While this points to APAC reaching peak venture capitalist interest, other signs show promise in India and pre-series A startups.
Property technology—the application of information technology and platform economics to real estate markets, reached a high of more than US$1 billion in disclosed funding in 2018, but last year, start-ups in Asia Pacific saw their funding decline by 38.4% to reach US$625.9 million.
Deal counts also fell across the board to 38 deals in 2019 compared to 50 in 2018. These figures were disclosed in a joint research study by real estate professional services firm JLL and media company Tech in Asia.
Says Jordan Kostelac, director of proptech, JLL Asia Pacific: “When we first commissioned Tech In Asia to produce the study, we wanted to get a sense of the Asia Pacific proptech funding scene now compared to two years ago. Fresh data from their sources shows that there’s been a significant decline in funding in the region.”
Kostelac feels that these figures are only indicative of VC interest and they are less reflective of what is truly happening in the industry. “In our work with clients and fellow corporates, we are seeing that interest in proptech in Asia Pacific continues to grow, with traditional players taking a strategic, integrated approach with start-ups instead of the VC investment route.”
The real estate industry has been relatively late to the tech revolution, which has given major corporates and other real estate firms a greater runway to innovate and invest internally in technology. In the Asia Pacific region, where corporate tech adoption is very quick due to the dynamic nature of the markets, many companies are entering partnerships while increasing trials and deployments of new technologies in their portfolio.
“For instance, JLL has an extensive suite of tech solutions and we set up a global Centre of Expertise for Technology, Data and Information Management two years ago to develop new solutions harnessing the latest technologies available,” Kostelac said.
Bright spot in pre-series A and India’s proptech scene
The study also shows that pre-series A start-ups experienced the biggest increase in funding from US$12 million to US$26.1 million, a rise of 117.5% year-on-year. India, too, bucked the overall trend as proptech funding grew nearly 17 times from US$3.4 million in 2018 to US$56.8 million in 2019. However, India’s 2019 figure is still below that of US$91.7 million in 2017.
Added Kostelac: “India will always be on investors’ radars—its tech community has produced some of the most innovative solutions in different industries. Its proptech scene has great potential as well as deep engineering expertise and this is also why JLL partnered with Invest India to launch our accelerator JLL IDEAs last year.”
Proptech, sustainability and data
Kostelac projects that real estate firms will be looking to invest to tackle the tough issues of data privacy and how to use technology to achieve greater sustainability in the built environment. “We’re living in an age where data is easily collected and data privacy needs to be taken seriously. Building owners and occupiers have to ensure adequate protection and proper management of their data.”
“Similarly, there is an increasing demand to ensure environmental, social and governance (ESG) metrics are met in buildings and the wider real estate industry. Well-employed proptech solutions, like platforms to track and benchmark energy consumption in buildings, have the power to deliver clear sustainability benefits on these fronts.”
