China, Hong Kong Received Dominant Share of Global PropTech Investments Since 2013

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According to new research from JLL, property technology - or PropTech - start-ups in Asia Pacific are outpacing their counterparts in Europe and the United States with 179 of them raising around $4.8 billion in funding since 2013. This represents over 60 percent of PropTech investment worldwide.

Greater China, including mainland and Hong Kong, raised the most funding in Asia Pacific and has received about 41% of global 'PropTech' investment.

The real estate consultant today released the findings of its report -- Clicks and Mortar: The Growing Influence of PropTech -- which analyses the state of PropTech and its growth potential in 13 markets across Asia Pacific. Commissioned by JLL and authored by start-up community Tech In Asia, the report also reveals the forecast for PropTech growth in the region, predicting that funding will reach $4.5 billion a year by 2020.

A blend of the words property and technology, PropTech refers to the application of technology to solve challenges in the real estate sector.

"Technology and real estate are converging in exciting ways. We're already seeing the potential of data analytics, artificial intelligence, the Internet of Things, virtual reality and blockchain, to transform how we invest in and occupy real estate in the future," says Anthony Couse, CEO, JLL Asia Pacific.

"The findings of the report show that there is a great deal of potential for PropTech in Asia Pacific. With its young population, rapid urbanization 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."

Asian PropTech giants

According to the report, Greater China and India emerged as the top two markets for PropTech start-ups in the region, based on funding value and total number of deals. Those in Greater China raised the most funding with approximately $3.02 billion or over 60% per cent of Asia Pacific's total funding from 34 deals. India has the highest number of PropTech start-ups in Asia Pacific at 77 deals which, combined, raised a total of $928 million.

Christopher Clausen, associate director of Asia Pacific Research at JLL said, "The high cost of living in Hong Kong and the city's history as a traditional financial centre have arguably held back innovation and the development of the tech industry in Hong Kong. But the city's tech industry is steadily gaining momentum and there are an increasing number of unicorns that got their start in Hong Kong. The Hong Kong Government's recent launch of the HKD2 billion Innovation and Technology Venture Fund should help spur further growth of the tech, and with it PropTech, sector in Hong Kong,"

"Also, the government can support the development of the tech sector, including PropTech, through tax holidays and business incubators for qualifying companies. But ultimately it will be market forces that determine whether Hong Kong's tech industry continues to grow. Hong Kong work visas for expatriates with tech skill sets in demand would also support the growth of the industry," continued Clausen.



PropTech evolution

The report revealed that PropTech in Asia Pacific has evolved significantly since it first emerged in 2007 with residential property listing start-ups. In its current iteration, it is beginning to serve larger enterprise needs and the commercial real estate sector.

PropTech startups serve four main verticals or niches, says the report: Brokerage and Leasing, Investment and Financing, Project Development, and Property Management. More than half (52 per cent) of the start-ups that have raised funding since 2013 are in the brokerage and leasing space, where they serve as a marketplace for brokers, property owners and purchasers.

"What's really interesting for a company like JLL is that more start-ups are beginning to emerge that bring solutions that are scalable for big corporate needs," explains Mr. Couse. "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."

Asia's PropTech 'unicorns'

Based on a specially developed matrix analyzing the Total Investable Real Estate Universe by JLL and Digital Savviness defined by the World Economic Forum's Networked Readiness Index, Tech in Asia projects that the countries with the highest potential of nurturing unicorns - or billion dollar start-ups - in Asia Pacific are China and Japan.

"We've noticed that China already has PropTech unicorns. Notably - Lianjia - raise $1.69 billion for its tech-enabled brokerage business. Given the country's enthusiastic adoption of FinTech and mobile payments, there are likely to be more in China. But we also think Japan is ripe to create a billion dollar startup because of its eagerness to adopt blockchain," says Terence Lee, chief editor at Tech in Asia.

"While many of the start-ups we follow are in areas such as e-commerce and gaming, we believe that PropTech is one of the key sectors to watch in the next three to five years."