Exploring the Dynamic Trends in PropTech Across Asia
May 10, 2024 | Akina Ho
The PropTech scene in Asia is witnessing a significant transformation driven by a multitude of trends reshaping the industry. A 2023 report from Future Market Insights forecasts a remarkable annual growth rate of 9.3% for the PropTech market between 2023 and 2033, projecting a value of $47 billion by 2033, which is a 160% increase from 2022 ($18 billion).
Akina Ho at the Huawei AI Conference, Bangkok
Emerging from COVID didn’t automatically bring with it a surge of economic benefits; rather, the market faced many unexpected behaviors that made doing ‘business as usual’ difficult. Post-COVID, like many countries, there has been a growing realisation of the need for a work/life balance, which has accelerated digital adoption, particularly in construction and property management.
Traditional practices are now more inefficient than ever and the need for swift transformation is crucial. The high cost of labour has also encouraged acceptance and interest in technologies such as Artificial Intelligence (AI).
The rising global hype around AI has forced Generative AI to become a norm in any deep technology that automates activities or transactions. And PropTech is no exception. Investors and decision makers in South East Asia are looking for AI elements in PropTech, across property and asset management, smart buildings, investment analysis, and personalised marketplaces. This is poised to become more and more mainstream within the next few years.
Some of the driving forces in South East Asia that push the need to adopt PropTech are listed below:
Demand for Automation of Services: Rising competition and the increase in digitally native consumers is compelling real estate stakeholders to embrace PropTech for enhanced services and increase sales, while reducing cost. Using AI to automate tasks in real estate offers significant benefits: it improves efficiency by automating repetitive tasks like data entry and scheduling, allowing professionals to focus on higher-value activities. This automation also leads to cost savings by reducing the need for manual labor. AI enhances accuracy by processing large amounts of data quickly and accurately, reducing the risk of human error. Additionally, AI improves the customer experience by providing real-time information and personalized recommendations. It also enables better data analysis, helping companies make more informed decisions. Overall, AI automation in real estate enhances efficiency, reduces costs, improves accuracy, and enhances the customer experience.
Sustainability Drive: Sustainability, alongside AI, is a dominant theme propelling change, attracting substantial investors and government support for green technologies. Several countries in Asia are increasingly demanding ESG reporting in annual reports or through separate disclosure requirements. Some of these countries include:
Hong Kong: The Securities and Futures Commission (SFC) in Hong Kong has issued guidelines on ESG reporting for listed companies. While not mandatory, there is a growing trend towards voluntary ESG disclosure.
Singapore: The Singapore Exchange (SGX) has introduced ESG reporting guidelines for listed companies. While it is not mandatory, SGX encourages companies to disclose ESG information in their annual reports.
Taiwan: The Financial Supervisory Commission (FSC) in Taiwan has issued guidelines for listed companies to disclose ESG information in their annual reports.
Japan (The Financial Services Agency (FSA) issued guidelines in 2015 encouraging listed companies to disclose ESG information.
South Korea: South Korea’s Financial Services Commission (FSC) has been encouraging ESG reporting, and the Korea Exchange (KRX) has made it mandatory for listed companies to submit sustainability reports since 2018.
China: The China Securities Regulatory Commission (CSRC) has also required listed companies to disclose ESG information in their annual reports since 2018.
3. Energy Saving: With the electricity bills in Asia increasing immensely, real estate companies are interested in energy-saving technologies primarily for cost savings. By reducing energy consumption, companies can lower utility bills, which is especially important for large commercial properties. There are other driving factors behind the movement towards energy serving:egulatory compliance is crucial, and many countries and regions have begun implementing regulations to reduce energy consumption and promote sustainability.
There is an increased drive to be more sustainable, with a focus on energy-saving technologies that can help reduce greenhouse gas emissions. Emissions from energy consumption contribute 87% of total global CO2 emissions, according to the 72nd edition of the Statistical Review of World Energy.
Tenant demand is another driver as tenants, particularly in the commercial sector, seek energy-efficient properties. Investing in energy-saving technologies can also provide a competitive advantage by making properties more attractive to tenants and potentially commanding higher rental rates. Overall, energy-saving technologies offer a range of benefits, including cost savings, environmental sustainability, and competitive advantage, making them an attractive investment for real estate companies.
4. Shift in Mindset: There’s a growing recognition of the importance of technology and innovation across industries, bridging the gap between PropTech start-ups and real estate firms. It is a proven fact to many real estate owners and management companies that technology is required to meet the requirements of the modern world, as listed above.
5. Cybersecurity Emphasis: Last but not least, the rise of technology also heightened cybersecurity concerns, leading to a greater demand for PropTech-specific cybersecurity solutions to safeguard data and smart building systems. Especially for real estate conglomerates that are keen to build their own data team with AI, this will be a fundamental requirement.
As we navigate through 2024, these trends will continue to shape the PropTech landscape, offering exciting prospects for growth and advancement, despite the gated playing field in South East Asia.
