Article contributed by Dr Alan Poon.
The buzzword in today’s business world is definitely related to 'technology', in the form of digital inclusiveness where daily operations are concerned.
Every industry seems to be wanting to jump onto the digital bandwagon, with the brick-and-mortar industry of real estate being no different.
As smart phones and higher bandwidth technology in communication (such as 5G infrastructure and SaaS-based software) are rapidly unfolding before our very eyes, businesses can no longer remain stagnant.
This is evident in where our daily activities are being centred in the digital world. The technology trend has even gone from disrupting business models in recent years, to being an antidote in the post-pandemic landscape now.
Technology-Enabled Or Technology-Driven?
There is a distinct difference between businesses that are technology-enabled, versus one that is technology-driven where digital transformations are concerned.
The former is what truly drives the change or adoption of technology, as its core approach in solving real-life problems usually require a much holistic approach, such as PropTech companies that provide alternatives to the current brick-and-mortar industry.
The latter would be existing businesses that are awakened by the need of technological innovation to drive their business and company direction forward.
This can be seen by using third party technology-based software, and the ramping up of digitisation of processes in the company. Both are distinctly different.
An easy indicator to help differentiate, would be the amount of workforce with a technological background that a technology-enabled business employs.
A tech company (or more properly labelled as 'technology-enabled') would usually have more than 30% of their talent pool consisting of highly skilled professionals in the field of technology, such as in IT or data science.
Onslaught Of Mega Trends
In recent months, Malaysia’s Ministry of Science, Technology and Innovation (MOSTI) launched Area 57, a drone development zone at Technology Park Malaysia (TPM).
This marks a significant milestone, as such an establishment supports the demand of highly-skilled labour to make Malaysia a drone hub, thus being a catalyst to drive multiplier effects across industries, including the real estate market.
While drone technology is not new, the onslaught of mega trends surely give rise to rapid development in a wider range of industries. Some of these trends are:
Big Data Analytics (BDA)
Artificial Intelligence (AI)
Electronic and mechanical engineering technology through IR 4.0, that combines physical, digital, and biological elements
All of this leads to supporting the growth of businesses requiring industrial, commercial, and residential properties in the country.
Despite the optimism that we see in technology innovation and advancement in the country, our brick-and-mortar industry seems to be quite rigid, as far as property technology is concerned.
Being a highly-regulated industry, the real estate value chain differs from every stage of the property lifecycle in terms of its practice.
For example, the built environment is governed by the Construction Industry Development Board (CIDB), while the transactional real estate and facilities management are regulated under the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP).
CIDB has already come out with the Construction 4.0 Strategic Plan (2021-2025), adopting technology such as BIM (Building Information Modelling) as one of the 12 main technologies with a proper route map.
While the Construction Industry Transformation Programme is applauded, the same cannot be said for the rest of the real estate value chain, from sales transactions to managing properties.
Stakeholders' Game Plan
We are reading this either on our computer or a mobile device. Rarely do we hold a physical book for a good read, or use them as our main reference for research (maybe in some situations such as in the academic field).
We appreciate real estate portals that contain a vast number of property listings at the tip of our fingertips, something that has been in the country for almost two decades!
Today, even portals like these require more than just giving users a smooth browsing experience; they also have the artificial intelligence to perform data analytics and deep learning, so that useful Big Data can be presented swiftly on the screen.
Real Estate Technology, as the umbrella for all things PropTech, has come a long way from the days of its disruption on merely property listings.
The inclusion of Marketing Tech (MarTech) pioneered from the early years of application through eCommerce sphere, have made sizeable inroads into interactive platforms when it comes to matching deals between two parties.
Many of the innovations we see today in real estate are clearly an indication as to how the marketing technology stack more than 15 years ago have given PropTech a new lease of life!
And then, there is also the Financial Technology (FinTech) within PropTech Verticals coming to maturity in recent years.
With more real estate stakeholders taking brickbats by technological changes in the market, PropTech businesses mushroomed due to the inefficiencies, thus giving rise to a new market demand.
Creative ideas combining Insurance Technology (InsurTech) have been making plenty of progress too in this region, as seen from the size of funds raised by real estate startups catering to the asset owner's needs.
As the landscape gets crowded, it is no surprise that eventually, the much-awaited Automatic Valuation Model (or AVM, for short) may even be a norm in years (if not months!) to come.
It is able to give the much-required speed for developers, banking institutions, or property investors almost real time data and accuracy for valuation of their prized assets.
As demand grows with a recovering economy, the pressure within the construction sector in the supply-value chain definitely requires tech such as IBS and BIM to be widely used, as the builders start to feel the heat to match demands in record time in the coming years.
Technology Through Approaching The Whole of Society
As our nation heads to a jumpstart of the economy post-pandemic, we are truly a generation which can look forward to better things to come!
The anticipated growth can most probably be materialised with widespread technology adoption, through approaching the whole of society and nation.
From the fundamental education sector, to the billion-Ringgit brick-and-mortar industry, Malaysia must welcome more skilled labour and foreign investors, while ensuring an ecosystem which is tech-enabled friendly for them to stay and tap into our nation’s growing technology-based workforce.
Technical and Vocational Education and Training (TVET) education and technology innovation must be welcomed and supported, just like the days of the ‘Look East’ policy, where we allowed industrial technology knowledge transfer to take place.
The real estate sector being no different, with its respective governing body, must have the courage to embrace the imminent arrival of PropTech disruption happening across the real estate discipline.
Policymakers are to seriously relook into consultation with stakeholders representing both demand and supply market, before making any judgmental move that could hinder the country trajectory in the right direction.
Dr Alan Poon is an award-winning international speaker, serial entrepreneur and author of the three “Good Tenant, Great Tenant” book series on tenant management. As founder and CEO of SuperiorWealth Resources, a business advisory firm specialising in real estate solutions, he is also a media influencer for his contrarian insights and market observations of the real estate industry. Feel free to connect with him at his Facebook page, or email him at firstname.lastname@example.org