A research report by CBRE suggested that proptech is all set to not only impact, but also disrupt traditional business operating models in real estate. Proptech (short for Property Technology) is a term which refers to the myriad of startups and new technologies cropping up in response to decades of inefficiencies and antiquated processes in the real estate industry.
Looking at the relentless wave of innovation in the past decade, it is not surprising that this trend will sweep over real estate, an age-old industry ripe for disruption. We know that a trend is established when it becomes a noun or verb on its own. Terms such as Googling, social media, fintech and proptech did not exist 10 years ago, but are now exoteric and commonplace.
Proptech is technology and real estate coming together to propel the real estate industry forward. The proptech ecosystem is flourishing now in many parts of the world, thanks in large part to ample venture capital, community efforts in local tech hubs, and an increasing realisation that there is a real need for innovation in the sector.
The CBRE report said that three forms of technologies are particularly pertinent and pervasive from the Singapore viewpoint: blockchain, augmented reality (AR) and artificial intelligence (AI). These technologies are already making their impact felt in the real estate industry with their adoption by startups, global corporations and the government.
A form of distributed ledger, the blockchain is distributed across nodes, locations and even countries. Being decentralised, it eliminates the need for an intermediary to process, validate or authenticate transactions. The CBRE report noted that local startups such as Averspace and Fundplaces have started using the blockchain for digital contracts and real estate investing, respectively.
“Averspace stores digital contracts on the blockchain, enabling homeowners and buyers/tenants to deal directly with each other without a need to sign a physical agreement. Digital contracts are also legally enforceable, thereby removing the hassle of going through legal professionals or paperwork.
Fundplaces, a deal origination platform, allows users to invest in real estate projects through their own currency, or “tiles”, which represents their ownership share. Ownership and transaction details are then stored on the blockchain.”
Catherine He, CBRE’s Associate Director of Singapore Research saidL “the blockchain brings with it two main advantages: security and transparency.”
She added: “Greater transparency is possible since each party involved will have visibility of every transaction. When a permanent and unalterable record of each transaction is created with each party, instead of with just a central authority, there is no single point of failure, resulting in greater security. Such a platform is especially useful for real estate transactions, where every contract is somewhat standardised and large amounts are at stake.”
The report noted that adoption of blockchain might help facilitate a higher volume of smaller and standardised transactions. But that bigger and more complex deals are more likely to require human interaction and intervention, and therefore need to be documented and handled differently.
AR is a branch of virtual reality, the overarching term for experiences created using either real-world content, computer generated (CG) content, or a combination of both, that allows users to experience the real world without having to be in it physically. AR is a combination of both – overlaying CG content on the real world. A popular example of AR technology is Pokémon Go, which has redefined the experience for mobile gaming.
The report noted that compared to the current practices of linking to websites or physical viewings, applications such as Floored have helped to increase client engagement as there is more interaction and visualisation. Both landlords and occupiers can also save time as they do not have to be physically present for viewings and can just visualise various configurations at the click of a button.
The report referred to Zillow as an example for AI which is able to extract insights from data. The Zillow application is the largest real estate portal in the US. It provides a “Zestimate” or a valuation for the property the user is querying about, as well as a forecast of property value trends of up to a year. These features provide users with more visibility and support their decision-making process based on actual data.
When it comes to property-related decisions, AI can help to narrow down choices based on a user’s financial situation, requirements and preferences, thereby giving considerable time and cost savings. Scrolling through endless pages of listings might become an activity of the past for both buyers and brokers as the optimal options get curated by AI.
The research report noted that the Singapore Government is cognisant of the need to keep up with changes which will be seeping the real etate inustry soon in introducing the Industry Transformation Map (ITM) for the real
estate industry.
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The report suggested that it is certain that proptech will have an impact on traditional business operating models. Whether this impact turns out to be positive or negative depends largely on how real estate players will use them to their advantage.
These technologies are however still a long way away from replacing human judgment, touch, and ability to react to dynamic changes, which are all critical to the decision-making process.
Mr Paul Ho, the chief mortgage consultant at icompareloan.com said that proptech disrupting traditional business operating models in real estate here is inevitable. In keeping up with proptech, property agents “must upgrade or die”, said Mr Ho.
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 ran a full 2 – 3 days course on how property agents can run such reports for their customers. He added that the trademarked course – Home Loan Report (TM) – is the bare minimum.