The Rise of PropTech in Hong Kong
 

Hong Kong’s property market has seen better days. Goldman Sachs predicted that property prices could drop as much as 20% by 2018, while Nomura Holdings has reported that home prices went down by another 10% last year. This drop is a big problem for the region’s economy, a large percentage of which comes from construction and real estate services, and is a result of a variety of factors including a 25-year-low in residential sales, high costs, and foreigners choosing to rent properties instead of purchase them due to unaffordable fees and other difficulties.

These issues have made purchasing a property in Hong Kong a riskier and less palatable endeavour than it has been in recent memory. In response to this, however, a new trend has gotten a foothold in the Hong Kong startup scene – PropTech, which aims to innovate the way the real estate industry works. PropTech will be able to lower the cost of doing business, while improving productivity for everyone involved.
 

So what are some of the ways PropTech is changing the way real estate works?
 

Smart Sensor Technology

Smart homes have been a “thing” for decades now, but only with the recent advent of low-cost, efficient Internet of Things (IoT) sensors and connectivity have they become applicable on a large scale. Today, real estate companies can make use of Smart Sensor Technology to improve tenants’ living conditions in real time, using sensors and automated controls to analyze temperature, light levels, and other metrics, and adjust thermostats and indoor lighting accordingly. Such sensor suites not only make properties more attractive to consumers, but also save energy and improve their environmental footprint.

 

Virtual Reality and 3D

Once a niche market, in recent years Virtual Reality (VR) has taken the technology world by storm, creating new ways to experience interactive video games, movies, and more. One application beyond entertainment where VR succeeds is in real estate. Companies have been using VR applications to provide prospective buyers with fully immersive virtual tours of houses and apartments, without the buyers ever setting foot inside. A new Hong Kong-based startup known as Palapple is focused on creating VR tours of second-hand properties, allowing them to build virtual models of existing homes, rather than work with the time-consuming process of rendering structures that might not even exist yet in the case of new properties.

 

Cloud Based Technology in Real Estate

E-mail, online file storage, streaming media – the cloud is everywhere, and larger than we think. For real estate, the cloud allows businesses to operate even with their people on the move. Documents and photos can be uploaded to and stored on online servers and shared instantaneously with managers, foremen, clients, and whoever needs to see them. Agents can pull up any information they need, and have it updated in real-time. Moving IT infrastructure from owned servers to cloud computing services decreases the cost of maintaining the machinery, as well as downsizing the IT department.

 

Big Data and Enhanced CRM Tools

The fairly recent buzzword “big data” has a big impact on nearly every conceivable business, and this is no less true in the case of real estate. Data analysis on a massive scale has allowed commercial real estate to use financial information and credit risk to determine the values of different locations. Information gathered from various sources can show potential investors whether or not a prospect is viable, given the structural integrity of a property, the financial status of an owner, and much more. Through big data, real estate CRM evolves as well, and the tiniest bits of feedback can be taken from thousands of customers and correlated to determine whether prices are too high, rooms are too small or even ceilings too low.

 


 

Interview with Kevin Kwong


We set down with Aria Group CEO Kevin Kwong to get his opinion on the real estate tech landscape. Kevin is a graduate of London School of Economics and Political Science, and a founding partner of Betatron Startup Accelerator and 1place.hk.

 

Is Hong Kong a good location to launch a PropTech startup?

Hong Kong was a natural place to launch our startup 1place.hk. In general, we see that the property sector still has lots of inefficiencies with current models, which can potentially be solved in other ways. Given the importance of the real estate sector in Hong Kong, we realised that it provides a great market to launch and test a new product.

 

Hong Kong has a very mature and traditional real estate market, what are the biggest difficulties founders might face?

For the property sector, the active senior brokers and smaller, local agents are often more mature in age and less tech savvy, which makes it harder to introduce a brand new concept. Even though competition among agents is fierce, they are often skeptical about new methods, and it takes time to educate them on the merits of any new business model. Clients, on the other hand, are actually more open-minded and willing to try out new things, perhaps because current methods are still not as efficient as they would like.

 

Do you see trends in the startup scene that may be as potentially disruptive to the real estate market as it was for UBER or AirBnB?

In the current market, we still mainly see listing as the primary business model for property (similar to AirBnB), and we are taking a different approach, more comparable to UBER. A client creates only one request, sends it out to multiple agents and then waits for them to respond. This method saves a lot of time and effort for clients and allows agents to be more active, rather than passively waiting. We are already getting great feedback from agents and clients who are on the platform and hope to expand further over time.

In the US market, we have seen a lot of different and interesting business models popping up, but it remains to be seen if they work and whether they will function in the rest of the world.

 

As an investor, do you have tips for other founders who are considering launching a PropTech startup in Hong Kong?

Hong Kong is a unique market so I would advise any startup founder to speak with participants at an early stage to get feedback about their idea first. The listing market is quite crowded already, so my view is that your product should be different from the current model.

 


 

Examples of PropTech Startups in Hong Kong
 

One example of a new player in the PropTech world is PowerMew, which recently received a HK$ 1 million grant from the HKSAR Innovation Technology Fund. PowerMew aims to connect owners, realtors, buyers, and tenants more deeply than ever before, through their MewMe platform. MewMe allows users to share property information, view properties in 360-degree panoramic virtual reality views, and communicate via a purpose-built social network that connects the global real estate industry together. It also makes use of big data analytics to provide accurate views of data and trends. PowerMew’s platform represents a prime application of many of the top technologies that the real estate industry world is making us of.

Another is Spacious.hk, a startup whose main product is a search engine that makes extensive use of big data to gather information about real estate properties, and help customers find exactly they want. One of its most interesting applications is an overlay that displays houses that may be haunted, due to tragic events such as murders or suicides. Many Chinese buyers are superstitious and will not want to live in a property that may be haunted, so haunted properties drop in price. Spacious.hk keeps track of these incidents and display them on over properties that apply in the haunted overlay. Non-superstitious viewers, such as foreigners or younger buyers, can take advantage of this and purchase “haunted” properties at lower prices.

 

Conclusion
 

With the omnipresent role of technology in our daily lives, questions about the adoption of PropTech are not “ifs,” but “whens.” Pioneering PropTech startups like PowerMew and Spacious.hk are already making waves in the industry with their innovative solutions. Even without a revolutionary tech-based product, any company will already benefit from the productivity improvements brought about by cloud-based technology and CRM. PropTech truly deserves the moniker of “The Next Big Thing,” and one should start sooner rather than later to reap its benefits.

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