PROPTECH 3.0: Changing the face of property PROPTECH 3.0: Changing the face of property
Share this on WhatsApp BY Aaron Ting, President, Fourth Industrial Revolution Structural Transformation Faced with stagnating property values, developers, investors and industry stakeholders are turning... PROPTECH 3.0: Changing the face of property

 BY Aaron Ting, President, Fourth Industrial Revolution Structural Transformation

Faced with stagnating property values, developers, investors and industry stakeholders are turning to property technology (proptech) in ever-increasing numbers to differentiate their portfolios.

In fact, global investment into real estate tech startups in the first half of 2019, at US$12.9 billion (RM54 billion), has already exceeded the 2017 full-year record of US$12.7 billion (RM53.2 billion).

Regionally, innovations in augmented reality are already changing the way home seekers 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.

Evolution of Proptech: From the Humble Excel Spreadsheet to Regional Proptech Powerhouses

 It should be noted that proptech has been around for decades, with each wave reflecting trends in computing as well as housing. Currently in its third iteration, early proptech was driven by the growth of personal computing in the 1980s.

This early wave saw the rise of applications such as Excel and computer-aided design (CAD), both boons to the property segment, as well as industry giants such as Microsoft and Autodesk.

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-1980s.

Proptech 1.0, with its heyday in the early 2000s, was largely an overseas phenomenon, with online property marketplaces such as Zillow, Procore and Trulia laying the foundation for increasing consumer confidence in online transactions.

Artificial intelligence has the potential to transform the role of agents in the property segment

The next wave, dubbed Proptech 2.0 is currently ongoing. Reflecting more dynamic online experiences with the advent of Web 2.0, this wave saw the rise of shared economy giants like Airbnb and WeWork, 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, 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 home seekers to know their loan eligibility ahead of time – a key challenge in conventional home financing 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 set to change the way the property supply chain itself works, primarily through digitalisation.

Digitising the Property Supply Chain to Reflect Real-time Transactions 

As Industrial Revolution 4.0 disrupts industries across the board through convergent technologies, its 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 a retail mall, for example, to be reflected in transaction prices for the area.

Inefficiencies like these are common throughout the property supply chain. They affect stakeholders from developers and investors to owners, tenants and contractors alike.

What’s exciting is that 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.

For example, PropertyData.my, a platform I co-developed, leverages on machine learning to anticipate future price fluctuations.

Traditionally an offline process, inefficiencies in the property supply chain can be minimised through Proptech 3.0

This helps alleviate the delay of knowledge prevalent in domestic property market prices, with increasing accuracy as more data is fed into its algorithm. Agents are afforded more data-driven insights to help sales, while sellers are more likely to receive beneficial prices.

In many ways, Malaysia is a perfect market for such solutions due to the relative scarcity of property valuation data here relative to more developed markets, as well as the timeliness of that data.

There have already 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. With Proptech 3.0 platforms, such delays are less of a concern.

AI-driven Chatbots, Robo-Advisors Transforming the Role of Agents

Another area where Proptech 3.0 can transform the industry is the role of agents in the supply chain. Here, 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. In fact, there is a close interrelation between fintech and proptech, with innovation in fintech frequently finding applications in property.

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.

Home seekers 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.

This is seen in other areas of the agent workflow as well. For example, AI can be used to deliver actionable insights into listings performance through real-time comparison with other listings and data sets.

With these insights, agents can fine-tune their own offerings with reference to market benchmarks. This is not a possibility, but a reality happening now, with proptech players such as PropertyGuru introducing features such as Listing Performance Insights.

Innovations in proptech are transforming the way home seekers experience property

 

Building with Blockchains – Crowdfunding to Digitised Land Registers

Finally, I would be remiss not to address the proptech applications of blockchain. As an active participant in the blockchain conversation in Malaysia as well as regionally, I have watched uptake on local shores grow and anticipate this trend to continue into the future.

To start, I always feel it’s best to clear up misconceptions regarding blockchain by defining the concept itself. 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. The decentralised nature of blockchain lends itself to operating models where data integrity and security are priorities.

When it comes to property, this has numerous applications, from crowdfunding platforms to digitised land registers. However, it should be noted that much of this functionality can already be duplicated by non-blockchain technologies.

At the same time, such functionality would be “tacked on” after the development of initial systems, and as such can have more problem points where data hygiene can be compromised.

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.

In the end, blockchain should not be adopted for its own sake, but for the benefits it can bring throughout a supply chain.

At Fourth Industrial Revolution Structural Transformation, our role is to ensure that the technologies driving Proptech 3.0 are clearly understood, as misconceptions can hinder the pace of progress.

Property 360 Online