In a sector that’s been typically more bricks and mortar than bits and bytes, technology is rapidly finding application across the world’s largest asset class.
Technology is transforming every industry, and real estate is no exception. The world’s largest asset class, Savills Global Research valued global real estate at $228 trillion in 2017. Residential property accounts for about 75% of that and is growing at 5% per year. The picture across Southeast Asia is more mixed, with Vietnam and Indonesia flat or in a downcycle, Singapore and Malaysia growing modestly, and Thailand the most buoyant, according to data from the IMF.
Technology is playing a key role across both commercial and residential property sectors, from property listing portals, to big data and analytics, blockchain, cloud platforms, and virtual reality, there are start-ups solving industry problems from all angles. JLL research found that, in 2017, Asia-Pacific accounted for 65% of global proptech financing deals, which highlights the expectations that investors have for proptech to take off around the region.
Part of this is due to the rapid urbanisation happening in many Asian countries. Globally, 55% of the world’s population lives in cities, a figure that the UN expects to rise to 68% by 2050. China and India alone account for 27% of this projected growth, pointing to a high level of internal migration and demand for urban real estate.
Despite being a relatively nascent industry, residential proptech has already gone through several evolutions from the early versions of online marketplaces and collated property listings. While not necessarily at the cutting edge of technology, the listing sites have been key to creating transparency.
Real estate technology is “creating an environment of trust,” says GeorgChmiel, chairman of Juwai.com, China’s largest international property portal, and ex-CEO of Malaysia’s property portal iProperty. “In the past, someone who wanted to purchase a property had to go to an agent and look what they had on offer but could never be sure if they had covered the whole market.’’
The second wave of the residential proptech evolution has been providing value-added services. To increase the attractiveness of their platforms, websites introduced data and analytics and virtual viewings. For example, Chmiel says that Juwai can advise developers targeting the Chinese market before they have started building. Juwai is the largest source of global properties for the Chinese audience, with over 2.8 million property listings representing about $1 trillion, according to its website.
“We can provide information about what Chinese buyers really value,’’ says Chmiel. ‘’What they want to see and whether they like two bedrooms or three. This is the power of data, where it becomes knowledge and it is really changing the industry.”
In the third evolution of proptech platforms, artificial intelligence and blockchain technology will play a role. Machine learning could accurately whittle down a property search according to a customer’s needs and their changing preferences. Meanwhile, chatbots could help automate real estate processes such as appointment bookings, saving time for real estate agents to concentrate on more value-added services.
In a real estate context, a blockchain – a digitised, distributed ledger that immutably records and shares information – offers a way to improve transparency. Smart contracts, essentially programs coded on a blockchain, would offer a means to do away with consuming face-to-face interactions with various parties such as lawyers or bankers.
Meanwhile, several companies are using blockchains as ways to ‘tokenise’ property; representing ownership of real-world assets in a digital form to reduce the cost of investment for investors and increase liquidity. However, regulators have cautioned that the anonymous nature of blockchains leaves certain platforms susceptible to potential abuse by criminals.
According to KPMG, in terms of digital innovation, real estate has typically lagged behind other industries, potentially due to the long-term nature of property investments and the apparent security they provide. Yet there are signs that this is changing and some of the most valuable US start-ups including WeWork and AirBNB are proptech companies that have already revolutionised the way we work and how we monetise our properties.
By applying technologies such as virtual reality and user-intuitive spatial planning tools for construction and development, or 3D printing to provide affordable homes, proptech could become a powerful force for good. “When people talk about disruption some people think it’s all about destroying something,’’ says Chmiel. ‘’But the ultimate source of disruption is really making things better in the real world and solving a real issue.’’
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