Welcome to a compelling conversation with Gigi Zappel, the Co-founder and CEO of IMMO Capital, a PropTech company based in London that is redefining the UK’s housing landscape. As a Forbes 30 Under 30 entrepreneur and an award-winning innovator, Gigi Zappel brings a unique blend of expertise in distressed investing, retail technology, and real estate.
With IMMO recently closing Europe’s largest-ever PropTech Series B round in 2022, totalling over €70 million, and embarking on a £1 billion initiative to retrofit 3,000 homes in the UK, today we explore the innovative work of IMMO in utilizing Artificial Intelligence and Machine Learning to revolutionize the property market. Join us as we discuss Gigi Zappel’s journey from Knomi to IMMO, and delve into the cutting-edge technology that is setting a new benchmark for sustainable housing.
Can you share with us your entrepreneurial journey and how that led to the foundation of IMMO?
By now I have founded only two businesses, however, some of the formative experiences that led me to start IMMO came from my time as an investor at US hedge fund Davidson Kempner, as well as my personal endeavours to invest in real estate. The vast majority of the existing housing stock not being accessible as a professional investment product just didn’t make sense to me, especially given that renting has been on the rise for decades. Traditional real estate investors kept telling me that acquiring small residential assets at scale is impossible. I couldn’t understand why that would be true, especially given that tech-driven investors in the US had already proven that it’s doable. Surprisingly, I found that nobody in Europe had even tried. This gap in the market, combined with the broken rental experience that almost everyone has first-hand experience of, was the inspiration behind IMMO, and it continues to underpin our mission to this day.
How does IMMO implement AI and machine learning technologies? How do you envision this technology making an impact in the real estate industry?
I can answer this in two parts.
- Artificial Intelligence: Investing in real estate usually starts with sifting through massive amounts of documents to collect the required data points to evaluate an asset. This is a cumbersome, lengthy process when done by hand. AI language models allow us to instantaneously extract the right data out of hundreds of documents, allowing investment experts to understand assets much faster and spend more time on activities that create actual value. At IMMO, we use AI to give humans investment superpowers, not replace them
- Machine learning: One key process in underwriting properties is the identification of suitable ‘comparable transactions’ to accurately value the asset. This process is traditionally very time intensive, often taking trained investment experts many hours to complete. Leveraging machine learning lets us train algorithms to consume much larger volumes of such comparables than humans can, and suggest the right comparable properties instantly. The time and efficiency improvement is massive.
All in all, we see AI and ML as tools that will make the industry work faster and more efficiently.
How was IMMO’s journey to find funding? How has this funding helped propel the company forward?
It was very important to us to find growth investors who understood how capital moves in the real estate industry and are familiar with the challenges of launching new asset classes to institutional investors. We found such partners in US-based Oak HC/FT who led our Series B, as well as Fintech Collective and Talis Capital who led our Series A. All our shareholders followed the creation of Single-Family Rentals as an institutional asset class in the US over the past 10 years and partnered with IMMO to bring this granular residential investment revolution to the UK and European markets.
The funding we raised has allowed us to invest in the buildout of our end-to-end technology platform, which today positions IMMO uniquely in the real estate investment management space. Since our series B, we have also been fortunate to assemble a world-class team: Hima Mandali (Chief Technology Officer, ex-Solaris Bank), Chris Chinaloy (Chief Growth Officer, ex-Round Hill Capital), and Arik Benzino (Chief Commercial Officer, previously COO of WeWork for North America and Israel) to name a few key additions to the team. We also opened a technology hub in Chennai, India.
Can you tell us more about IMMO’s current “shopping spree” in the UK to buy and retrofit 3,000 homes? What motivated this initiative, and how will it meet the Government’s minimum energy performance bill?
The UK was always an obvious market for us to target, due to the sheer scale of the problem dominating this market. Ahead of the proposed new Minimum Energy Efficiency Standards, 56% of UK homes are currently rated EPC D or below, and will urgently need to be retrofitted. The cost of that is estimated to be £65 billion, with each private landlord required to foot a bill of over £5,000.
The private rented sector has called the necessary retrofits “unaffordable”, but they are required for the UK to meet its net zero strategy and decarbonise polluting homes. It’s clear therefore that institutional capital is needed to make the UK’s housing more efficient. At IMMO, we exclusively target existing housing and commit to retrofitting homes to an EPC C, or above, which makes meeting future energy standards a core part of our business model, while ensuring investors’ assets are ‘future-proofed’ against regulations.
What sets IMMO apart from its competitors? What unique advantages or offerings do you bring to the market that they do not possess?
IMMO is fully integrated through the entire real estate value chain: from capital sourcing, through underwriting, acquisitions, and retrofit, to renting and managing homes. This allows us to deliver deep innovation that companies which focus on only one part of the value chain cannot achieve because they do not control every faucet of the home through its lifecycle.
Consequently, we can develop the home as a platform to deliver services to tenants. Control of the asset is a key differentiating factor in this equation.
Can you share some moments or situations where you faced significant challenges or unexpected setbacks, and how did you overcome them?
Unexpected setbacks and challenges are the rule rather than the exception when building a company. As an entrepreneur, this is part of the journey.
It’s been a while now, but COVID-19 stood out as a crisis as investors around the globe started to panic. We lost a client contract back then worth over 150 million as the investor questioned whether anybody, let alone a startup, would be able to operate successfully through a pandemic in such a deeply physical asset class. This was very challenging for us. And indeed, we had to find ways to keep our employees and residents safe, but also operate in ways that involved significantly less on-site work. We came up with new products and ways of working that we’ve kept since, for example allowing us to conduct asset inspections, or home viewings remotely when necessary. We adapted fast and soon were able to win new clients again.
You have been recognised by Forbes as 30 under 30’ for your role as a leading entrepreneur and commerce innovator. What key innovations or advancements do you foresee in the future of real estate technology?
Today, real estate is largely missing a foundational data layer and technological infrastructure that enables meaningful, deep innovation. There is a parallel to be drawn between the rise of open banking and shared payments infrastructure, that facilitated an enormous wave of fintech innovation. Once these ‘rails’ exist for proptech, real estate, energy companies, and others, to communicate in unified standards, we will likely see much more meaningful innovation appear, including novel applications of IoT, a deeper connection between the home and community services, digital transactions, and much more. It is a very exciting time to be in proptech.
What advice do you have for new founders looking to enter the real estate or PropTech industry?
It is important to understand that the real estate category still mostly operates based on convention rather than first principles reasoning. Things are done the way they have always been done and change hence occurs slowly. Founders trying to disrupt the market with game-changing solutions need to master the art of ‘picking customers up where they are’. This is crucial to succeed in proptech.
Looking ahead, what are your long-term visions for IMMO in the next 5 to 10 years? How do you see the company evolving and impacting the real estate market?
IMMO will turn residential real estate into an easily accessible, liquid investment product. The IMMO platform will allow institutions and retail investors alike to invest in e.g. ‘housing in Manchester’ or elsewhere in the same way in which we are used to buying stock in the stock market today. Investors get what they are looking for: the macro investment exposure to the asset class and geography they choose. Today real estate investing is intensely operational project work.
