Tech: Prop-tech — disruptor and the future of the property industry
IMAGINE this: You are making an online reservation for a hotel in the Maldives, and the website you are on displays not only the floor plans, rates, and pictures but also a live panoramic window view from your chosen room as well as the relaxing sounds of waves that you would hear if you were actually there.
Basically, what you see and what you hear will be what you get.
You would be able to choose the perfect room — one with a view of a beautiful beach instead of an ugly rooftop, or a blocked ocean view that the hotel neglected to mention on its website — and actually get what you chose.
It may sound too good to be true but with property technology, or better known as “prop-tech” — the new buzzword in the real estate industry — all these things are possible.
And this is just scratching the surface.
Prop-tech is expected to reshape and redefine the real estate industry, from how we buy, sell or rent properties to how we manage them, be they shopping malls, hospitals, wellness facilities or golf courses.
When you are hunting for your dream house, not only will you be able to get the feel of the place, you would also be informed of its structure, parts and components. No more shoddy work and tofu-dreg — that is, poorly constructed — projects.
With prop-tech, we would also need less security guards as our property would be under surveillance through CCTV. As the cost of managing properties goes down, maintenance fees would also be reduced.
Ideally, with the adoption of technology, the entire process of purchasing and selling properties could even be done online.
Last September, a US$60,000 flat in Kiev, Ukraine, became the world’s first property to be sold using a blockchain. The transaction took place entirely via smart contracts on the Ethereum blockchain using cryptocurrency.
In Malaysia, property buyers will soon be able to view upcoming property developments via virtual reality (VR) technology, which will provide a 360o realistic viewing experience.
Full adoption of prop-tech may be a long way off but at least it has got off to a good start.
Many in the property industry acknowledge that prop-tech is the trend going forward. It simplifies procedures, helps gather transparent data, sets up systems and provides cost savings.
This, however, means that the property sector will likely be the next industry to face disruption, with websites utilising artificial intelligence and VR transforming each stage of the house-buying process and delivering end-to-end services that are currently offered by estate agents.
In the UK, No Agent was set up to overhaul the traditional letting agent model, and in the process, make lettings easier and cheaper for both landlords and “generation rent”.
Clixifix, meanwhile, is making life easier for house builders and commercial contractors by allowing them to manage their customer care operations as well as track defects and repairs in new houses and commercial buildings through its web-based portal.
Reposit provides tenants with a more affordable alternative to the average six-week tenancy deposit needed to move into a property in the UK, while Seeable uses high-accuracy mobile mapping techniques to create augmented reality and VR building visualisation apps.
And then there is Airsorted, an Airbnb management company that makes using the service hassle-free for property owners.
Indeed, about US$6 billion in venture capital has been invested globally in prop-tech since 2011, with about 70% seen in the last two years, according to tech market intelligence platform CB Insights.
In 2016 alone, four prop-tech unicorns — Compass, Homelink, SMS Assist and OpenDoor Labs — emerged, and they all saw their valuation reach the coveted US$1 billion mark.
“With the largest commercial real estate market in the world, New York is currently the worldwide prop-tech hub. But in Europe, the UK is leading the way, although [all] eyes are looking beyond these areas for the future of prop-tech,” Forbes contributor Paul Armstrong wrote in the magazine. Armstrong is also the founder of HERE/FORTH, an emerging technology advisory.
Nurturing next-generation prop-tech firms
The rise of prop-tech should not be neglected. HSBC Bank Malaysia highlighted in its “Beyond the Bricks” homebuying report in August last year that funding for prop-tech firms had grown from RM945 million in 2012 to over RM8.5 billion in 2016.
So, are venture capitalists in Malaysia and the region also keen to invest in these firms?
Recognising the potential of prop-tech to transform the real estate sector, IFCA MSC Bhd is launching its flagship RM10 million accelerator programme, dubbed IFCA Accelerator Programme (IAP). IFCA is an ACE Market-listed property industry integrated solutions provider.
