Helen Chen, chief executive and co-founder of PropTech start-up Nomad Homes, has always loved real estate.
Growing up on the US west coast in Washington, she would spend her free summers helping her parents fix up rental properties they owned, getting them ready for new tenants.
Unsurprisingly, her first investment was in a real estate asset – a rental property she purchased at the age of 23.
“This is what I love [and] this is what I think about all hours of the day,” says Ms Chen.
So, it was only natural that she zeroed in on a market gap in the real estate sector while pursuing her MBA at Stanford University. With a stint in private equity at Blackstone and at China Investment Corporation, Ms Chen had a keen eye for potential investment opportunities. While digitisation was rapidly transforming many sectors, she noted real estate was lagging.
“Real estate is a $30 trillion industry. It is the largest asset class globally and across the UAE," she says. While there are "over $20 billion transactions every single year ... real estate is still largely offline. The opportunity that I saw was to bring the real estate transactions online”.
Ms Chen and her co-founders – Dan Piehler and Damien Drap – sought to address this particular gap when they launched Nomad Homes, a platform that collates multiple options for users looking to buy or rent homes in Dubai.
Users visiting the platform need to enter in specific details such as the preferred area and the number of bedrooms they require. Nomad Homes will use algorithms to suggest listings that might be suitable for users based on the details provided.
The start-up is not the only one to digitise home listings in the emirate. Portals such as PropertyFinder, Bayut.com and Dubizzle all offer similar services. However, Nomad Homes, Ms Chen argues, goes an additional mile and offers users a customer service agent, who helps co-ordinate viewings and deal with brokers.
“We become their one point of contact so buyers no longer have to deal with 30 different listing agents and they still have access to the entire market,” Ms Chen says.
Nomad Homes partners with property brokers in a bid to offer a wide range of authentic listings. Once a sale goes through, the start-up takes a commission from the deal. The platform also offers buyers a list of financing options, too.
“Our main value proposition is that you can search, transact and finance in one place,” the founder says. The company offers a similar service in Paris.
Real estate marketplaces such as Nomad Homes, Redfin and Zillow are surging in popularity as homebound users increasingly embraced digital channels amid the Covid-19 pandemic. The industry, which once depended on in-person visits, is coming to terms with a more tech-savvy consumer base.
A survey conducted by US-based real estate marketplace Zillow showed that 39 per cent of millennials – those born between 1981 and 1996 – are comfortable buying a home they have seen online. Fifty-nine per cent said they would be ready to put in an offer for a home they only toured online.
Figures for the region are hard to come by but the trend is not so different in the Middle East either. Ms Chen says that Nomad Homes, which launched in June 2020, registered “tens of thousands of users” and has grown 16 times in the first half of this year alone. She declined to disclose the number of transactions on the site.
While she admits the pandemic has proven beneficial for PropTech start-ups like home-buying portals, the shift to digital channels started long before.
“We already saw it starting to happen, but Covid-19 really accelerated this trend of moving online,” Ms Chen says. “More and more people are comfortable with virtual tours and are completing the transactions online.”
Ms Chen did not specify whether they are seeing more sales activity or renting activity.
“Renters are a consistent trend, and that's always growing. But recently there has been a pickup in buyers as well, just given where the market is," she says.
Residential transaction volumes in Dubai were up 76.8 per cent in the first eight months of the year, while secondary market transactions jumped 120.7 per cent and off-plan transactions rose 39 per cent, according to real estate consultancy CBRE.
As online home buying picks up pace, Nomad Homes has also garnered investor interest. The company raised $20 million in a Series A funding round that was co-led by 01 Advisors, an investment fund co-founded by Twitter’s former executives Dick Costolo and Adam Bain, in addition to New York-based investment firm The Spruce House Partnership. That followed a $4m investment round earlier this year.
The founders are planning to use the funds to invest further to develop the product and technology, including investing in machine learning, to improve the customer experience.
However, one add-on that Ms Chen hopes to have is an ability of users to secure mortgages through the platform.
“I do believe that all PropTech companies will one day become FinTech companies. So, one of the latest offering we want to include is a FinTech or a finance offering.”
Despite the recent boom in PropTech, Ms Chen and her colleagues have no intention to exit the business immediately.
“I would say right now we're really focused on our markets and [our] focus will be on Paris and Dubai as of now.”
Q&A with Helen Chen, CEO of Nomad Homes
What other successful start-up do you wish you might have started instead of Nomad Home?
I have respect for all entrepreneurs and all start-ups, because I know how hard it is. But Nomad is my favorite start-up, because this is what I love. So I would not start any other start-up, but I have immense respect for every other entrepreneur.
What would you do differently if you had to start over and are there any mistakes that you'd like to correct?
As a start-up, you always want to move faster. I wish we could iterate faster. We could test more frequently, and this is something that we are always working on. For us it's always about testing. It makes all the difference.
What skills have you learned from setting up your business?
I would say the biggest skill I've learned is to actually convince people to join your team early on. Having the best team is the most important piece of building your start-up and what I've learned is how to convince people to join you. This is largely because of the mission and the vision that we have and the team that we've built at Nomad Homes.
What is the one quality that an entrepreneur should have?
Determination. You have to believe that you can solve a problem and you need to convince everyone around you that you can do it and then you have to do it.
What advice would you give upcoming entrepreneurs who struggle?
If you love what you do and you're solving a problem that's meaningful to you, you will figure it out.
Name: Nomad Homes
Year started: June 2020
Based: Dubai, Paris and US
Amount raised: $24m
Investors: 01 Advisors (former Twitter executives), Spruce House, Goodwater Capital, HighSage Ventures, Abstract Ventures, Partech, Class 5 Global, Precursor Ventures, Alta Park Capital, and an undisclosed multibillion-dollar crossover fund, among others. Angel investors such as co-founder and former chief executive of Zillow and Pacaso Spencer Rascoff also participated in the round through his firm 75 & Sunny, along with Opendoor chief executive Eric Wu and former Compass COO/CFO David Snider.