Tech startups could soon become big business in commercial real estate

Only 35 per cent of active proptech startups are involved in the commercial real estate market, because of a difficulty in securing funding compared with residential property startups, as well as the complex and discreet nature of commercial property transactions.

But change is underway as the growing value of investable commercial real estate around the world is projected to hit $US65 trillion ($84.85 trillion) by 2020, according to a joint report by JLL and Tech In Asia, Clicks and Mortar: the growing influence of proptech.

Australia and New Zealand has benefitted from $US54 million ($70.4 million) of proptech financing since 2012. Source: JLL

That change could come even sooner in the Asia Pacific, the home of about a third of the world’s commercial real estate.

The current proptech industry in the Asia Pacific consists of 179 startups raising about $US4.8 billion ($6.26 billion) in funding since 2013, already taking up 61 per cent of proptech investments worldwide.

But proptech funding in the region is forecast to hit $US4.5 billion ($5.87 billion) a year by 2020, the report predicted.

This investment could pave the way for revolutionary projects, such as the studies being undertaken at Nanyang Technological University of Singapore to build giant 3D printers to “print” high-rise buildings, floor by floor. Several developers in China and Dubai have already built low-rise commercial buildings, reporting benefits including lower costs and quicker construction.

Asia Pacific has dominated proptech financing since 2014. Source: JLL

JLL Asia Pacific chief executive officer Anthony Couse said while the sector was more established in Europe and the United States, Asia Pacific was well placed to reap the benefits of proptech.

“The findings of the report show that there is a great deal of potential for proptech in Asia Pacific,” he said.

“With its young population, rapid urbanisation and ‘mobile-first’ mindset, all the conditions are in place for this new sector to accelerate, bringing increased efficiencies and better experiences for the end user.”

Following 10 years of developing mainly consumer-focused residential property portals such as China’s Lianjia – which is similar to Domain – the industry is evolving through the third wave of proptech, which addresses more complex enterprise needs.

“What’s really interesting for a company like JLL is that more startups are beginning to emerge that bring solutions that are scalable for big corporate needs,” Mr Couse said.

“Once we start to see the application of technologies such as 3D printing, robotics and drones alongside the rise of smart cities in Asia, it could lead to a transformation of the real estate industry.”

In Australia and New Zealand alone, $US54 million ($70.4 million) of capital was pumped into 19 proptech start-up deals since 2012.