Following the end of the COVID-19 pandemic in 2023, the European rental tech sector saw an interesting shift, increasingly catching the eye of institutional investors. Resulting from the changing living habits, as more people are seeking flexible models, and the acceleration of digital property platform startups, this boom is not expecting a decline anytime soon.
Digital rentals surge amid lifestyle shifts
The global health crisis, which first took off in 2019, caused significant disruption to traditional residential markets. The real-estate industry remained stagnant for nearly 2 years, but it also opened new opportunities in the rental space. The European market rebounded with confidence in 2022, driven by renewed investor interest in the property tech (also known as proptech) startups. In fact, according to the report by Sifted Intelligence, investment in European proptech grew by around 45% in the last year alone.
But, what has caused such a surge? One lifestyle factor is the increasing prevalence of remote or hybrid working as a result of the pandemic. The isolation restrictions have taught companies that the WFH (Work From Home) model is not as damaging to productivity as we once believed. Even when doors opened back up, many team members chose to continue working remotely, spurred by a healthier work-life balance and savings associated with commuting.
Furthermore, remote work also opened up opportunities for a more flexible approach to housing, especially appreciated by younger renters who are less inclined to commit to longer leases. As a result, digital platforms like Spotahome are supporting this trend by making flexible renting easier than ever before, across a number of European cities. Tenants can find verified homes for both mid to long-term lease anywhere, equipped with all the essentials of a remote employee.
Rental tech platforms redefine value chains
Within this broader shift, rental tech startups are changing how property value is viewed digitally, turning the heads of institutional investors. On the transaction front, instant home-buy and sell models, such as Casavo, are redefining how property liquidity and yield is treated across Europe, offering smart solutions to sell a home quicker. Meanwhile, data platforms like Unissu are helping investors and asset managers access proptep investment flows and analytics more efficiently, while AirDNA are feeding into short-term rental owners’ decision-making with key insights about yield and occupancy.
What unites all of these platforms is a renewed focus on digitalising the rental value chain. We are moving away from individual landlords managing properties by hand towards platform-enabled portfolios that lower friction and improve transparency. It’s an attractive offer for investors, promising scalable and predictable income streams. Furthermore, regulatory and political attention on housing affordability has, too, pushed investors to seek stable rental-income assets, making technology-enabled rental operations even more desirable.
A new era for the rental market
The proptech boom currently evident in Europe’s rental market represents an intriguing change in both investor’s and society’s attitudes towards real estate, a big part of which was contributed by the pandemic. For investors, the message is clear: rental assets driven by strong technology may just be the new gateway into property returns.
