What we can expect as proptech matures in the Asia Pacific region
By Quek Wee Siong | Proptech is the application of technology in the real estate industry value chain, where the intention is to integrate disruptive solutions and enhance productivity. The spectrum encompasses property management using digital dashboards, research and analytics, listing services or tech-enabled brokerages, residential and commercial lending, 3D-modeling, shared spaces management, as well as organizing, analyzing, and extracting critical data from lengthy rental documents.
One key focus for proptech is closing gaps in property sales. The typical property market value chain encompasses the following:
Proptech looks at ways to speed up, simplify and save cost in this cycle. Over the past ten years, the industry has evolved from 1.0 into 2.0, and is now steadily transitioning into 3.0.
In the early 2000s, the rise of the internet resulted in the digitization of information, replacing traditional print in every sector including property listings and property-related services. In Malaysia, PropertyGuru and iProperty are notable portals that thrived in this space, becoming the platforms to buy, sell, and rent.
This model generates revenue from listing fees predominantly on the pre-sales front as lead generators for developers and estate agents, but most post-lead real estate transactions were still manual.
Proptech 2.0 emerged as a result of broader internet and smartphone penetration, which enabled greater information sourcing and transfer. Mobile devices became more than just a tool for communication, as innovative business-to-business solutions were created to help property developers digitally manage sales, and make property bookings and reservations.
Greater importance was placed on harnessing data to better understand market behavior and allow stakeholders to make more informed decisions. Visibility regarding specific properties and historical transactions was invaluable for consumers and investors.
Proptech 2.0 also saw the emergence of shared economy products such as home-sharing (e.g., Airbnb) and co-working (e.g., WeWork). Fintech and proptech started overlapping in the context of eKYC (electronic Know Your Customer), payments, mortgages, and property-related insurance, allowing consumers to engage and apply for these products from the comfort of their home, marking a shift from info-sourcing to actual conversions from 1.0.
The surge of blockchain technology, specifically concerning smart contracts, is likely to normalize paperless land title registries, playing a significant role in Proptech 3.0.
Stockholm-based blockchain startup ChromaWay recently announced a trial with Australia’s New South Wales Land Registry after a proven track record of transaction recording in Sweden. In the future, land transactions will happen instantaneously while fraudulent ownership or unauthorized transactions will essentially become non-existent.
Another trend on the horizon is the widespread adoption of smart homes, where the Internet of Things will enable optimized energy use and other functionalities. Fractional property investments, powered by blockchain via the tokenization of assets, will allow individuals to participate in property exchanges in the same way as conventional shares, which is another major innovation that’s being developed.
Proptech 3.0 also sees the use of tech in construction, where robotics is applied to make materials more durable and the process more efficient, such as using 3D printing to construct buildings.
The future of proptech
Proptech is no longer niche, as evidenced by the fact that 70% of the US$6 billion invested in proptech globally since 2011 took place in the last two years, according to Cushman & Wakefield’s Occupier Edge report. The next five years will be especially interesting for the Asia Pacific region, as proptech matures in emerging markets and the demand for services that facilitate housing transactions continues to grow.
About the Author
Wee Siong is the CEO and Co-founder of MHub, Malaysia’s leading real estate fintech platform used by property developers, sales agents, bankers and lawyers all working together towards a shared goal: to help deserving individuals buy a home. MHub has facilitated the purchase of properties totaling US$1.2 billion to date.