South-east Asia rises as proptech hotbed, but funding and talent hurdles remain, say experts
Another key obstacle is navigating the slow-moving nature of the real estate industry
[JAKARTA] Fuelled by rapid population growth and an accelerating digital revolution, South-east Asia is emerging as a hotbed for property technology (proptech) innovation, offering immense potential for investors and startups.
However, industry leaders caution that while the region’s expanding real estate market presents vast opportunities, the path to unlocking proptech’s potential is fraught with obstacles, chiefly securing sector-specific funding and overcoming the traditionally slow pace of the property sector.
These insights emerged during a panel discussion at the Tech in Asia Conference, co-organised by The Business Times, in Jakarta on Wednesday (Oct 23). The session was moderated by BT’s senior property correspondent Leslie Yee.
During the panel, Ethan Cheng, managing partner at Feedback Ventures – a venture capital firm focused on early-stage startups within the real estate ecosystem – said the scarcity of proptech-specific funding as a major challenge facing South-east Asia’s growing proptech sector.
“Unlike in the US, where you have proptech-focused venture capitalists (VCs), South-east Asia’s startups often rely on generalist VCs or non-strategic investors, which can stunt growth,” he said.
He emphasised that these investors, often more focused on fintech or other sectors, may view proptech as an afterthought, limiting the startups’ ability to scale and reach full potential.
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However, he views this as both a challenge and an opportunity. With few dedicated proptech investors in the region, there is an untapped “blue ocean” for those with the conviction to invest in the space.
“Real estate is a massive business in Asia, and there will always be opportunities to improve the industry with innovative business models,” he said, adding that startups willing to take the long view could find a less crowded, more lucrative market.
Sabrina Soewatdy, chief executive officer of Rukita, a Jakarta-based property management startup, echoed this optimism.
She said the vast potential for proptech in the region, particularly in Indonesia, where her company has successfully navigated the challenges of the pandemic and tech winters to establish a profitable business model.
She also added that markets such as Thailand, Vietnam and the Philippines are also primed for similar proptech-driven transformations, driven by the universal demand for housing and the need for more efficient real estate solutions.
“We’re incredibly bullish on what proptech can achieve in the region,” she said.
However, she added that prioritisation is key, warning against the risk of becoming distracted by the wide array of solutions that proptech can offer. It’s easy to lose focus with so many options available, but staying committed to a clear, scalable market strategy is vital for success, she added.
For Darius Cheung, founder and CEO of Singapore-based property platform 99 Group, patience is a significant challenge. He noted that unlike faster-moving industries, proptech requires companies to endure several market cycles before seeing returns.
This slow pace is exacerbated by the traditional 10-year life cycle of VC funds, which can make it difficult for investors and founders alike to adopt the long-term strategies necessary for real estate innovation.
“Real estate is the mother of all markets, but it’s also the slowest,” he said.
Besides this, he flagged talent shortages as another significant hurdle for tech companies in South-east Asia, including those in the real estate sector.
AI adoption in proptech
The panellists also offered their insights on the role of artificial intelligence (AI) in the evolving proptech landscape, emphasising its immense potential while acknowledging the challenges of integrating it effectively into existing systems.
Rukita’s Soewatdy expressed enthusiasm about AI’s potential, particularly in the areas of data analytics and urban planning, noting its ability to enhance decision-making and optimise real estate development processes.
In Indonesia, where the challenges of urban development are significant, AI can provide valuable data-driven insights into where businesses can expand into new cities or districts, she said.
She said that AI’s natural integration can propel businesses to new heights.
“We are super excited about how AI can help us, particularly in terms of better matching housing options to customer needs,” she said.
Feedback Ventures’ Cheng noted that AI has become nearly ubiquitous across many startups, especially in real estate technology.
However, he cautioned against the pressure many startups feel to integrate AI, especially if it is not essential to their business model.
“Sometimes, founders attempt to shoehorn AI into their operations without fully understanding its value or application,” he said, adding that this trend could be counterproductive if AI did not genuinely enhance the company’s competitive advantage.
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