Real estate innovations changing the landscape

Real estate innovations changing the landscape

The future of the real estate market will be shaped by breakthrough technologies like big data, smart contracts and smart cities, say top executives speaking recently at the Asian Real Estate Summit in Bangkok.

Bangkok has seen the most change among Asian property markets and is one of the most innovative, said Hari Krishnan, chief executive of PropertyGuru Group.

"The Southeast Asian property sector is very dynamic," Mr Krishnan said. "The region has more megacities than any other part of the world. There is definitely a trend for big data."

The two-day summit featured real estate analysts and entrepreneurs coming together to exchange ideas, build partnerships, gain industry insights and discover the best industry practices in Asia.

PropertyGuru has a 55% share in the Southeast Asian residential real estate market. Thailand is the group's largest market, with its portal DDproperty.com.

Mr Krishnan said the Thai property market has seen steady high growth, with an emerging middle class in cities.

Vikram Kohli, regional managing director for Southeast Asia at CBRE, said the biggest issues driving real estate development, investment and growth in Asia, and across the world, have a particular focus on smart cities, property technology, big data and digital innovation.

"Big data can be used by real estate companies to build transparency, especially among property evaluations," Mr Kohli said. "It can also be used to develop smart technology to reduce water and energy usage."

Shifting demographics could also affect real estate, he said. A growing middle class with a large population under 35 should inspire real estate firms to look towards mobile technologies to attract buyers.

The future of real estate investment could take place on the blockchain, said Chris Marriott, chief executive for Southeast Asia at Savills, a global real estate service provider.

"In 3-5 years we will see the first digital representation of fractional ownership of real estate on exchanges with trust-free platforms with debt represented in smart contracts," Mr Marriott said.

In the near future, portions of real estate debt or equity could be bought and sold as tokens like a bitcoin on online exchanges. The transactions would be secured by smart contracts, where the agreement terms between buyer and seller are written into lines of code on the blockchain.

"Take, for instance, a hospital -- usually the building is a sunk cost," Mr Marriott said. "But with these tokens you can make the building itself a means of raising capital.

"Real estate is just one part of asset-backed tokens, a growing fintech innovation, that has started to become mainstream. Conceivably, the token can be backed by any asset, like gold or even intellectual property. The tokens act as a marker the issuer must pay out at some point.

"By improving liquidity in the real estate market, asset-backed tokens allow for smaller investors in larger assets."

Some investors remain hesitant to invest in real estate because it lacks liquidity, worrying that their money will be inaccessible for long periods of time. But tokens can be bought and sold at any time, resolving this concern.

The Singapore-based startup RealFuel is working with the Singapore Stock Exchange to allow the trade of these tokens, Mr Marriott said, while US startups Propellr and Fluidity are working on a dual token that combines debt and equity for real-estate-backed tokens.

"This regulation won't appear on its own," he said. "Companies are working with regulators in Southeast Asia to build a legal structure for asset-backed tokens for real estate assets."

Do you like the content of this article?
COMMENT