The real estate market in Southeast Asia is growing in conjunction with the utilisation of innovations in the industry. One of the areas experiencing the most significant evolution is the property technology segment, otherwise known as proptech. This technology sector involves integrating or utilising tech, software, websites, platforms, smartphone apps, and other digital solutions into the real estate industry.
In 2018, property experts believed that the prevalent technologies most likely to be used in the industry would include smart building products, pre-fabrication options, construction site robotics, and building information modelling (BIM) techniques. Plus, there would be drones, intelligent building design, and more.
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According to the Market Reports World research, the global proptech market will be worth USD 53077.5 million by 2028. The trends positively influencing the segment include continuous technological innovation through research and development (R&D), consumer expectations for new product launches and features, and lower pricing models. Other macroeconomic factors are rapid urbanisation, a growing middle class, and increased spending by citizens.
For the Association of Southeast Asian Nations (ASEAN), property technology has been thriving for many years due to the favourable investment environment in the region. Examples include Singaporean companies like PropertyGuru and Soho Property, which increased their share capital in 2021. Moreover, commercial and residential property values are low, enabling more people to invest in the industry.
Benefits of proptech in Southeast Asia
Proptech caters to various parts of the real estate industry, including property management, rentals, purchases, land sales, and more. It has many advantages for the region, such as:
- Access to real-time data: The sector collects real-time data from its customers to manage their accounts or process transactions. The gathered information can provide valuable insights about user behaviour and help to tailor the products and services to their needs.
- Handle transactions: Real estate transactions must be transparent and efficient to build user trust and enhance customer experience. It can also involve other steps whereby businesses handle valuations or connect to brokers and agencies to close deals.
- Streamline business operations: Property technology simplifies and enhances operations by digitalising many parts of the industry and making the sector more user-friendly. People can manage their properties via a platform and respond to customers via a chatbot when they are away.
- Virtual and augmented reality viewings: When new digital platform users want to buy or sell real estate, a valuable feature they can use is virtual or augmented reality. It enables them to tour the entire property and see multiple angles before deciding whether to buy or pass on the offer.
- Democratise access to those in underdeveloped areas: ASEAN faces similar challenges to other regions, with differences between those in advanced areas and those in rural areas. Those in underdeveloped areas can get personalised recommendations through AI learning tools and enhanced search capabilities.
- Adopt sustainable technology options: Customers get user-friendly and sustainable solutions when they adopt property tech. They can manage their commercial or residential real estate remotely and control the Internet of Things (IoT) options, such as smart lighting, heating, security systems, automation, and other systems.
Challenges to the adoption of proptech in ASEAN and opportunities ahead
Currently, proptech has several factors undermining it. Firstly, it works by collecting personal data and processing transactions. That means there is a cybersecurity risk, which some users may be unable to overcome out of fear of financial or data loss.
Secondly, ASEAN still needs to be developed in some areas and is plagued by poor infrastructure. For example, some countries are more advanced in launching 5G networks than others.
A third challenge is that many people are reluctant to adopt the technology because it can be expensive to buy and implement. Other users are concerned by the number of stakeholders in real estate at different levels. Some prefer simple living compared to those who are comfortable using digital tools.
A fourth issue is that the current global economy is facing problems like inflation and rising energy costs. One of the outcomes is a need for more funding for startups. The financing shortages will affect proptech businesses and are unsuitable for the overall health of the real estate market in Southeast Asia. Regulations may also play a part, but the industry still shows much growth potential.
ASEAN’s population is increasing, raising the demand for housing and commercial space. Its people are tech-savvy, meaning they are open to trying novel technologies. Even though competition may not be friendly, customer expectations ensure that startups have opportunities to disrupt the industry to deliver transparency and efficiency.
Solutions for financing and further innovation are critical to the ASEAN real estate market. The region is undergoing rapid urbanisation and digitalisation, and investors may be able to provide funding, mentorship, and guidance on uplifting the industry. Moreover, sustainable options like smart lighting and other environmentally friendly options will contribute to safeguarding the planet.