Ravi Chandran
Property technology funding in the Asia Pacific region declined last year, a sign of general caution among investors toward the tech industry after a years-long boom.
Proptech start-ups raised US$625.9 million in 2019, compared to a record US$1 billion in 2018, according to data from tech media company Tech in Asia.
The decline comes as investors take a step back after years of growth in a commercial real estate industry that has come to embrace technologies like artificial intelligence and augmented reality. But the shrinking numbers don’t necessarily give the full picture, says Jordan Kostelac, director of Proptech, Asia Pacific, JLL.
“While venture capital interest in proptech start-ups may have peaked for now, in our work with clients and fellow corporates, we have seen that interest in proptech in Asia Pacific continues to grow and is now beginning to mature,” he says.
Globally, funding for proptech – which includes the likes of sensors under office desks and drone inspections – is still on the rise. After a banner year in 2018, last year the sector continued to register strong funding, reaching US$12.9 billion in mid-2019, according to research firm CREtech.
“Proptech funding plays out differently in Asia Pacific because investors and corporations are a less beholden to legacy systems, and more accustomed to the fast rate of technological adoption and changing market dynamics,” Kostelac says.
Investor watch for Proptech Funding
The commercial real estate industry has typically lagged in picking up on new tech. This has allowed corporates the runway to play catch up, especially in Asia Pacific. Instead of investing in funds, companies have been collaborating with the tech firms to create products for them or work their solution within the corporates’ offering.
“Investors and corporates alike are taking their time to find start-ups which present the right balance of founder/product-market fit and possess deeper expertise to navigate a complex industry that’s been slower to evolve,” says Kostelac.
“Moreover, the APAC proptech eco-system is less mature than Europe and the U.S.,” he says. “The challenge has always been how best to integrate start-ups or their solutions with the current real estate system to overcome the main points of friction.”
Property Technology Funding and Tech with an edge
Recent IPO disappointments involving tech firms have also affected the growing proptech scene. Investors have become more stringent, focusing on start-ups and products with a clear innovative edge that could deliver benefit and results instead of simply being a start-up offering space as a service.
“This development is a good step forward for proptech start-ups to grow, scale and function meaningfully in the industry,” Kostelac says. “Investors are now aware it’s no longer about growth at all costs but investing strategically in start-ups that could make a difference to the industry or their portfolio performance.”
One of the world’s largest sovereign funds, Singapore’s GIC, started investing in proptech last year. Private equity firm The Blackstone Group recently made a strategic investment into Dealpath, a cloud-based platform which allows acquisition teams to manage deals.
Such investor preferences can also be seen in the funding figures. Pre-series A start-ups experienced the biggest increase in funding between 2018 and 2019 from US$12 million to US$26.1 million. India, too, bucked the overall trend as property technology funding grew nearly 17 times, with US$56.8 million raised in 2019 compared to US$3.4 million in 2018.
“It makes sense for investors to invest in pre-series A start-ups to support initial market research and early product development,” says Kostelac. “As for India, it will always be on investors’ radars; its tech community has produced some of the most innovative solutions in different industries and its proptech sector has great potential as well as deep engineering expertise.”
With more than 60 percent of the world’s population but just 30 percent of the landmass, Kostelac believes that “proptech solutions that address the region’s needs will shape the industry for the next century.”
Even if Property Technology funding has decreased, the signs of the times are such where property agents must upgrade to keep up with technology or they must die”, said Mr Paul Ho, chief mortgage officer of iCompareLoan.
He noted that many property agencies struggle to keep up with all the regulatory changes in the industry, as well as the changing financial calculations for acquiring a property. He urged property agents to master the basics in property financing, refinancing, taxation and CPF.
Mr Ho said that iCompareLoan.com runs a full 2 – 3 days course on how property agents can produce such reports for their customers. He added that the trademarked course teaches Property Agents how to generate complicated Financial calculations using – Home Loan Report (TM) – in 3 mins flat. This helps Property agents to close deals faster and serve customers more professionally.
The Home Loan Report tool is a Singapore’s first one-of-a-kind analysis platform that provides latest updates of detailed loan packages and helps property agents, financial advisors and mortgage brokers to analyse home loan packages for their clients and give unbiased home loan / commercial loan analysis for their property buyers and home owners.
As buyers of the future grow more discerning, agents cannot afford to just rely on their personality or their experience to attract clients. Buyers and sellers of the future will increasingly rely on agents to have knowledge on property finance calculations and this is where the Home Loan report comes in.
This trademarked tool is a one-stop solution that can help deliver a detailed home loan report to property agents in 3 minutes flat. This is especially helpful when agents who do not have knowledge on property finance calculations make cold calls to potential clients and need to have a thorough analysis at hand in order to best direct each client on what their property buying and selling options are.
Such a report will not only help agents deliver the best possible property options to their clients, it will also help prevent the agent or potential buyers or sellers from wasting each other’s time since they already have all the information they need on the potential client’s buying or selling prospects at hand.
Property agents who want to continue working in the industry must set themselves apart and position themselves as thought leaders, especially in this day and age where digital marketing largely drives the economy.
