Buying property or investing in real estate the old fashioned way involves approaching agents who pocket commission money that genuine buyers can do without. This is the whole premise of PropTech that has been emerging as one of the most promising sectors in South Asia.
What is Proptech?
Well, it is quite clear what Proptech stands for – Property Technology. We are living in the century of technological buzzwords. We have come across Artificial Intelligence (AI), Machine Learning, Fintech and many more, and Proptech is one of them. It is an acronym that describes any kind of technology used in the real estate sector. It could be a software, hardware, special materials, or a manufacturing process. According to a 2018 JLL report, Proptech can be described as: “the utilisation of technology as a solution to challenges in the real estate sector.” Basically, to offer services offered in real estate like buying, selling, marketing, renting, developing and managing property in an efficient and effective manner. The main idea behind Proptech is to make the buying and transaction process more transparent and flexible.
The traditional real estate market is highly inefficient, with the costs passed on to end-users. The costs of viewing and marketing properties, sourcing for leads etc. can be brought down with the help of Proptech by-
- Better data and control- Aggregating property listings on platforms, providing detailed metrics about performance of property listings.
- More choices- Freedom to browse and shortlist property listings anytime and anywhere.
- Less time spent travelling- Virtual listings and 360° online tours allow individuals to view properties while sitting on their couch.
In short, agents get to close deals faster and clients save on a significant amount of commission.
The Proptech scene in South Asia
Lately, the Asia-Pacific region has been experiencing a lot of action in the global Proptech industry. According to a JLL report published in 2017, between 2013-17 a total of 179 startups in Asia accounted for 60% of global proptech investment, raising US$ 4.8 billion. India and China are bigger players in the proptech sector, but ASEAN countries are not far behind. JLL estimates show that there are 786 proptech startups in the ASEAN market.
Data analytics, Artificial Intelligence, the Internet of Things, Blockchain, Cryptocurrency etc. are changing the way we invest in and buy real estate. Various players in this sector recognise these challenges and opportunities.
In 2019, Southeast Asian Proptech startups raised $72.9 million USD, out of Asia Pacific’s total of US$ 625.9 million funding. This shows that Proptech is taking off in the region. Out of a total 38 deals brokered in 2019 in the South Asian countries, 11 were in Southeast Asia, placing it just behind China and ahead of India, who were previously the major competitors behind China.
As a result of urbanization and a young population, demand for housing and workspaces has risen dramatically in Southeast Asia. Currently, there is limited credit access and financing in the emerging markets across ASEAN. Therefore, Proptech will need time to dominate the real estate market in Southeast Asia. It will also have to rely on other startup ecosystems to expand across the region. The rapidly growing Fintech sector will act as an engine for growth.
Emerging Proptech Markets in South East Asia
- Singapore- Singapore has been awarded the top rank in JLL’s “Global Real Estate Transparency Index.” Singapore’s Proptech is very advanced as compared to other countries. This has been possible due to its supportive “startup ecosystem.”
- Malaysia– Malaysia’s startups- iProperty.com and Common Ground have made it to the top 12 Proptech players in the region. Malaysia Proptech Association has also been set up by Dato’ Sri Gavin Tee (President of SwhengTee International Real Estate Investors Club) to encourage the growth of Proptech and support startups.
- Thailand– In Thailand, the Proptech sector is yet to develop. The county has some local property search portals but are lacking sophistication of products and the relative development in the real estate markets.
- Indonesia– The Proptech market in Indonesia is quite promising. It is gradually evolving with various technological developments in the country. EV Hive is an Indonesian Proptech startup that has raised $24.3 million USDin three rounds of Seed and Series A funding since 2017. It is a coworking space offering entrepreneurs networking opportunities and business services.
Thus, we can say that an enormous transformation in the real estate sector is expected with the development of various disruptive technologies all over the world. It is only a matter of time before property scene in this region catches up with other developed sectors.