Property technology (proptech) is one of the fastest-growing industries globally. It involves using websites, software, and smartphone apps to search for, manage, or purchase real estate. Currently, the fundraising value of companies in this niche stands at $18 billion USD worldwide.

Even though proptech in Southeast Asia and the rest of the Asia-Pacific (APAC) region started a bit later than other regions, it is now showing signs of growth. Singapore has the third-highest number of proptech companies in APAC and is first in Southeast Asia, with examples such as PropertyGuru and Soho.

Tech innovations in real estate are fixing the inefficient – and sometimes chaotic – processes in the long-established market. Common problems revolve around searching for property, finding the ideal platform for listing, and lacking sufficient data on industry trends. Other factors include the challenge of distance when viewing property listings, plus the issue of hidden costs and commissions.

There are several signs that the proptech industry has a bright future in Southeast Asia. The increased investment in the region, the low housing prices, and the rapid population growth indicate a move in the positive direction. 

We take a look at the reasons for the thriving Proptech market in Southeast Asia.

Favourable investment environment for proptech

The investment environment for proptech in Southeast Asia looks favourable for those who want to get into the industry. Singaporean proptech companies PropertyGuru and Soho Property have increased their share capital in August by $146.9 million USD and $2 million USD, respectively. The former’s funding came from REA Asia Holdings Co., whereas the latter’s backing came from BMT IT Services and Soho Property Investors.

PropertyGuru has struck a merger deal with special purpose acquisition company (SPAC) Bridgetown 2 Holdings Ltd, owned by billionaires Richard Li, from the Pacific Century Group and Peter Thiel, from Thiel Capital LLC. The equity value of the deal will be $1.78 billion USD.

Meanwhile, Soho Property, which owns the website, received its most recent funding round in March this year. Its total investment stands at $3.4 million USD, with money coming from BridgeLane Capital and Second Century Ventures.  

These examples of recent proptech deals indicate that the real estate market is mending, albeit slowly.

Lower housing prices

COVID-19 has harmed Southeast Asia’s economic growth due to the steps taken to protect the health of the residents. Measures such as social distancing, virtual viewing of listings, and digital transactions continue to be the way forward in the property industry.

Global real estate services and investment management company Jones Lang LaSalle’s (JLL) report shows an “uneven recovery” in the property market. The Asia Pacific Property Digest Q1 2021 survey states that office leasing is steadying, whereas the retail market is improving gradually. In the Philippines, workplace relocations are benefitting the leasing sector.

On the other hand, the industrial and residential markets are doing well in many areas. There is a massive demand for new properties, which is boosting the real estate sector. In Singapore, for example, the Urban Redevelopment Authority’s (URA) data showed that newly built private home sales went up by 82.2% in July. Malaysia will likely have lower rental prices and capital values because of pressure from an increased supply of houses.

Rapid population growth

Southeast Asia’s population is multiplying, currently standing at over 675 million people. Demographic data affects the real estate market through property-type demand and supply, pricing, migration, and investment.

The populace in the region has had to deal with movement restrictions due to the COVID-19 pandemic. People are moving away from shared office spaces, hotel stays, and co-living units and opting for more private areas.

Another significant factor is the smartphone penetration in Southeast Asia. According to GSMA’s Mobile Economy 2020 report, 70% of the population will be mobile phone subscribers. This widespread digitisation of the region alongside the deployment of 5G means proptech startups can seamlessly offer their real estate solutions to the public via mobile devices.

What lies next?

Based on recent trends, the market for proptech in Southeast Asia is preparing to shine in the near future. Companies such as PropertyGuru, Soho, and others will continue innovating and making the sector well organised, cost-effective, and inclusive.

COVID-19 will be a thorn for the region and the whole world for a while, but governments and the public are navigating the current landscape better than expected. People are adapting to a new way of living, including social distancing and using digital options when dealing with property agents.

Expect to see further investments in proptech as other Southeast Asian countries catch up with Singapore. The new funds will bring better solutions as the market responds to customer needs. There will also be a greater focus on data analysis, which will shape the entire industry.