations, and investors are truly working together to create a more sustainable future for both their citizens and the built environment.
Today, Finland is home to almost 200 promising PropTech companies. From their early days in 2012 and beyond, many have matured and expanded into a global market. As a consequence, Finland is one of the leading countries based on the number of companies per capita that facilitate growth in built environments.
PropTech or ConTech, and What is the Difference?
Because Finland’s PropTech sector has developed from a BIM background, most startups in the industry are also ConTech companies. They support the construction sector with technology.
Their solutions address problems like project management, communication, end-user services, and site safety. Moreover, technology that helps resolve construction project timetable issues has become an industry favorite.
This is where PropTech applications have seen huge growth. At the same time, building owners are looking to adopt existing BIM models within the construction phase of their projects. Technology also found its way into building maintenance. In this area, algorithms are designing smart maintenance schedules and making real estate more sustainable.
Collaboration is Key
A strong focus on collaboration and a well-structured way of helping companies into their market have made Finland ideal for tech startups.
There are local initiatives, too. PropTech Finland is one example. This local community connects corporations, investors, and growth companies. KiraHub provides a space for built-environment forerunners that lets them showcase their innovations to everyone who is interested in built environment innovations.
Whilst PropTech is growing throughout Finland, the sector is creating the biggest buzz in the cities of Helsinki and Oulu. In both places, local companies like Helsinki Partners and Business Oulu proactively support startups.
Providing a wide range of support has been the key to the sector’s growth. Most Finnish construction companies are small and don’t have huge IT departments. They needed external know-how to start digitalizing their tendering processes and project management.
This demand created an ideal breeding ground for PropTech companies specializing in building. As the entire industry matures, most startups are moving towards a broader range of services. This will attract the attention of bigger construction companies.
The Future of PropTech in Finland
Unsurprisingly, PropTech’s growth slowed down over the past two years. However, more recently, we are seeing a fundamental change in investors, corporations, and other stakeholders. They recognize the constant need for innovation and are ready to put their weight behind it.
Based on a 2021 survey by RAKLI, the association for Finnish real estate owners and construction clients, building owners are getting ready to invest. Their focus is on digitalization and data-based solutions as well as technology relating to environmental, social, and governance (ESG) issues.
Many Finnish PropTech startups are ready to scale and have started this phase of their development. These companies already have good traction, and they know how the real estate or construction industry works.
They are secure in their market and are now developing solutions that support real estate companies in their day-to-day business. What’s more, larger corporations have started investing time and money into researching opportunities within the local and global PropTech ecosystem. The number of corporate incubators is still growing, and I am sure we will also see a private equity fund in the sector very soon.
Helsinki and Oulu remain the places to be for PropTech entrepreneurs. The capital is investing in hubs, labs, and programs to create smarter cities. Oulu is concentrating on IoT technology and communications to boost sensor-related PropTech solutions. The future is bright for Finnish PropTech.