Property is the largest asset class in the world—it’s worth more than all stocks and bonds combined. In large markets like the United States, the property industry contributes US$3.5 trillion to the GDP, of which $836 billion is construction spend. About US$1.3 trillion worth of existing homes transact every year in the US residential property market, and these deals generate about US$66 billion in commissions for property brokers.
However, real estate was one of the last sectors to adopt technology.
Property technology—or Proptech—was initially linked to three property activities: information provision, transactions, and management and control. The market’s huge investment potential was apparent to venture capitalists, given its business size and early technological gap. There were also benefits to be reaped for the region’s middle-class population, whether they were buying, selling, renting, or investing in apartments, houses, condominiums, or land.
From 2013 to mid-2017, 179 startups in Asia Pacific received US$4.8 billion or over 60% of all Proptech investment, with China and Hong Kong making up US$3 billion of this amount. Today, it is no longer a niche phenomenon, especially in a developing country with a sizeable population like Indonesia.
Indonesia is a promising market for the property industry, as its economy has grown steadily in the last couple of years. Between 2015 to 2017, the country’s GDP per capita increased from US$3,330 to US$3,840. More importantly, a larger number of young and middle-class urban Indonesians can now afford to buy homes.
A recent World Bank report shows that Indonesia’s growing middle class—which now stands at 52 million people—will have a significant impact on the economy. This younger, more urban generation has more disposable income and will turn the housing market around.
So, how can Proptech startups help the industry tap into its maximum potential?
Making property searches easier
The first wave of Proptech in Indonesia began with the increase in demand for homes from the middle-class population, thanks to a healthier, growth-stimulating economy. This area of Proptech is still the most popular, with a high concentration of selling, buying, and leasing search portal startups.
Through this online system, people can find properties for sale or rent by area and price in a transparent manner.
One such startup in this field in Indonesia is 99.co, a B2C platform that provides users with a map-based system for finding properties. After its acquisition of Urbanindo, 99.co now has over 140,000 authentic listings that users can sort and filter according to their preferences. Founded in 2014, 99.co has helped large swathes of the middle class in Indonesia and Singapore find their dream property.
From co-working to co-living
The collaborative environments and attractive prices of co-working spaces are a big draw for entrepreneurs and startups who want more interaction and flexibility in their office space. Even large firms like HSBC, Deloitte, and Manulife are getting in on the shared workplace trend.
In 2015, VC firm East Ventures set this trend in motion in Indonesia with its co-working space EV Hive. In a short time, EV Hive grew from a single location at The Maja to 31locations in Greater Jakarta, Medan, Jogja, and Bali. It currently has around 9,000 members from 800 paying companies and has rebranded to CoHive.
CoHive has also added new services for co-living (CoLiving) and co-retailing (CoRetail) to its repertoire, in addition to its existing co-working and event space businesses. It’s the first startup in Indonesia to offer a fully operated co-living space—its maiden property, Tower Crest West Vista in West Jakarta, has 64 rooms across a total 2,800-sqm living space.
The property contractor sector is one that’s replete with inefficiencies. It’s no wonder given the number of people involved from across different industries; a single project often includes engineers, designers, architects, general contractors, subcontractors, and developers.
Several startups are trying to solve this problem, including Arsitag, an online service platform that connects users directly with architects and interior designers.
Arsitag has made it easier for the average homeowner to find the right professional for their needs. Today, it has a network of 650 architects and interior designers in Indonesia.
The next wave of Proptech is all about data. Buoyed by remarkable advancements in data processing, storage, and ingestion, the last 10 years of Proptech has ushered in companies with large ambitions and even larger treasure chests. Time will tell which company will lead this technology revolution in the property industry.