Examining the Impact of Tech on Real Estate in Latin America
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Examining the Impact of Tech on Real Estate in Latin America

Photo by:   Joe Merullo
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By Joe Merullo - Arrenda
CEO

STORY INLINE POST

In recent years, technological advancements have been at the forefront of modernizing the region’s real estate sector. Now, the Latin America real estate industry stands on the cusp of digital transformation. 

As the region expands its adoption of proptech, innovative digital companies have opened new doors in the real estate industry, allowing industry professionals to offer more convenience, accelerate deal velocity, reduce paperwork, and minimize risk.

This article examines the impact of technology on real estate transactions in Latin America and how digital transformation is changing the way real estate is transacted in the region.

Proptech Investment Booming in Latin America

According to a report issued by the Brazilian intelligence platform Sling Hub, corroborated by Labnews in June 2022, startups in Latin America related to real estate technology through 2Q22 had raised US$369 million of the total US$1.26 billion that flowed to the region.

These startups cover various areas, such as property marketplaces, fractional ownership, short-term rentals, financial services and digital property management. Furthermore, Latin America is expected to be one of the fastest-growing regions in the global proptech market, which is set to grow from US$18.2 billion in 2022 to US$86.5 billion in 2032

The size of fundraising and market growth underlines how much technology influences, and will continue to influence, real estate transactions in the region.

Marketplace Solutions Lead Digital Change

In Latin America, “all-in-one” solutions are becoming increasingly popular in the real estate industry. These solutions provide private landlords and real estate professionals with the tools they need to advertise, manage and streamline their businesses effectively, in a one-stop solution. 

Proptech companies, such as QuintoAndar, Houm, Habi & LaHaus, are leading the charge in the region, providing property owners with innovative technologies to improve their selling and renting businesses by automating processes, reducing transaction friction and providing access to digital financial services.

Quintoandar is undoubtedly the most successful tech-enabled real estate marketplace across Latin America. The proptech giant is focused on residential transactions in Brazil, and closed a US$300 million Series E funding round in 2021, valuing the business at US$4 billion. While started in Brazil, the company recently arrived in Mexico under the brand name of Benvi. Because the two markets share a similar degree of complexity in the bureaucracy of their property markets and population density, Mexico is an ideal frontier for additional disruption. 

Another example is Houm, which offers a marketplace to rent and buy residential real estate. The company makes it easy for property owners because it pre-inspects the properties, takes pictures, and creates professional listings at no up-front cost for the owner.

How Landlords Can Use Proptech to Better Manage Properties

One common theme across Latin America is that the property market is highly fragmented and transactions are subject to various layers of bureaucracy. As a result, it makes it difficult for landlords to optimize their rental income and time. 

Some of the most popular models to streamline selling, renting, and property management procedures are the following:

  1. Digitized marketplaces: these companies help present the property in the best quality possible, including virtual viewing and 3D property tours to provide buyers with an accurate preview of the property. 

    1. Top examples include Loft, QuintoAndar, Houm, LaHaus and TuHabi.

  2. Short-term rental management software that helps professional landlords and property investors streamline operations and reduce costs across the board. 

    1. Top examples include Naya Homes and Wynwood House.

  3. Digital financial services, which provide tenants and landlords with easy, convenient rent payment and liquidity options. 

    1. Top examples include Arrenda, Mica 

  4. Lease guarantee and property insurance platforms to reduce the risks associated with rental property investments and bad tenancies.

    1. Top examples include Nowo, MoradaUno and CredPago.

These technology solutions can help property owners maximize profitability and reduce costs, allowing them to remain competitive in the rapidly changing Latin American real estate market. 

How Fintech Solutions Merge With PropTech 

In addition to pure proptech solutions, a wave of fintechs have emerged to offer real estate professionals more efficient, secure, and cost-effective services in Latin America, creating an overlap between fintech and proptech. 

Financial technology has opened up many opportunities for property owners looking for financing options for their projects. One of the most notable is revenue-based financing, which allows developers, contractors, and other property owners to access short-term financing to fund their projects. This type of financing, such as what Arrenda offers, is based on the future revenues from a project and is much easier to access than traditional financing options from banks.

These companies are advantageous for tenants as they allow them to make cashless payments while also providing property owners with the opportunity to quickly and efficiently access their future rent payments.

What Does the Future Hold? 

In Latin American real estate's fast-paced and ever-changing world, technology has become a vital tool for landlords, tenants and property investors.

From proptech platforms to fintech solutions, digital innovation has allowed real estate practitioners to manage their properties better, automate transactions and increase their rental income.

Technology is providing landlords and property investors with a more efficient and secure way to do business, and it will continue to be a driving force behind the real estate industry in the years to come.

Biography - Joe Merullo

Joe Merullo is a fintech entrepreneur who grew up in Boston and has dedicated his career to creating digital-first solutions for real estate owners to access working capital. He has an extensive background in finance, real estate, and technology, formerly having led business development at the furnished housing giant June Homes. An advocate of financial inclusion and transparency in the real estate market, Merullo has used his knowledge and expertise to develop Arrenda, a fintech company that allows property owners to access future rents in advance through revenue-based financing. Above all, Merullo’s primary mission is to ensure that the real estate market becomes more inclusive, equitable, and efficient for all stakeholders. He is passionate about his work and strives to make a lasting impact in the industry across the globe.

Photo by:   Joe Merullo

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