How technology brings value to the property market
WHEN you think of the property market, advances in the internet of things (IoT), artificial intelligence (AI), and blockchain seem to fade away and you’re left with this traditional, offline system that seems out of sync with modern society and cities.
Imagine building a smart city with today’s existing property transaction mechanisms.
You’re going to need to go and get deals signed by different people, have lawyers representing all stakeholders come to the table, negotiate what fair price is, and engage with specialists to discover the right price, among other things.
All of these pieces of the puzzle could be left behind if the world moves on to a more technology-driven marketplace. It’s what proptech firms have been attempting to do for a while now, but without too much success – and in many respects, their failure to make an impact is a result of people’s lack of awareness and understanding of their role.
Jack FitzGerald, Senior Development Manager of Lendlease, in an exclusive interview with Tech Wire Aisa, discusses the value proposition of propetech firms and how technology can add value to the property market.
Why proptech and why do you think that the property industry is hungry for tech innovation and start-ups?
There is a rising awareness within the real estate industry that technology is beginning to change the way we do things.
From crowdfunding and bitcoin emerging in the investment space, to 3D printing and drones used in construction, or IOT and big data analytics in building management it is now possible to identify oncoming change in virtually every part of the real estate value chain.
The reality, however, is that the buzz around proptech still outweighs its actual implementation.
Technology has been part of real estate for a long time, the only difference now is that we now have a term around which to rally so it’s important to understand that while proptech is an important trend, it’s not entirely new.
Meanwhile, the real estate industry faces urban challenges caused by the megatrends of rapid urbanization, growing population and changing demographics.
Urbanisation in the APAC will happen on an unprecedented scale over the next 20 years, with more than 550 million people expected to move to cities by 2030.
ASEAN is expected to gather more than 660 million inhabitants in 2020, and that number is expected to grow to 720 million by 2030.
In turn, rising land prices and greater competition for resources such as building materials puts further pressure on margins which leads real estate players to seek out greater productivity and efficiency – some of which can be achieved by technology.
When you combine these factors with the size of the commercial real estate market, reported to be worth US$16 trillion in 2017 and set to grow to US$19.5 trillion by 2020, we are talking about the convergence of two of the world’s largest industries – technology and real estate – which is a monumental prospect.
How well is the property sector in Asia embracing innovation such as proptech?
The term proptech only came to prominence in Asia in 2017 so it is relatively new, and we are starting to see the first wave of proptech specific events being organized which is a sign of things to come.
There are plenty of established proptech players in Asia when you think about residential search – REA, PropertyGuru, iProperty etc – and we are now seeing a rapid expansion of new platforms emerging covering commercial real estate, smart homes / IoT, and crowdfunding.
In terms of the traditional real estate industry, there have already been a few proptech specific funds launched in Singapore and Thailand, and now with the JLL Spark US$100m global fund, I expect we will see both developers and the big advisory firms follow their lead.
Investment data is already very healthy with Asian start-ups receiving 60 percent of the world’s proptech investments.
Why is it important for the property industry to keep up with proptech?
In short, it comes down to our customers. The ultimate objective is to provide the best customer experience possible.
This could be someone walking into our shopping mall, working in an office tower or engaging with us in a transaction.
Customers’ expectations are evolving, creating new demands in the real estate sector and the property industry simply has to keep up.
Technology is not the only answer, but it should be part of an overall approach to creating the best product or experience.
Interestingly, despite 89 percent of real estate businesses agreeing that they need to engage with proptech, only a third of them have an enterprise-wide digital strategy in place.
Customers are not the only player in the property market that is driving change. Developers too are making their own play to benefit from the growing demand for flexible space.
For example, Lendlease’s Paya Lebar Quarter development in Singapore will dedicate up to 15 percent of its office space to house co-working facilities.
This is a testament that customers’ demands have shifted and the need for greater innovation in the property market to respond to these changes is more important than ever.
Finally, the businesses that engage with proptech early by adopting the best technologies will ultimately gain a competitive edge.
They will be able to build faster, to a higher quality, operate more efficiently and provide a better customer experience – all possible to some extent through proptech.
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