Real estate technology in the Asia-Pacific, like the region itself, is fragmented and features countries at different stages of development. China and India are the whales, with massive populations making sure that any consumer facing platforms are highly valued by investors. Australia is the most sophisticated in terms of breadth and depth of business types. While South East Asia has massive potential, although often requires multi-country coverage to reach scale making it a highly challenging proposition.
Based in Singapore, Disrupt Property has a particular interest in this part of the world and predicts there is a lot to come over the next 5-10 years. So far the biggest successes have been copies of existing models, but it won’t be too long before some more innovative platforms emerge.
China and India: Whales in the bathtub
China and India are mind-blowing prospects when it comes to disruption in the property industry. With 1.4 and 1.2 billion people respectively, the potential scale of any consumer facing businesses dwarfs the US and UK which are enjoying so much activity in this space.
This fact is well known to investors. According to CB Insights, of the top 10 funded proptech companies globally (2011-2015), the top 2 were Chinese (Fangdd and Aiwujiwu), while no. 7 was India’s housing.com. The first US entrant on the list was redfin.com at no. 4 which raised roughly half of Fangdd. This speaks to the potential of these markets. VC funding doesn’t mean value has materialised, rather it is representative of their bet that it will.
India has got some interesting ‘copycat’ startups. NoBroker is the pin up fixed fee online agent. Livspace looks a lot like Houzz. While Propstak looks similar to Comptask, although its very strong founding team points out significant differences in the way they collect data. Whether they are direct copies or not we’re not sure, but it matters little. US proptech companies have so much ground to cover in their own country, that taking on India is unlikely to be in the 5 year plan. In that case, Indian entrepreneurs are bound to take the initiative and get a jump start.
Australia: 23 million people obsessed with property
The Australian dream is to own your own home. Previous Australian generations grew up in a house with a front and back yard, and held the assumption they would own their own one day. As the population grew and density swelled in major cities, apartment living has partially replaced that dream, but the obsession with property has done nothing but deepen.
This has extended to startups and Australia has a population size large enough to support them, plus a UK based legal and business system meaning that what can be done there can typically be replicated down under. As a result, most of the business models seen in the UK already exist in Australia. Online agents, agent comparison, crowd funding, P2P funding and 3D visualisation.
VC funding has so far been modest. Openagent.com.au has raised almost $7m while ratemyagent.com.au has raised $5m. Beyond that, the main game remains the big search portals domain.com.au and realestate.com.au.
Australia is in the midst of a fintech craze with even the national government introducing measures to stimulate startsups in the area. Given this, we expect to see significant progress of companies providing new ways to fund real estate transactions which would likely be readily welcomed by locals facing some of the highest home prices on the planet.
South East Asia: Singapore and beyond
Singapore is fast becoming the regional HQ for tech startups. Branded the Smart Nation by its own government, Singapore has all the factors conducive to starting a business. Great regulatory system, English language, low tax, super fast set up procedures and a highly educated workforce. Singaporeans also like their tech and love their mobiles. Every month sees another startup incubator, or innovation lab launched as well as a continuous stream of tech conferences and events.
Having said that, Singapore’s achillies heel as a startup location is its small population size (5.3m). Businesses needing scale may well test bed the concept in Singapore, but need to expand to its much larger neighbours such as Indonesia, Malaysia and the Philippines in order to do so.
Two good examples of this are propertyguru (Singapore based) and iproperty (Malaysia based), direct competitors in the property search market. In 2015, Australia’s realestate.com.au purchased iProperty group valuing it at A750m while earlier in the year, propertyguru raised $129 in private equity to help it further expand and maintain its leadership position over its Kuala Lumpur based rival. Both companies operate throughout the region allowing them to gain sufficient scale.
Singapore, like Australia, has quickly developed a greater breadth of proptech companies over the last 12 months. Unsurprisingly, they replicate existing models from the US/UK suggesting there are enough enterprising Singaporeans wanting to do an Alibaba (ie. Recreate Amazon in Asia). In another big sign of progress, Capitaland (Singapore’s leading property developer) announced in May 2016 that had set up a S$15m startup fund.
As for countries like Indonesia, Malaysia, Thailand etc, so far we have witnessed a range of property search portals launched but have yet to see any breadth of product types giving the impression they remain very undeveloped markets. Of course, there will be a few dozen startups bubbling away in each country we have yet to hear of so this can and will change quickly.