The SAR government must do more to nurture property technology
The rise of property technology (proptech) is being touted as a game changer for the world’s real estate industry. In the first and second quarters last year, proptech attracted over $10 billion in capital investment globally, according to a Wall Street Journal report.
As a fast-growing segment of the information technology sector, proptech refers to the use of technology in tackling challenges facing the real estate industry. The technologies include big data, virtual reality, 3D printing, blockchain, artificial intelligence and internet of things. They can manifest in different ways, such as hardware, software, materials and construction methods.
Hong Kong businesses have started testing the waters of proptech. Local startups started digitizing traditional industries, including property trading platform SmartME and the Squarefoot.com.hk website. Yet these have not become the mainstream choices for the general market.
So, the key question is: What is hindering the development of proptech in Hong Kong? Or is proptech simply not suitable here?
First of all, there seems to be a misguided overreliance on online technologies for listing properties for sale and for rent only. But proptech has the potential to do much more than this. Pavegen, for example, is a proptech startup whose technology converts the kinetic energy of footsteps and generates renewable electricity.
The lack of incentives to innovate is one of the reasons that proptech products and services are limited on the local market. Being the world’s most expensive real estate market, the city has many real estate agents, and such convenience makes customers reluctant to explore technological solutions.
The second challenge seems to be a lack of open government data, leading to a lot of unnecessary costs and difficulties in applying technologies such as AI, which requires lots of data. The Rating and Valuation Department, for example, has information about the annual valuation of properties in the city, but the government has not considered using the data to help develop proptech.
As early as 2018, Singapore announced a new development blueprint for the real estate sector. The key strategy was embracing innovation and making good use of technology. The Singaporean government also proactively releases data to help advance the technological development and transformation of the real estate industry.
The proptech model that proved successful in Singapore might not be suitable for Hong Kong, but the Singaporean experience shows that there are proactive roles the government can play to nurture Hong Kong’s innovations in the real estate sector.
The third reason for Hong Kong’s lagging behind the global proptech race lies in a talent gap in technology. While the city offers a range of incubation and acceleration programs, there is only one Hong Kong-based organization — Asia PropTech — with a specific focus on proptech.
Given its proximity to the Chinese mainland’s tech hub of Shenzhen, which hosts a pool of talent coming from tech giants, closer cooperation between Hong Kong and its Guangdong-Hong KongMacao Greater Bay Area counterparts could be the answer to its shortage of talent. Since Shenzhen has a strong tech base, the actively trading real estate market of Hong Kong could become a proptech testing ground through collaborative efforts.
Although proptech is still in its infancy, Asian investors’ growing appetite for it may provide more incentives for local startups to benefit from this rapidly growing sector. Research estimates that proptech investment from the mainland and Hong Kong between 2013 and 2017 had hit the $3 billion mark, and investors’ appetite remain strong.
Better late than never, as the saying goes. Hong Kong should step up and implement the right policies specifically for the development of proptech, and it will reap rich dividends before long.
Research estimates that proptech investment from the mainland and Hong Kong between 2013 and 2017 had hit the $3 billion mark, and investors’ appetite remain strong.