Written by Joepoh35 – Analyst of J&J Investment
The crowded space of “Proptech”
For almost a decade in the industry of Malaysia Property, PropTech is a new burst word which has emerged more and more over the years. PropTech is the collective term used to describe the wave of tech innovations set to disrupt real estate markets. However, do property portals really disrupt the marketplace? The rise of popular portals like iProperty.com, PropertyGuru.com, Estate123.my, Landlord123.app, EdgeProp.my, StarProperty.my, and Speedhome.com are proof of that. All portals considered within the category of “Proptech” has one single mission: to disrupt the property value chain and create exponential growth for their business model.
There are some successful cases of sellers advertising their properties in conventional newspapers, and new project developments with a full page of print advertisements. This includes supporting sub-segments in the value chain such as property loans, insurance, legal advisers, valuers, and even interior design. Everything can be found and housed in a “Proptech” portal as s one-stop shop. But does it really disrupt the property value chain?
Extending market reach rather than disrupting
I feel to an extent it has disrupted the anchor of marketing reach to an extent. Most newspaper, magazines and even street advertising billboards are being pressured. As marketing has become one-to-one with the ownership of smartphones, push notifications, SMS and even basic email can have a more enhanced effect compared to mass message advertising. A one-stop concept also creates a much more effective approach for potential buyers and sellers to be extremely productive when involved in the process. Marketing ideas along this channel are further flooded into social media like Facebook, Instagram, LinkedIn, WeChat and even TikTok. Artificial intelligence (AI) and Big Data are further maximizing the characteristics of targeted audience. One-to-one marketing has become more effective and accurate than ever, with the conversion rate of leads to actual sales becoming higher than ever. The question is, has this really disrupted the property value chain, especially when it comes to buying and selling of a property?
If comparing to Uber, Grab, Airbnb, Netflix and Lazada as successful disruptive agents, it is extremely difficult to find success of their scale in the PropTech industry. There are even some local companies attempting to sell their products on Lazada. Perhaps, you may have some transactions but it is still far from disrupting the industry. Many people refer to “Uber” which is the biggest taxi company in the world that does not own any physical taxi, but it is a completely different industry and a total disruption is still a long way ahead.
Lengthy and complex procedural processes may be the main reason
Personally, I find the biggest challenge is the procedures involved to conclude a proprty transaction. A buyer and seller can match digitally, but the process to complete the transaction involves land office, tax office, developers (if title is not issued yet), banks, credit agency, legal firms, etc. This process sometimes can take weeks – if not months – and some special cases can even take years. There are a lot of people involved in the process and it is not just as simple as one-to-one transaction. It is also difficult to be automated as many “maker and checker” processes are mandatory for security and risk assessment purpose. The procedures and processes are not going to change overnight and the value chain also involve regulators that require time to change policies supporting a completely new value chain.
Value enhancement – a step-by-step approach
Going forward, PropTech is not going to completely disrupt the value chain but more towards adding value to enhance the current property system. A number of new value-added concepts are emerging lately, including property management solutions like Landlord123 that enhance the relationship between tenant and landlord. Propfits.my is another proptech newcomer that manages payment via credit card within the rental process. In addition, there is also the usage of virtual reality (VR) in constructing virtual tour for new project development, as well as crowd funding to co-own a property and share returns which is being offered by Edgeprop.my.
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- Uber Technologies Inc. (2021). Always the ride you want. https://www.uber.com/us/en/ride/