The great potential of Proptech
- Proptech is wide but should provide a seamless overall experience
- Adoption is slow but awareness is picking up, so opportunities abound
DIGITAL technology is forcing businesses everywhere, including in the property industry, to step outside their existing models. In the KPMG Global Proptech Survey 2017, 86% of respondents stated that they saw digital technology as an opportunity.
A 2017 KPMG report on how the property sector can engage with technology states that 53% of respondents surveyed said that big data and analytics is the emerging technological innovation their business is most likely to adopt in the next three years. The other two biggest technologies that are predicted to impact the sector in 2018 are the Internet of Things (IoT) and artificial intelligence (AI).
At the recent Let’s Jam@GEM panel session (part of a series of monthly panels organised by the Global Entrepreneurship Movement on various topics) that focused on the proptech and the Future of the real estate sector, the panel discussed where technology in the property sector is now and where it is heading to in the near future, as well as about adoption rates in Malaysia.
The panel comprised business software solutions company IFCA MSC Bhd chief executive officer Michael Cho, Malaysia Proptech Association deputy president Elizabeth Siew, Mah Sing Group Bhd group strategy & operations director Lionel Leong, and IoT solutions company BNetworks Sdn Bhd chief executive officer Tharma Indran. The panel was moderated by Proficeo co-founder and chief evangelist Dr. Sivapalan Vivekarajah.
The panelists’ consensus was that property technology – proptech – is a wide area as it includes technology applications in construction, infrastructure, and property management, among others, and even includes legal tech and fintech.
The property sector has already gone through proptech 1.0 with technologies in the areas of brokerage and leasing and is currently in proptech 2.0, heading towards proptech 3.0. Leong opined that the industry will soon see a lot more assimilation of big data analytics and virtual reality layering, as well as a high influx of innovative talent.
“If we can use technology to increase efficiency in the entire process, we will be able to achieve something that the government has been talking about – bringing the prices of houses down to a level that’s more affordable to younger homebuyers,” said Siew.
She also pointed out that proptech has great potential to facilitate cross-border property transactions, something that Malaysians will be seeing a lot more of in the future with the construction of the Pan-Asia railway network. “We will really need tech to facilitate this within the next 10 years.”
Tharma opined that there is still room in proptech for solutions that provide a seamless experience through the multiple layers of users – from the point of conception of a property to the point where the developer hands over the keys to the buyer and moves into the property.
Adoption rates are, however, a little slow, especially among developers in terms of digitalising their internal processes and using technology to enhance customer experience. Leong said that most developers are taking their time with their digital transformation journeys.
When it comes to the business-to-business side, there is also a delay in the adoption of tech for construction and building information modelling. “The government needs to take a stand to promote it,” he said, comparing Malaysia’s slow adoption to Singapore, which already uses building information modelling for its public housing projects.
“Only when the government starts moving forward with it and makes it a compulsory requirement can we get skilled workers who can adopt the tech, which will make it easier for us to operate.”
According to Cho, Malaysia is on the adoption curve though not ahead of it; new awareness of proptech is helping adoption. He explains that property developers tend to view property buying as a transactional process without a lifetime value – once the building is sold, there is nothing more to do.
In China, however, developers take a long-term view of their customers as people tend to buy more than just one property from the same developer, and technology makes this possible. “It’s a matter of time in Malaysia. The adoption will increase just because it will become the norm. Once the big players start, everyone else will.”
When it comes to IoT in proptech, however, Tharma revealed that adoption is low and very slow in Southeast Asia compared to the US and Europe, though this is gradually changing. Interestingly, in this sector, it is customers who are driving the change.
“More and more potential purchasers are asking about smart homes. The younger generation of buyers want connected living. Stakeholders have no choice but to adapt or be left behind,” he said.
He said that IoT is quite fragmented in that there is a lot of techs but a lack of devices and embedded systems. Therefore, there is a lot of space for fully localised systems and content.
Besides IoT manufacturing and solutions, the panel also identified blockchain technology as having potential for application in proptech – transactions can be recorded on the blockchain and therefore protected from fraud.
“The opportunities are huge,” said Tharma.