It’s around noon on a hot summer day and inside a 40-story office tower, say in Tel Aviv, a battle breaks out between office workers over what temperature to set the air conditioning at. Meanwhile, hundreds of workers over dozens of floors have ordered takeout for lunch. Soon the lobby is filled with delivery people and there’s a crunch in the building’s elevators.
Behind all the crowding and kvetching is a business opportunity for an emerging sector in the world of high-tech. Popularly known as proptech, it spans software such as property portals like Zoopla hardware (for example, sensors), new materials and manufacturing (for example, 3D printing).
For that unhappy office building, proptech may soon be offering solutions in the form of smart air conditioning combining data on how building occupants use AC, and sensors that detect how many people are occupying a given part of the edifice. Another technology would synchronize deliveries to an office- or residential building to prevent traffic jams.
The elevator-crowding problem could be solved by elevators that aren’t limited to moving vertically. Other tech proposes an entire rethink of the design of a big building’s logistics and service areas.
As in so many other sectors of the tech world, Israeli startups have become a part of the proptech phenomenon. One place this is occurring is in a newly formed collaboration between WeWork, the global shared-office-space company, and Livestone, a company set up by Assi Tuchmeir.
Tuchmeir, who is chairman of the Israeli property company Israel Canada Group, recognized the proptech potential and set up the platform to help startups in Israel and abroad raise capital, advise them on how to develop their businesses and provide mentoring services.
Working inside the framework of the WeWork Labs program, there will be a global network of co-working spaces with some elements of a high-tech accelerator especially designed for startups.
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“Technology has created revolutions in almost every area of our lives – communications, medicine, transportation, commerce, finance. But real estate has lagged,” Tuchmeir told TheMarker.
The proptech platform based in Israel will have an investment committee that includes players from the real estate and technologies industries. In turn, they are expected to recruit strategic investors for the resident startups. As part of this process, a team of professional mentors from different sectors will be established, to advise the startups.
The team will include Ron Gura, a senior vice president at WeWork who leads the company’s Israeli research and development, as well as On Freund, the head of WeWork Labs for Europe, Africa, Israel and Australia, and Ehud Schneerson, managing partner at the U.S. venture capital outfit Blumberg Capital and a former officer in the Israel Defense Forces’ 8200 intelligence unit.
“The combination of knowledge and experience we have in real estate on an international and local level, together with the technology, ideas and talent that the startups will bring, will enable us to disrupt and improve the industry,” Tuchmeir said.
A study by the investor Innogy Innovation Hub commissioned by a group of Israeli organizations and government agencies found that worldwide investment in proptech, including the construction technology subsector, reached $4 billion last year.
That’s not a huge number compared to other tech sectors, but it represents a sharp increase from the $2.8 billion in 2016. Moreover, WeWork estimates that investment in proptech startups was a considerably bigger $15 billion in 2018. Global trends – like more-crowded cities, longer life expectancies and migration from rural areas into urban conclaves – support growth going forward.
The WeWork Labs-Livestone collaboration has already begun to identify Israeli startups; the first of them have moved into its office space in the 33rd and 34th floors of Tel Aviv’s Midtown office tower. It’s one of three WeWork Labs sites in Israel and 57 around the world.
The startups will be in different stages of development, but they will all enjoy mentoring services from the collaboration as well as a 50% reduction in rent on the WeWork space.
The collaboration isn’t Startup Nation’s first foray into proptech. The Innogy Innovation Hub study counted more than 120 Israeli startups in the sector. In the last five years, the number has grown by 240%. Innogy put $11 million into Israel proptech startups, one in construction technology and one in energy technology.
Among the younger plays in the segment is Leaperr, which uses artificial intelligence to automate interior-design planning. Skyline Robotics, which is developing robotic window cleaners for tall buildings, raised $3 million last year.
Another is Zero Energy Solution, whose AI-based platform connects to all of a building’s heating and cooling end-units and collects temperature, humidity and occupancy data room by room to monitor and control the climate. HomeHero does away with much of the work of lawyers in property transactions, checking details like property ownership, and even helps negotiate terms.
Intsite, founded by the twin brothers Tzach and Mor Ram-On, has developed technology that handles the trajectory, control and navigation algorithms of construction cranes to shorten project times.
Construction tech startups like Intsite have become a major presence in Israel – and not a moment too soon as the local building industry has long suffered from low-tech methods and in recent years a wave of construction accidents.
Bonei Yisrael, the Israeli construction industry’s trade association, has its own tech initiative. Called Contech, it’s leading programs in autonomous cranes, 3D printers for printing structural elements, drones that monitor the progress of building projects and warn about faults, and software that uses big data for urban planning.
Some of Israel’s biggest construction companies are investing on their own. Property & Construction Ltd., for instance, has put money into technology and building-safety startups. Tidhar Group is collaborating with Versatile Natures, an Israeli startup with a process control solution that provides site management for construction sites.
The only thing that threatens the spirit of cooperation is the Israeli construction industry’s innate conservativism and unwillingness to deploy new technologies. Long lead times for building approvals and a chronic shortage of skilled workers are also deterrents.
Still, Gura remains optimistic: “The potential for changing the way we build and manage real estate assets is enormous.”