The story appears on

Page D2

November 27, 2017

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Real Estate

Asia Pacific leads proptech start-ups growth

Asia Pacific has seen its share of property technology, or proptech, rise with start-ups receiving more than 60 percent of the over US$7.8 billion invested in them worldwide since 2013, newest findings released by international real estate consultancy JLL showed.

Between 2013 and 2017, 179 proptech start-ups in the region have raised around US$4.8 billion in funding, with China and India emerging as the top two markets based on funding value and total number of deals, according to the report titled “Clicks and Mortar: The Growing Influence of Proptech,” which was commissioned by JLL and authored by start-up community Tech in Asia.

Proptech refers to the application of technology to solve challenges in the real estate sector. Specifically, technology is used to create or renovate services offered in real estate to buy, sell, rent, develop, market and manage property in a more efficient and effective way.

“Technology and real estate are converging in exciting ways and we’re already seeing the potential of data analytics, artificial intelligence, the Internet of Things, virtual reality and blockchain, to transform how we invest in and occupy real estate in the future,” said Anthony Couse, chief executive officer of JLL Asia Pacific. “There is a great deal of potential for proptech in Asia Pacific, where the young population, rapid urbanization and ‘mobile’ first mindset will jointly accelerate the growth of this new sector while bringing increased efficiencies and better experiences for the end-user.”

Funding for proptech in the region is forecast to grow to US$4.5 billion a year by 2020, according to the report, which has grouped proptech start-ups into four main verticals: brokerage and leasing, investment and financing, project development and property management. Brokerage and leasing, among all, plays a dominating role as it has received nearly 90 percent of total Asia Pacific proptech funding since 2012.

By geography, start-ups in China raised the most funding of US$3.02 billion, or more than 60 percent of Asia Pacific’s total, from 34 deals. India, meanwhile, boasts the highest number of proptech start-ups in the region at 77 deals which raised US$928 million in total.

Home to six out of 31 megacities in the world in 2016, Chinese mainland represents a highly dynamic proptech landscape. Despite having only 23 out of 179 proptech start-ups in Asia Pacific, it has received close to 60 percent of the region’s proptech funding since 2012, with most of the funding flowing into the brokerage and leasing vertical.

China’s Lianjia.com, arguably the country’s biggest real estate agent chain with 6,000 shops and 120,000 staff at the end of last year, has raised US$1.69 billion for its tech-enabled brokerage business. The proptech unicorn is taking a mixed online-to-offline approach to differentiate from its web-only rivals. Aside from Lianjia, the biggest proptech unicorn to date in China, the country also has three other notable proptech unicorns: Mofang Gongyu, stated to be one of the largest institutional rental apartment operators in China; Fangdd, an online-to-offline platform and Aiwujiwu, an online real estate agency.

The report has also listed several major factors that will affect proptech’s development within the region as follows:

Economic factors

Asia Pacific is home to some of the largest emerging markets like China and India and rapid urbanization is occurring across the region. Research from the United Nations shows that between 2000 and 2016, 40 out of 47 cities with the fastest growth rate in population are in Asia; 20 of them in China alone. That will result in a wider pool of users with diversified needs. This is where proptech start-ups can come in and use technology as a competitive advantage to thrive across all four verticals.

Social factors

The middle class has become the rising force in consumption across Asia Pacific. It is estimated in 2015 that Asia Pacific’s middle class account for 46 percent of the global middle class and represent over US$10 trillion of consumption. These figures will increase to 65 percent or around US$38 trillion by 2030.

In addition, millennials — one of the largest generations in history — are reaching their prime spending years and about to reshape the real estate market with their distinctive spending habits and expectations.

In Asia Pacific, it is estimated that by 2020, 50 percent of the region’s population are millennials. Economic uncertainty, job losses, supply scarcity (in some markets like Singapore and Hong Kong) coupled with more liberal spending habits compared with their parents’ generation, make it unattractive and difficult for millennials to own a house. Thus, they tend to lean toward flexible options (i.e. renting) or collaborative consumption (i.e. co-working space). These demographic trends present excellent opportunities for proptech start-ups in brokerage and leasing as well as investment and financing to offer new products and services aimed at affordability for this customer segment.

However, consumer behaviors remain a formidable challenge to proptech’s growth within the region. Many countries in the region are low-trust societies. Due to a lack of transparency in many local property markets, consumers are likely to favor human interactions for high value assets like real estate. This behavior is more entrenched among baby boomers, who remain the main buyers of real estate.

Technological factors

Proptech in Asia Pacific is accelerated by technological sophistication of consumers. Asia accounts for 50 percent of total Internet users in the world. Besides, Asia Pacific tops the world in growth of smartphone traffic to the Internet. As consumers get savvier, online shopping is booming in the region, paving the way for an “Amazon experience” in the real estate market. Additionally, the rise of millennials in Asia Pacific’s population will boost consumer preference for using technology.

Political factors

Governmental regulations have not always been able catching up with changing technology, presenting a hurdle for proptech start-ups. Policy challenges are most visible in peer-to-peer accommodation start-ups while blockchain is also facing resistance from governments of some countries.




 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend