5 Shared Economy Values in PropTech

The sharing economy in Real Estate is galvanized by the slow merger of the second and third space. People don’t work in the office that much anymore. Sharing Economy, of course, is not only affecting the Real Estate but also the transportation and labor markets.

Access to the Internet and the consequent communication tools, the loss of jobs and assets after the financial crisis of 2008, popularization of entrepreneurship and the fallout of political stability has shaped the minds of the Millenials which carries itself across all verticals. It helped to create some of the largest unicorns of the century (e.g Uber, Airbnb, and WeWork).

The low ownership rate this economic model is generating will benefit many operating in the rental market space.

For Millenials though, the use of sharing economy services often comes out of necessity, not preference. Surely when living in a large metropolitan, ride sharing can be more convenient than owning a car, but in most other cases, renting an asset over owning it is financially inferior. Many popular articles with sentences like “Millenials have reconsidered the need for ownership” try to convince us that their values are somehow more enlightened and less materialistic, while in reality just reflect the growth of the increasing wealth gap.

The growth of inequality can be also clearly seen in the counterintuitive relationship between high real estate prices and the massive availability and excess of living space. The low ownership rate this economic model is generating will benefit many operating in the rental market space.

The nature of the Shared Economy model offers the following 5 value propositions which any organization operating in the Shared Economy sector can align itself to.

  • Widely distributed and a diverse source of demand — people looking to rent
  • Widely distributed and a diverse source of supply — excess available space
  • Lack of effective mechanism for bringing demand and supply together.
  • Financial gains for both demandsupply as well as for the intermediary.
  • Scaleability.

Airbnb is a great example of a company that is well-aligned with all of these conditions. This has also allowed them to grow from 1M listings in 2014 to 6M today.

Similar alignment payoffs can be seen in many other cases where companies operate in the Shared Economy space. Since this economy has been meticulously designed to follow the above-mentioned model, the shared economy attributes are here to stay and anyone looking to start or turn around a business should consider aligning its value offerings to the above.

Continue reading The 3 Waves of PropTech — 2.0

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