Early days for proptech as new companies seek trust

Although proptech could usher in the next era of real estate, the sector’s lack of faith in tech and sluggish development must be overcome first. Photo: Le Toan

According to Hai Nguyen, executive director from FinHome.com, the inaccuracy of existing data limits the development of some proptech models such as home valuations, digital mortgages, and digital investing. Technology adaptation, meanwhile, is slow and causes proptech startups to spend more time and resources educating the market.

“Moreover, there are very limited collaborations between ecosystem stakeholders of real estate investors, developers, brokerages, service companies, and startups,” Hai told VIR. “Having said that, proptech also brings in a lot of opportunities for different ecosystem stakeholders.”

For instance, besides the traditional listing websites, now landlords and tenants have another option called digital brokerage, which promises to speed up the leasing and renting process while reducing costs. Another examples are coworking and co-living models.

“By leveraging big data into real estate, those proptech startups can provide a seamless experience and flexible leasing terms for clients. Millennials furthermore can access homeownership through a new business model like rent-to-own,” he said.

Meanwhile, Pham Lam, chairman and CEO of DKRA Vietnam, said that the prospects are straightforward. “The field is big and full of potential, so organisations can dominate from large markets to niche markets to match the capacity of the business,” Lam said.

However, he added the challenge is still huge in terms of gaining users’ trust, and the capacity of proptech companies must be verified from practice. “There are many supporting platforms for long-term development. Users easily give up if the products and service quality of the models do not meet their needs, so this is one of the huge issues for any proptech company,” Lam said.

Wider development

In Vietnam, proptech is developing most strongly in the marketing housing business, office management, and smart homes. This trend is gradually expanding to related areas such as shopping malls, real estate logistics, and hotels.

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.

Along with real estate information channels, the emergence of AI and big data helps form many centres to store real estate transactions, in which information is processed through software to filter data more precisely about customers, market needs, or marketing strategy orientation.

Proptech is also widely applied in coworking in Vietnam, helping landlords and tenants optimise the necessary space in an office.

Meanwhile, smart cities are being offered for sale by domestic developers more and more and are being well received by the market. The smart home field in Vietnam is developing at the initial stage with leading names such as BKAV, Lumi, and ACIS, possessing a price advantage compared to foreign technology companies.

But despite the disadvantages, experts say proptech’s irreversible global position continues to affirm that only when they know how to grasp and apply technology to their business activities will real estate companies become market leaders in the future.

Attracting capital

The proptech market in Vietnam has quickly become an emerging field with a series of startups being born and many having successfully raised capital of millions of dollars.

Last month Homebase, a proptech company that buys homes upfront for clients and allows them to move in and buy back anytime, announced the successful raising of $30 million in equity and debt to make homeownership accessible across Southeast Asia.

Leading global investors participating in this round include Y Combinator, Partech Partners, Goodwater Capital, Ace and Company, Emles Advisors, and Foundamental, alongside Michael Seibel, CEO of Y Combinator, and operators and executives from SoFi, Opendoor, Republic, Microsoft, Instacart, Abu Dhabi Investment Authority, Binance, and more.

In August, startup Rever also successfully raised more than $10 million in capital for Mekong Enterprise Fund IV. Rever previously received a $2.3 million investment from the GEC-KIP Technology and Innovation Fund. VinaCapital Ventures also announced an investment of $4 million in this company.

Elsewhere, short-term booking startup Go2Joy received $1.3 million from SV Investment in May, bringing the total series A funding round to $6.1 million. A few months earlier, Go2Joy received $2.5 million from investors. Also this year, Citics raised $1 million in a Series A round from Vulpes Investment Management, Nextrans, and The Ventures.

In 2020, Propzy announced a successful $25 million Series A round of funding from Softbank, Gaw Capital, and many other investors, bringing the total raised capital to $37 million. According to its development roadmap, Propzy expects to close the Series B funding round of $50 million by the end of this year.

To attract more startup investors and international funds to invest in proptech in Vietnam, Hai from FinHome.com said that regulations will be the primary point.

“Sophisticated proptech business models like real estate fintech, rent-to-own, and especially blockchain and tokenisation will require a lot of meaningful conversations between proptech players, the established real estate industry, and the government,” he added.

Meanwhile, Lam from DKRA said that businesses need to focus on practicality and understand the market to solve related problems – the pain point of the market.

“As well as building long-term, sustainable strategies, slowly but with limited risks, it is necessary to build an executive team with experience and intellectual convergence, and with high practicality,” he said.

The following years are forecasted to be a revolution for Vietnam’s proptech market, Lam explained, with an increasing demand from users as well as new methods being used to help the market have more choice. “Therefore, there will be competition and businesses with low competitiveness will be eliminated,” Lam said.