The IAP — a collaboration between IFCA and Google Cloud — aims to nurture and develop local prop-tech companies by providing fundraising, business networking and mentorship opportunities.
“IFCA has the ‘prop’, and Google has the ‘tech’. When we put them together, we are able to go into ‘prop-tech’. We could accelerate the probability and capability of start-ups to [help them] move to the next stage,” IFCA CEO Michael Cho tells The Edge in an exclusive interview at Google’s regional office in Singapore.
“IFCA has the most customers, as well as broadest coverage of solutions for construction, property sales and property management — that’s our expertise. Google is a technology specialist — that’s what they are good at,” he explains.
Tim Synan, head of Google Cloud in Southeast Asia, says the cloud computing service provider works with start-ups of all sizes across the region, regardless of their business sectors.
“The participants of IAP will be able to enjoy some of the benefits that our start-up programme provides, such as access to Google Cloud’s platform as well as our technology resources and experts. We also want to support IFCA and their associate start-ups because Southeast Asia, including Malaysia, is important for our business,” he adds.
At one time, the likes of Snapchat (an image messaging and multimedia mobile application) and Spotify (music, podcast and video streaming) were all start-ups, Synan points out.
In Singapore, Google Cloud has been working closely with local start-ups such as Carousell, a mobile and online consumer-to-consumer marketplace for buying and selling new and second-hand goods.
Regionally, it is also collaborating with Go-Jek, an Indonesian hyperlocal transport, logistics and payments start-up.
“They (Carousell and Go-Jek) are leveraging the power of Google Cloud and our start-up programme. Going forward, we hope that IAP can produce these types of organisations, specifically in the prop-tech sector,” says Synan.
Cho opines that property is a rather wide industry, but it “has not been very friendly” to technology.
“The property business was simple — you build, you advertise, you sell. But today, technology is becoming more important to the sector. Things are moving so fast. We need innovation,” he says.
“We need to work with the start-ups because they are just trying to disrupt everything. More importantly, their disruption is not destroying but creating value, which is a good thing for us.”
Meanwhile, Synan says Google supports open source by removing technology constraints for organisations. He also recognises that it is early days yet for cloud technology.
“If you look at the number of traditional enterprises that have migrated to the cloud, and consider the transformation opportunities that we have, we are at the absolute beginning of a long marathon journey.”
On how cloud technology could assist in developing the prop-tech sector, Synan says, “I can imagine a world where you have got a large capital-intensive project, you are building a mall, you get several suppliers and subcontractors — it is really hard for organisations to manage the information flows in a very responsible and secured way.
“Our collaboration platform, G Suite — which includes Gmail, calendar, video conferencing, and instant messaging — would allow you to collaborate with your internal organisation, suppliers, and partners in a more efficient way.”
Are we there yet?
But still, the big question is, are Malaysian property developers and house buyers ready to embrace prop-tech?
When contacted, most local developers and builders say they are optimistic about the rise of prop-tech, stressing that it is “good for the industry”.
However, more work is needed in building a complete ecosystem in the country before it is possible for people to buy and sell houses entirely online.
For instance, banks, construction firms, property management companies, architects, and designers need to embrace and adopt technology in their operations.
A managing director of a public listed infrastructure group, who did not wish to be named, highlights that building information modelling (BIM) has made significant leaps forward and is now very much a part of many construction professionals’ lives.
“It is not something impossible. The software — containing proprietary data that can be extracted, exchanged or networked to support decision-making regarding a building or other built assets — is already there,” he says.
“In fact, we don’t even need to build a showroom because everything will be available online. The buyers can find out exactly how many pieces of steel are being used, while the contractor can source the material correctly. There will be no mistake, and almost zero variation order.”
Meanwhile, the CEO of a local property firm points out that prop-tech could “offer transparency” and “reduce misunderstanding” between buyers and sellers.
“The developers or contractors cannot take things for granted by sourcing cheap materials. Buyers know they are paying more to get better quality homes. With technology, they can make a comparison,” he says.