What’s brewing in Proptech
What’s Happening Here?
The real estate industry has long defied innovation, spending less than 1% on information technology. However, the past few years have seen many start-ups disrupt this market by implementing technology to make the process of buying and selling properties much easier and quicker.
What Does This Mean?
There is a clear need to simplify the complex value chain in real estate and reduce the high amount of information asymmetry by either removing middlemen or increasing their efficiency by augmenting them with technological tools. There is significant opportunity for start-ups and investors to capture value especially in Southeast Asia where property transactions can be opaque and expensive due to the layers of middlemen.
Why Should You and I Care?
Real estate is the largest asset class in Southeast Asia, seeing over US$200 billion in transactions annually. It is a matter of time before Proptech players capture a significant slice of this pie as they facilitate greater transparency, lower costs and provide more efficient turnover compared to traditional brokers.
We have seen platforms like PropertyGuru and 99.co establish themselves as market leaders in the listings category. Such platforms provide online discovery of property listings, facilitating a greater number of interactions between property agents who post the listings and potential home buyers who browse the listings.
However, to properly tackle the Southeast Asia market, offline channels have to be mined as property transactions are large-value transactions which require some level of personal interaction to engender trust between both buyers and sellers. Proptech platforms like Ohmyhome in Singapore and Malaysia, as well as Rever in Vietnam, are bridging this gap by supplementing their services with a trained team of in-house real estate agents to close the deal.
Property is also closely linked to the financial sector, as credit is a major requirement in real estate transactions. This gives rise to opportunities for Proptech companies to offer financing options to buyers, on their own, if they are licensed, or in partnership with financial institutions like banks. There is a whole new value chain to be unlocked by Proptech companies who can leverage the data they have on existing customers to offer value-added services. One thing is for sure, we are only at the beginning of the Proptech revolution.