Proptech in Southeast Asia was thriving due to the strong demand in the real estate industry. Funding for the industry in Asia was second-highest in the world in 2019. However, the onset of COVID-19 shook things up considerably. The global pandemic created a panic in the real estate market. Many potential buyers put off their property purchase decisions — a trend that dealt a huge blow to proptech in Southeast Asia.
Will the proptech sector be able to recover from the storm?
The good news is that Asia is still undergoing urbanisation, and the upward trend towards demand for property and proptech doesn’t seem to have been affected much by the global pandemic.
Proptech in Southeast Asia is still in its infancy
Proptech has been gaining ground across the globe in recent years, with global venture capital investment in proptech hitting over $75.2 billion USD in the last five years.
Proptech is a growing industry and we focus our attention on the startups making waves in the region.
Research platform Tracxn reports that more than $202 million USD venture capital was invested in the industry in the last quarter of 2019, spread across 25 deals. During April 2020 to June 2020, upwards of $25 million USD was invested across six deals.
Vietnamese real estate startup Propzy has secured $25 million USD in series A funding. The funding round was led by Gaw Capital and SoftBank Ventures Asia, the early-stage venture arm of SoftBank Group. Other participants included Next Billion Ventures, RHL Ventures, Breeze, FEBE Ventures, RSquare and Insignia.
Propzy was founded in 2016 and aims to provide a safe buying, selling and renting experience. According to Business Insider, Propzy plans to use the funding to simplify real estate transactions, as well as manage and streamline the real estate lifecycle. The company will also expand into its home country and across other South Asian markets over the next couple of years.
According to Gaw Capital’s Managing Partner, Humbert Pang, “Propzy is an example of the many macroeconomic successes in Vietnam. With its innovative breakthrough in real estate’s offline to online business models, we see the immense potential of Propzy to skyrocket.”
Last year, proptech startups in the region raised $625.9 million USD, according to research by JLL and tech media firm Tech in Asia, out of which, Southeast Asia-based companies raised a total of $72.9 million USD. Out of the 38 total deal counts in 2019, Southeast Asia accounted for 11 of these deals, clocking in the second-highest record of deals, as well as funding across Asia Pacific.
We look at the industry from a bird’s eye view to get a better sense of what proptech in Southeast Asia looks like.
“The demographic in Southeast Asia has favourable elements supporting investment into proptech. This includes a young and growing tech-savvy population, urbanization and a growing real estate footprint fuelled by strong economic growth and higher market transparency,” said CEO of JLL Southeast Asia, Chris Fossick.
Are the first signs of recovery already visible?
With Singapore as one of Southeast Asia’s most advanced proptech markets, Vietnam is not far behind. Apartment prices rose drastically in Ho Chi Minh City in 2019, and the proptech market quickly grew with it to meet demand.
SPEEDHOME, a home rental platform in Malaysia, is already seeing the first signs of a recovery. Their May sales rebounded to the pre-COVID 19 levels and they expect them to grow more than 20 percent in the coming months.
Southeast Asia’s proptech giant, PropertyGuru is adapting quickly to the fast-evolving real estate landscape, realising that virtual is becoming the new normal. The company launched a new feature to its PropertyGuru FastKey platform, called StoryTeller. This useful, 20th-century tool provides viewers with a 360-degree immersive property viewing experience — even providing potential customers with an accurate feel for the surrounding landscape. It’s the ideal tool to present to a property buyer to help in their decision making while also supporting social distancing.
While these are excellent signs, it’s impossible to say what the future will bring. The Coronavirus’s effects have been widespread, and it’s nowhere near over. So realistically, we’ll just have to wait and see before we can make a real assessment of where proptech in Southeast Asia will be at the end of it all.
Due to COVID-19, economic recession is imminent. However, property in Southeast Asia is one of the least disrupted industries, and the opportunity is still excellent for investors. While some proptech startups were pushed to the brink, many are focusing on innovative ways to reposition themselves and find new opportunities in the changing real estate market. With social distancing in place and people no longer using co-working spaces, the demand for affordable private spaces has risen. Consumers are also taking to virtual viewing which is a great opportunity for proptech firms to tap into and grow. The pandemic has also contributed to the digital acceleration across industries. COVID-19 is changing the real estate market and opening doors to more innovations that are setting the stage for the future.