By UNI.CORN Team Connexion | Fion, Justin, Sharlene and Weilun
The rise of the Proptech
June 21, 2017
Growing challenges faced by millennial homeowners
In Singapore, everyone dreams of owning a home and everyone works towards that dream. In land scarce Singapore, property prices have rocketed sky high, making it increasingly difficult for millennials to purchase their dream home.
Today, most young millennials look towards Built-to-Order (BTO) flats as their first home as it is greatly subsidised by the government. However, BTOs which are located at excellent locations are highly sought after and are always oversubscribed multiple times over, making it extremely difficult for couples to get their ideal housing. As a result, more and more millennials are looking towards the resale market. The booming property market, together with today’s technology and information driven world, has sparked off a growing trend of Property Technology (PropTech) firms which leverage computer and financial technology to integrate with the market. Digital advancement has changed the way we live, work and play and Proptech is now changing the property purchase journey of millennials.
Transformation of the property buying journey
Previously, home buyers looked through newspaper property listings as opposed to using online search aggregators like PropertyGuru for potential housing. Property transaction was done conventionally - property agents were the few sources of information in the property market and their superior knowledge allowed them to charge a premium for their expertise. Today, with the advancement of technology and cloud data property information can be consolidated and shared openly with the public in real time. The sharing of information equips consumers with relevant knowledge and reduces the reliance on property agents, paving way for potential cost savings, thereby creating a market for Proptech. Cost savings aside, Proptech can also equip agents with better tools to provide greater service for their clients.
Proptech startups provide a wide variety of services, which includes virtual home tours, online brokerage, utilising of Big Data to empower customers to make more informed decisions, as well as emerging Smart House hardware and software. With people getting increasingly tech savvy and receptive to P2P platforms offered by startups such as Uber and Airbnb, the existing property industry is set for disruption.
Prominent Proptech in Singapore
For example, Singapore’s Property Guru, one of Asia’s most successful real estate portal, generates approximately 104 million page views, over 500,000 enquiries for real estate developers and agent advertisers every month, and serves around 12 million property buyers across Singapore, Malaysia, Thailand and Indonesia. The increasing popularity of such online web service that congregates property listings only prove that people in Singapore and its neighbouring region are increasingly more receptive to the invasion of proptech, and this trend is spearheaded by millennials who hold progressively greater purchasing power.
Similarly, Averspace is a digital P2P real estate portal in Singapore which connects homeowners directly with potential buyers and tenants, seeking to save its users commission fees and other intermediary costs. Using blockchain technology, Averspace allows homeowners and prospective tenants to enter into a digital tenancy agreement on their smartphones and computers. Its key features include property listing, an advanced search function, online chat board, setting up of calendar appointments as well as digital documentation and signing of contracts. Users can also find plenty of complimentary resources on the portal, which range from financial calculation tools to the latest transacted prices of property.
Trends and technology that will have a significant impact on the property market
According to an article published by the Straits Times in 2013, about 1 in 4 of all HDB buyers and sellers transactions each year had already been done without an agent. This rising trend of Do-It-Yourself (DIY) home purchases is especially well received by millennials due to their tech-savviness and ease of finding information online. On various websites, there are already existing listings by independent sellers who choose the DIY path. Besides classifieds sites such as Gumtree, sellers can use property-specific listing apps or sites such as DirectHome and OhMyHome, who provides DIY-specific services. We can be sure that more and more millennials will choose the DIY path in the future as the DIY trend will continue to gain traction in the property market. It may not be long before property agents are made obsolete and replaced by various PropTech.
Digital has also changed the way prospective home buyers view properties. Technologies such as Virtual Reality (VR) and Augmented Reality (AR) could be further used to enhance the property purchase experience. Taking a closer look at VR in proptech, this technology can be used in ways such as providing virtual walkthroughs of both existing and to-be-developed properties. Other possible uses of AR and VR include advertising for real estate through wearable smartphones or technologies. With tech-savy millennials becoming more welcoming of new technologies, AR and VR will only become more relevant in connecting them to the property industry. In fact, PropertyGuru is already exploring the use of VR to sell homes.
As the rise of technology increases interconnectivity between and within communities, more property buyers are seeking DIY processes, especially millennials that are technologically savvy and budget conscious. In short, they want an easier way to buy, sell and rent property without the need for a property agent as the middleman, which can be costly and at times ineffective. With the changing demands and preferences of home seekers today, and the rapid rise of proptech startups, this leaves us with the imminent questions about the future relevance of and the market’s dependence on real estate agents, as well as the window of opportunities these trends might open for banks and other financial institutions.