IF YOU are in the real estate industry, then you might have heard about proptech as it is no longer a niche word in this day and age.
But for those who don’t know, proptech is an acronym used to describe any aspect that relates to technology applied in the real estate space.
For instance, property portals such as iProperty.com.my and PropertyGuru Malaysia, hardware, materials and manufacturing that use technology are all housed under the proptech umbrella.
Developers, investors and property stakeholders are turning proptech into a huge business to differentiate their portfolios.
Ting says agents will be afforded with more data-driven insights to help sales, while sellers are more likely to receive beneficial prices through this platform
According to Fourth Industrial Revolution Structural Transformation president Aaron Ting, proptech has been around for decades, with each wave reflecting trends in computing and housing.
“The early proptech was driven by the growth of personal computing in the 80s and currently, it is in its third iteration.
“This early wave saw the rise of applications such as Excel and computer-aided design, both boons to the property segment, as well as industry giants such as Microsoft Corp and Autodesk Inc.
“It coincided with the implementation of large-scale national housing projects in Malaysia, as well as the transition to affordable housing quotas by private housing developers in the mid 80s,” he stated in an email.
Ting added that PropTech 1.0, which was popular in the early 2000s, was largely an overseas phenomenon, with online property marketplaces such as Zillow Group Inc and Procore Technologies Inc increasing consumer confidence in online transactions.
The next wave, dubbed PropTech 2.0, is currently ongoing. With the advent of Web 2.0, the wave saw the rise of shared economy giants like Airbnb Inc and WeWork Cos Inc, as well as regional proptech powerhouses such as PropertyGuru — all of which have made their way to local shores.
This shifting tech paradigm remains deeply tied to the national housing agenda according to Ting, with players such as PropertyGuru helping Malaysians in their aspirations to own homes with proptech innovations like home loan pre-approval.
“Such solutions promote convenience and transparency in the home loan application process by allowing homeseekers to know their loan eligibility ahead of time, which is a key challenge in conventional home financing in Malaysia,” he said.
Currently, the global investment into real estate tech start-ups in the first half of 2019 is at US$12.9 billion (RM54.05 billion).
This figure has already exceeded the 2017 full-year record of US$12.7 billion.
Regionally, innovations in augmented reality are already changing the way homeseekers seek, learn about and evaluate properties in markets like Singapore.
Closer to home, advances in proptech have the potential to fundamentally transform how property is conducted as a business in Malaysia.
“In review, PropTech 1.0 and 2.0 focused on the evolution of the consumer journey, with solutions tailored to address consumer needs. Moving forward, PropTech 3.0 is all set to change the way the property supply chain itself works, primarily through digitalisation,” Ting noted.
He laid out three ways on how PropTech 3.0 is making waves in this current scenario.
Digitising the property supply chain to reflect real-time transactions
According to Ting, the Industrial Revolution 4.0’s ripples are already being felt in the property segment, traditionally an offline chain rife with inefficiencies at multiple contact points.
For example, sellers and agents are often faced with “delay of knowledge”, where property prices often lag behind current market trends due to imperfect sharing of information.
It can take months for the announcement of a major pull factor, such as retail mall, to be reflected in transaction prices for an area, he explained.
Ting said there have been calls for the National Property Information Centre to release information on a quarterly basis, as reports tend to lag two quarters behind current market conditions.
PropTech 3.0, through the digitalisation of offline processes and application of seemingly unrelated technologies, has the potential to address many of these friction points.
“This helps alleviate the delay of knowledge prevalent in domestic property market prices, with increasing accuracy as more data is fed into its algorithm,” he said.
He stated that agents will be afforded with more data-driven insights to help sales, while sellers are more likely to receive beneficial prices through this platform.
AI-driven chatbots, robo-advisors transforming the role of agents
Artificial intelligence (AI), in combination with machine learning in property valuation, has the potential to change the very face of the industry.
This is already being seen in the financial services sector, with AI-driven chatbots and complex wealth robo-advisors emerging as the new status quo.
Given the financial commitment needed for property purchases, it is likely that virtual advisors in property will develop as a complement to agents and brokers, similar to their equilibrium in financial services.
“Homeseekers will always need the human touch when negotiating and finalising a lifelong property debt.
“As such, AI will automate mechanical workloads for today’s agents and brokers, while generating leads, allowing them to focus on more strategic tasks,” Ting said.
He added that with these insights, property agents can fine-tune their own offerings with reference to market benchmarks.
For example, proptech player PropertyGuru has introduced features such as “listing performance insights” to help with the agents’ workflow.
Building with blockchains — crowdfunding to digitised land registers
Ting said the decentralised nature of blockchain lends itself to operating models where data integrity and security are priorities.
“As an active participant in the blockchain conversation in Malaysia as well as regionally, I have watched uptake on local shores grows and anticipate this trend to continue into the future,” he said.
Blockchain is not bitcoin or cryptocurrency, but the technology on which these were built.
In simplest terms, it is a distributed ledger, where data exists as a consensus of information replicated, shared and synchronised across multiple sites.
When it comes to property, it has numerous applications, from crowdfunding platforms to digitised land registers, Ting said.
“It should be noted that much of this functionality can already be duplicated by non-blockchain technologies. By contrast, any system built with blockchain in mind from the start, with an eye to data integrity, will be comparatively more robust, stable and secure,” he said.
Ting added, in the end, that blockchain should not be adopted for its own sake, but for the benefits it can bring throughout a supply chain.
