Most, if not all, UK and European cities are experiencing a housing crisis with a lack of affordable, sustainably designed urban housing to buy and rent. One company, IMMO, is looking at a novel way to merge investors and inhibitors.
IMMO is a technology-led residential real estate platform designed to create quality portfolios of existing single-family rental (SFR) housing at speed and scale. SFR is an established asset class in the US, but still largely untapped as an investment in Europe where the residential sector estimated at about €40 trillion.
The company was founded in 2017 in London and has built a unique end-to-end solution, providing institutional partners with sourcing, acquisition, portfolio management, lettings and property management, enabling them to drive performance and maximise returns.
The company has raised $90.7 million in funding, most recently raising $75 million in Series B in April 2022.
I spoke to CTO Hima Mandali to learn more. He sees housing as "one of the last fundamental need categories that hasn't seen a lot of tech-driven efficiencies."
Housing investment is broken and relies on outdated tools
Mandali calls housing "so viscerally and obviously broken."
"Few things are more tangible than housing. And yet, we don't have a unified foundational data standard or layer, not even in any single country in the world."
He reveals that there are jokes in Germany about "rooms full of dinosaurs that make investment decisions based on handwritten notes."
Primarily focused on Germany, Spain and the UK, IMMO helps buyers acquire properties using proprietary technology. It unlocks the single-unit residential real estate market for capital deployment by institutional investors — a new asset class that offers superior risk-adjusted returns.
In terms of tech, local teams conduct physical and remote inspections using proprietary digital diagnostics tools and 3D imaging capturing everything from lighting levels to water pressure.
An automated valuation model leverages AI on millions of data points across 30 data sources, analysing over 400 variables and 9,000 decisions allowing the company to underwrite assets in minutes and move to offer within 48 hours.
Sellers enjoy a quick and transparent sales process with a guaranteed offer, and tenants enjoy fully customisable and furnished apartments on long-term rentals, fully equipped to move in immediately.
According to Mandali:
"In proptech many companies are solving incremental problems, but these fail to flow into a larger ecosystem that delivers value.
You can have the best real estate CRM in the world, but without the ability to affect structural change across the entire value chain, there's only so much you can change.
We own the entire value chain, from market intelligence to sourcing capital to property management."
Can residential real estate meet carbon-zero goals?
Real estate is responsible for 40% of global emissions, which Mandali calls "something your mom-and-pop landlord isn't prepared to weather."
"Our key insight is that 80% of the buildings that will exist by 2050 in Europe already exist." They need to be made habitable and available.
Smart buildings have been honed commercially with remote and intuitively controlled heating, cooling, and predictive analytics that reduce long-term maintenance. Still, mass deployment at a residential level has been limited, especially for rental properties.
Mandali asserts, "Without digitisation, this results in a massive disparity in how to tackle renovations and retrofitting at scale."
What will be the state of housing over the next decade?
We spoke at length about carbon zero and the need for regulatory standards regarding insulation, heating and cooling.
Mandali asserts that for the industry, "compliance with ESG and carbon zero standards will be tough."
Incentives such as tax credits will be necessary to motivate owners to make quality structural changes (especially to ensure these costs aren't passed unduly onto tenants).
We both agree that there's a lot that the housing sector can learn from smart building tech already employed in commercial buildings, including using predictive maintenance to prevent leaks and reduce energy costs."
"We're going to hopefully see housing that is more resilient to the climate. But I also hope we will see consumers get a better deal and demand more for their money. There are few industries or categories with so few consumer protections and remedies."
IMMO is in the rudimentary stages of bringing various digital tools to end users, such as an AI-enabled app with a chatbot for 24/7 communication.
While I wouldn't want to talk to a chatbot in a crisis, Mandali notes:
"We provide the first contact digitally. 80 percent of tenants' maintenance issues can be self-serviced, for example, by finding where your circuit breakers are and how they work.
We're not trying to remove the human element but rather provide faster answers to simple queries that are commonly backlogged."
But for all of its digital-first tech, IMMO's underlying values are impressive. Mandali told me:
"One of the things that we're very proud of doing is that we're not driving returns by gentrifying neighbourhoods or creating costly apartments.
We're targeting the middle market. Fairly priced properties in local communities that are affordable for the local people who already live and work there.
We don't see a conflict between good investment returns and a fair rental product."