Digital Platforms in the Real Estate Industry: Factors influencing PropTech Market Development

Joachim B. Kraus

ERES from European Real Estate Society (ERES)

Abstract: Purpose – The capital raising and dissemination of companies have been examined in numerous studies, but typically only through sector-independent analyses. However, there are few studies focusing on the effects of macroeconomic variables on newer sectors such as PropTech (Property Technology). This paper aims to identify relevant macroeconomic drivers for this sector and complement them with specific factors from the fields of technology and real estate.Design/methodology/approach – Multiple linear regression and a Fixed-Effects-Model (FE) are applied to conduct the analysis. The first analysis is based on a sample of 220 observations from 22 countries during the period from 2014 to 2023. Each observation represents the annual volume of venture capital (VC) investments in PropTech per country. The second analysis includes 98 observations from 98 countries, where each observation corresponds to the current number of PropTech companies per million inhabitants in each country.Findings – This study confirms that macroeconomic variables significantly influence the amount of invested capital. Furthermore, the analysis reveals that technological infrastructure (measured by the number of telephone connections) and the house price index have a positive effect on PropTech investments or the proliferation of such companies.Practical Implications – For PropTech companies and their investors, understanding the interplay between macroeconomic variables, technological advancements, and the real estate sector is essential. The direct relationships identified in this study play a crucial role in providing a holistic understanding of how technological and real estate factors impact the PropTech sector.Originality/value – This study addresses a research gap by examining the relationship between factors influencing the dissemination and investment in PropTech. The integration of cross-sectoral and sector-specific variables provides a novel approach that expands existing research perspectives.

Keywords: Digitalization; Fixed-Effects Regression; proptech; venture capital (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-pay and nep-ure
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