Prop-tech has potential but faces challenges
Property technology is the application of information technology and platform economics to real estate markets.
Prop-tech startup Propzy unexpectedly ceased operation. According to Tech in Asia, Propzy raised $30 million from Gaw Capital Partners and SoftBank Ventures Asia. The startup aimed to penetrate Southeast Asia, including Thailand, Malaysia and the Philippines.
However, this June, rumor had it that Propzy had to shut down after its announcement on the dissolution of Propzy service, a subsidiary of Propzy Vietnam to change business plans.
On September 13, 2022, the firm officially announced operation suspension because of financial problems caused by the pandemic and global financial uncertainties.
Like Propzy, many startups have failed. Two years ago, a corporation developed its online estate trading floor to sell its products. Earning sales of trillions of VND a year, its ambition was regaining customers and reducing commissions for affiliated floors. However, the online estate trading floor worked ineffectively. The firm had to return to the traditional way, using brokers.
Barriers for proptech
According to Proptech Vietnam Network, there were 150 prop-tech startups by the end of 2021, and none of them was a unicorn (valued at over $1 billion).
Giang Huynh from S22M Savills Vietnam said that proptech seeks short- and long-term leasing for holidays; sells or leases houses to support real estate brokers, leases co-working spaces, and manages assets for short-term leasing.
In terms of property management and operation, there are apps such as building utility management platforms, and repair and maintenance service platforms.
According to the Vietnam Real Estate Association (VRA), the real estate market will be of $1.232 trillion value, accounting for 22 percent of total economic assets by 2030.
The market is still young, so analysts believe there is still space for proptech development.
However, there are many barriers for the development of prop-techs. Many people buy only when they can see the property directly, and most transactions are carried out with cash payment.
Meanwhile, estate developers prefer using brokers because the service is cheap and brings high efficiency. In many cases, realtors collude with brokers to manipulate prices and cause artificial fever in the market.
As for proptechs, at first, they focused on product distribution and real estate management. But this has a low profit sharing ratio. Particularly, operating and leasing properties is a hard job to do.
Moreover, it is not easy for proptechs to meddle in the long-lasting affairs between banks and real estate developers, as well as in the lending to fund real estate purchases.
At many proptech startups, managers are good at technology, but don’t have deep knowledge about the real estate market, especially Vietnam, which has specific characteristics.
Even businesspeople operating in the field for a long time say they do not understand all about the market.
However, experts say there are still opportunities for proptechs, because in the long term, the real estate market must become more transparent and sustainable.
Meil MacGregor, managing director of Savills Vietnam, said protechs allow the online brokerage model to go further, focusing on efficiency in real estate management as well as using data when making decisions.
New names have appeared in the proptech field, despite some failures. One Mount has launched the house valuation tool OneHousing. Businesses are making investments in technology, or promoting M&A (merger and acquisition)activities to develop their proptech divisions such as Cen Group, Sunshine Group and Hung Thinh.