Even if we only had totally digitised 3D printed houses, it would still be a very static asset, on a defined piece of land.
There are a few platforms which already serve the Swedish real estate market. What is Newst’s advantage over them?
There are two sides of the market today. One is the real estate companies and consultancies which have lists of the premises they lease on their own websites. The other one is listing platforms. And it is the latter which is our competition, because they target their services directly to the end client. Of course, our great advantage is a unique collaboration of partners, who alone represent around 20% of the market. But to confront the market we had to come up with a cutting-edge, more user-friendly platform with better functionalities.
Besides, apart from being a hub for communication between the parties, we want to be a hub for innovation, where we can co-create technology-driven initiatives and startups, and trigger the development of companies. I already have at least five development ideas in mind that I'm surprised no one else has done till that point.
What ideas? What else can be done to move things forward?
There’s a lot of processes based on data that you can put in SAS services that you can store and aggregate to create new products and new insights from what you have already put in. Then, for instance the lease agreements, they are standardised, most of them are written on paper, and it’s a stack of paper you have to store. It is freaking 2018, I want to have it online so that I can access it whenever I want. So we would definitely add a digitised lease agreement service to Newst. Another idea: when you switch offices you have to arrange cleaning services, heating services, internet services, while all those should come as an integrated part of a lease. And I think half of the clients don’t even think about them until after they sign the papers. So we want to connect them with the services already on the platform, so that they choose the best partners.
It's not rocket science, but we should focus on that too.The real estate companies don't care about it – all they want is to have their lease signed, but for the end client all the hassle around it is part of the process of renting an office. Therefore, we want to put all those services together and be the hub for it. You shouldn’t forget about the client’s experience.
I guess that’s not a very popular approach. From what I’ve heard from my friends who live in Stockholm, a client doesn’t have many rights. With too much demand and too little supply of housing in the city, tenants can’t be picky and have to agree to the lessor's terms. Otherwise, the lessor will find new ones in no time. Is that the case with your business as well?
That’s basically the result of a free market. If there’s a popular city or popular country, the real estate market looks like that. The renting levels in Sweden are lower than in many other countries and there’s very high demand for any residential object that is for rent, but it’s different with commercial buildings. It's easier to find an office than to find a flat.
Well, then maybe live in an office?
Yeah [laughing], but it would be very expensive and there are certain restraints on what you can rent and where you can live. Living in central Stockholm and renting a 100 m2 apartment would cost €2,000 at most, but for the same space office at the same address you would probably pay €5,000 or €6,000. So it wouldn’t be worth it.
What is the biggest challenge of operating in real estate market now?
The biggest challenge, after so many years of stagnation, is to keep the development process going forward. We have to deal with an extremely constant product and I see that as our mission to help the industry develop proper technology. We also need to create good working conditions for people coming to the industry in the next ten years, who are rather going to be data-driven engineers than traditional real estate agents. And if doesn’t change rapidly now, they are not going to choose real estate as their career, and we won’t have enough professionals working for us.
This makes me think of professions that will die out in the future because of digitalization and machine learning. I’ve read that real estate agents and middlemen are going to be replaced in the future. Is it the place where Newst fills in and where you see your chance?
Sort of, but personally, I don't think that a real estate agent as a profession is going to die out. We may have fewer people working in the industry, but we shouldn’t underestimate the service side of transactions and processes. Because that’s where human interaction cannot be replaced by a machine. For me, it's the service side and the client’s experience that are more important than creating an AI environment that’s totally digital, however convenient it might be.
Where do you see your business in 5- 10 years then?
I see Newst as a much broader platform that takes on a lot more processes of handling commercial real estate. This will be our core business, but we will build other services with other companies as well. Through CRM (Customer Relationship Management), we might build a system of properties and sell services for lease agreements, digitise transactions and connect to built in data services. And if we keep a really high pace of development, we will try to create a system that includes it all, so that there are no data losses between all the different processes.
I see Newst in other countries such as Denmark, Finland or Norway, as we have partners operating in many Nordic countries. Poland could also be of interest. So if we have a good launch in Sweden, we would start to expand.
Do you think a continuous cooperation with Netguru can add a value to your project?
Absolutely. The project is a kind of an enormous organism, which will go through a continuous evolution and become bigger and bigger, and a proper ecosystem is extremely important. Thus, the setup we worked out for Newst is a really good base that we could build upon. Netguru was very fast and very helpful during the design phase, and the the Newst platform looks is great. It’s very important to have a company that understands the vision behind a product and that you can rely on.