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REAL ESTATE has been a spectator to technology disruption for years, but all that could be changing as the traditionally tech-laggard sector moves into the epicentre of a technology revolution.
Some say it is a new generation of managers and executives, digital natives themselves, who are driving the change. Regardless, a new term has been coined to describe this phenomenon: "proptech" - the real estate version of "fintech".
This leveraging of technology to improve property services ranges from an increased use of big data to the introduction of a distributed database such as blockchain technology, to even inventions such as robot receptionists.
At a recent proptech panel discussion hosted at the Tech in Asia Singapore conference, JLL Asia Pacific CEO Anthony Couse said: "The next five years is critical to anyone in the real estate sector, whether you are a service provider, or in the world of developing or investing in real estate."
Disruptproperty.com lists about 33 proptech companies in Singapore, ranging from property search engines, to asset management companies, crowdfunding websites, smart building firms, market research companies, augmented reality service providers and video analytics solution providers to track human traffic in retail malls.
According to CB Insights, a venture capital database, the volume of proptech financing globally has been on a steady increase, rising 36 per cent year on year to US$2.7 billion in 2016, and projected to increase another 10 per cent in 2017 to US$3 billion.
Of the approximately US$6 billion in venture capital that has been invested in proptech since 2011, about 70 per cent was in the last two years.
Those in the industry see opportunities for more investment in the sector.
In an interview with The Business Times, Robert Courteau, CEO of Altus Group, a software and data company for real estate, said: "What's fascinating to me is how little has been spent on technology in this industry when I look at the spectrum of things that are important to real estate - from funding, to joint-venture development, to partnerships, to construction planning, to cost monitoring, to leasing, to the crowdsourcing of data, to liquidity, to things like daily valuation . . . If you go across that spectrum, every one of those has an opportunity for improvement in real estate."
Increasingly, he noted that there are venture capital companies that are solely focused on funding proptech startups. "Three years ago, there was no such thing. Now you have venture capital firms whose focus is all on real estate, and I think we will see more of that."
One major theme of fintech that has migrated to proptech is the use of blockchain. There are two main uses of it in the property sector.
The first allows for the decentralising of transactions and removing of middlemen such as brokers, land title offices, and conveyance law firms.
Property information such as ownership details, addresses, maintenance and repair history, et cetera, is recorded on the immutable digital ledger, such that home buyers and sellers can enter into "smart contracts" - digital contracts that automate the offline functions presently handled by agents, lawyers and banks. This also makes transactions cheaper and quicker.
But Mr Couse said that for this to fully work, it requires the buy-in of the government. The "holy grail" of transacting online is to find a solution that will allow an end-to-end transaction with no break in the process.
"If we can crack that and convince governments to completely digitise titles and ownership, then we can have end-to-end transactions and that's really the end of the agent.
"But just like fintech hasn't removed the traditional banker, this hasn't really happened. It's still early days in the property sector, but the manual aspect of real estate is really going to go with automation."
There are early attempts to implement this in Singapore. For instance, peer-to-peer real estate start-up Averspace has launched blockchain-enabled house rentals on its mobile app.
Homeowners and prospective tenants can enter into digital tenancy agreements on their smartphones without having to meet face-to-face. All communication can be done through the in-app online chat feature. Of course, this is for leasing; sales transactions would be more complex.
The second way that blockchain can be used in real estate is by allowing fractional ownership of property through the digitisation of real estate into cryptographic tokens that are backed by hard assets.
Singapore-based Reidao is one such company that is tokenising real estates on the Ethereum blockchain, giving investors access to lucrative but capital-intensive investments in digestible bite sizes.
Another real estate investment firm, FundPlaces, is in the midst of launching an asset-backed currency called "tiles" using the blockchain concept.
"These currencies are backed by real estate deals which could give them returns in excess of 12 per cent per annum. Tiles on the blockchain will increase the transparency in each transaction, reduce the costs of investments and increase the liquidity of real estate," said Tan Kok Keong, co-founder of FundPlaces.
He added that the adoption of blockchain is no longer a passing fad. "It is going to change a lot of how things work in the coming years. This is part of the industrial revolution that will challenge a lot of traditional ways of doing things."
Abraham Tachjian, director of digital banking at Standard Chartered, likens it to how some start-ups have begun to monetise highly illiquid assets such as art, splitting ownership of a single piece of art into tokens and allowing multiple holders to keep their share or sell it in a secondary market.
"I think it is a great idea. Don't just look at it as turning a hard asset into something virtual. Think about it as a way to facilitate the monetisation of that asset. I think that can move in real estate as well," he said.
Mr Courteau from Altus said that even for the most laggard of sectors which show huge inertia to technological change, once change begins, developments can quickly accelerate.
"It is akin to the equities market 20 years ago when there wasn't a lot of technology for trading and visibility and transparency and market scoping," he said.
In any case, it appears that property may not be the last bastion that is resistant to technological change. One sector that has been slower still to respond is the healthcare sector, said Mr Couse, which may make "healthtech" the next thing to watch for.