Core products being altered with proptech
Core products being altered with proptech
The property technology market is attracting capital and gradually occupying a new position in the global real estate market. Now, Vietnam’s market may have the chance to thrive with the application of more tech in various areas.
On June 13, Houze, a proptech startup based in Vietnam that offers a fully integrated real estate ecosystem for agents and customers through its offline-to-online platform, has become the latest player after successfully raising $2 million of funding led by DKRA Group, giving the company resources to continue expanding its services and growing its team to meet the demand in Vietnam and beyond.
Houze has created a multi-platform for both real-estate agents and home-buyers, offering integrated services from the transaction, management, investment, and financing options. The startup features services such as digital brokerage, a property management platform, fintech, and more.
According to founder Pham Lam, the fund will help complete the leadership team as well as enhance core products. “Technology will disrupt geographical limitations and human capital, close the gap between agents and home-buyers, and professionalise the brokerage community,” Lam said.
Houze also revealed that it is in the process of closing an additional fund with venture capital to launch new products such as Houze Portal, Houze Super App, and Houze Finance. Current partners of Houze include Phat Dat Corporation, Home Next Corporation, Capella Holdings, GP Land, Van Hanh Phat, MoMo, and GrabPay.
Huge potential
Proptech is attracting a large amount of investment capital. According to figures released by CRETI, in 2021, the investment value in this field reached $32 billion globally, the highest level ever. Vietnam has also emerged as a thriving real estate market in Southeast Asia.
According to the Vietnam National Real Estate Association, the scale of the real estate market will increase from the current $205 billion to $1.2 trillion, accounting for 22 per cent of the total assets of the economy by 2030. Investment deals and capital contributions to proptech show that the heat in the field is increasing.
A new study on the technology-prioritising behaviour of customers after the pandemic by The Boston Consulting Group showed that the number of people actively using banking and digital financial services, especially in proptech in Vietnam, has increased the most compared to emerging Asia-Pacific markets.
Figures from the PropTech Vietnam Network note that around 140 startups are currently operating in Vietnam. The segment appeared in the country through websites introducing residential real estate, consulting transactions, buying, selling, leasing, and project management in the housing segment.
Among them, about 50 per cent of companies focus on the housing and office segment with a market value of about $500 million.
“Vietnam is the most dynamic and dynamic market in Asia,” commented Nguyen Van Dinh, chairman of the Vietnam Association of Realtors. “The urban population of Vietnam is currently 44 million people, accounting for 45 per cent of the population, and it has over 860 urban areas. In 2025, it is forecasted that the urban population will increase to 52 million people, accounting for half of the population, with about 1,000 urban areas.”
Because real estate is a special commodity with multi-step transactions, lots of information, and complicated processes, it is necessary to digitalise as quickly as possible, Dinh added.
In addition to established proptech groups such as information platform Batdongsan.com.vn or the all-inclusive office leasing solution DreamPlex, smaller startups have raised more than $40 million in capital.
These include Rever, a real estate brokerage platform with $16.5 million, Homebase, a platform providing real estate investment solutions for sub-bank borrowers with $30 million, and Citics, a data platform including valuation, purchase, lease, and investment loans which has raised more than $1 million.
According to Nguyen Quoc Anh, deputy general director of Batdongsan.com.vn, developing proptech is not just a temporary trend and solution, with the last couple of years accelerating the application of technology in real estate activities and services.
Not an easy business
However, Proptech is revealing challenges that investors need to pay attention to.
Propzy, a real estate pricing and information search platform which raised $33 million from investment funds, in September 2021 laid off 50 per cent of its staff amid a restructuring of its business model.
As explained by CEO John Le, the startup is now promoting the automation of direct brokerage services through technology, so these positions are no longer needed.
And at the end of Ma this year, Propzy announced the dissolution of Propzy Services Co., Ltd., one of two businesses in its ecosystem, doing business in real estate consulting, brokerage, and auction of land use rights. The reason for this dissolution was to focus on its core business of diversifying real estate products and mortgaging to buyers.
According to Do Hieu, CFA at VinaCapital investment fund, those providing services and real estate management are all struggling with losses. “These services are the least profitable in the real estate value chain, so many businesses have given up on them,” Hieu said.
A series of traditional real estate developers such as Cenland, Dat Xanh, and Khai Hoan have realised that they have advantages in expanding land funds and handling legal issues. Therefore, they all leave the rental and management services to other units.
In addition, with proptech, another challenge is to change the beliefs and consumer behaviour of real estate buyers and sellers from the habit of buying daily newspapers or looking for sale billboards to online platforms and using technology tools.
“Currently, Vietnamese homebuyers are cautious and do not fully believe in online information. Almost all buyers want to visit the site where they can witness information and projects by themselves. For products of great value such as real estate, they prefer to deal with them directly,” said Anh.
Anh said that this is completely reasonable because, in a market where there is unclear information, the credibility of the investors remains uncertain and so consumers visit a location first to ensure safety.
Besides, as users get used to the technology, proptech needs to maintain a growth rate and create new solutions and products, in order to keep up and meet the rapidly changing needs of customers.
Anh added that the change in consumer behaviour and habits is faster and more powerful. Therefore, understanding users and bringing the user experience in line with the journey of each target group is another challenge for proptech, especially with high-value products.
“The potential for the sector is there where investors can reach tens of millions of people who need to buy a home. This is a large customer database and of huge potential for investors,” Anh said.
