Proptech in Vietnam: What to expect?

Proptech is still considered a new concept in Vietnam but has shown significant signs of potential to attract more and more investments into the growing number of ambitious proptech start-ups.

Proptech and Proptech Companies

Proptech, short for property technology, is an innovative approach to real estate in which technology optimizes the way people research, rent, buy, sell, and manage properties. Although it has been around since the introduction and optimization of software such as Excel, proptech has only recently gained popularity due to the Covid-19 pandemic and the global demand for online solutions for the purchase and management of properties.

Now, PropTech is helping modernize the real estate sector, with Virtual and Augmented Reality (VR and AR) leading the way. The use of these two technologies within real estate, property management, and living sectors has been increasing for some time. However, their benefits go beyond cost efficiency and time-saving. While AR can improve communication, ensure precise progress reports in construction and identify potential errors in the build, VR can help enhance the customer experience by providing virtual tours of properties to potential buyers from around the world.

Artificial Intelligence (AI) applications for proptech continue to gain traction, as they can improve the outcomes of a variety of fields, including building operations and performance, tenant experience, robotics and drones, real estate investment, and more. Other emerging market trends include the potential uses of blockchain systems and the appearance of cryptocurrency transactions.

Proptech startups and tech companies around the world have cashed in on this capital-rich sector over the last decade, conquering challenges at the residential, commercial, and industrial levels. While proptech encompasses many aspects of the real estate industry, many housing innovators concentrate on home buying, selling, and financing. They aim to make the housing sector easier to navigate and, ultimately, more financially rewarding. 

According to a recent Forbes article covering upcoming technology trends for the commercial real estate market, the proptech industry has grown by 1072% from 2015 to 2019. In 2018 alone, venture capital (VC) firms invested $8.3 billion in proptech companies around the world. This number rose to a record high of $11.7 billion in 2021, according to the report by the investment bank Keefe, Bruyette & Woods. As VC investment hit $4 billion only in the first quarter of 2022, investors have high hopes for another fruitful year.

The Rise of Proptech in Vietnam

Proptech in Vietnam has come a long way in the last 18 years. In the years 2003-2004, a slew of online advertising sites emerged, including diaoconline.vn, metvuong.com, nhaban.com, muabannhadat.com.vn, batdongsan.com.vn, and others, ushering in the first wave of proptech in Vietnam. However, these sites were not sustainable, focusing only on property listings while the real estate market had gradually evolved and required more professional and innovative solutions.

It was not until the Covid-19 pandemic that the Vietnamese real estate market saw a surge in proptech popularity and massive investments in proptech startups. In order to stimulate real estate demand, proptech companies had to come up with game-changing solutions to gain a competitive advantage. New trends in the global proptech market were taking hold in Vietnam, as evident through partnerships with fintech companies or VR/AR applications.

Houze, for example, has launched Houze Invest, which allows customers to invest in real estate with as little as 1 million VND. Investors can choose between a fixed interest rate package, which is ideal for customers who want to invest safely, and a profit-based investment package, which is based on investment performance and does not require a fixed interest rate commitment.

Another trend involves attempting to reduce loan interest rates through the use of technology.  Dat Xanh Real Estate Services Joint Stock Company (DXS), a subsidiary of Dat Xanh Group, has had some success through a strategic investment in FINA, a financial brokerage platform. Specifically, FINA uses technology in steps such as setting up a profile, providing simple advice or checking the status of the attached mortgaged real estate and operates primarily online to reduce the cost of the premises while continuing to approach the masses in order to gain economies of scale. Despite the fact that there are only four consultants/salespeople on staff, the total disbursement of real estate loans through the FINA platform in 2021 was VND 1,700 billion. This means that each employee can disburse an average of 50 billion VND per month.

While blockchain is a proptech technology that has the potential to transform the global real estate market, there are still several issues that prevent it from reaching its full potential in the Vietnamese market, namely the transparency of smart contracts and customer satisfaction level. 

Propzy, a real estate investing platform founded in 2015, is proving to the entire industry why it is a "giant" among Vietnam's real estate transaction applications. Propzy's technology covers every stage of the real estate transaction to adapt to the current situation, and is fully focused on bringing transparency and comfort to clients through standardized listing data, making the comparison experience easier for all participants with real estate transaction needs. Moreover, Propzy has a strong physical presence, with over 30 transaction centers in Ho Chi Minh City and over 400 highly trained employees. The effort made by this startup has contributed to changing the way real estate transactions become easier and safer, helping create a transparent real estate business environment based on modern technology and professional services.

As Vietnam slowly recovers from Covid-19 and many sources of capital have begun to return to real estate due to low bank interest rates, proptech now faces a question about its future development plans. Should the sector continue on its current path, focusing on improving customer experience, or will another trend emerge to reshape its roadmap?

What to Expect for the Future of Proptech in Vietnam?

According to Savills Vietnam, the real estate market in Vietnam will continue to grow, particularly in major cities such as Hanoi, Ho Chi Minh City, and a number of tourist destinations. Savills also predicted that more money would flow into proptech in order to take advantage of the opportunities and promote the market's growth.

The strong economy, accelerating urbanization, and rising incomes, according to Hoang Duc Trung, a partner at VinaCapital Ventures, are all factors driving demand in the real estate market. Trung also believed that at the same time, proptech has gained ground in Vietnam in recent years, mostly thanks to the country’s young and tech-savvy population.

According to the PropTech Vietnam Network, there are more than 140 startups operating in Vietnam, focusing on the areas of real estate marketing, office management, and smart homes, shopping malls, real estate logistics, and hotels.

The segment appeared in the country through websites introducing residential real estate, consulting transactions, buying, selling, leasing, and project management in the housing segment.

The increasing heat in the field can be seen in investment deals, contributing capital to proptech startups. For example, startup Rever has successfully raised more than 10 million USD from Mekong Enterprise Fund IV. Rever also received a $2.3 million investment from the GEC-KIP Technology and Innovation Fund. VinaCapital Ventures also announced an investment of 4 million USD in the company. Short-term booking startup Go2Joy received $1.3 million from SV Investment in May, bringing its total Series A funding round to $6.1 million. Citics also raised $1 million in a Series A round from Vulpes Investment Management, Nextrans, and The Ventures.

Proptech in Vietnam will continue to be pursued by investors in the coming years as a result of the booming growth potential and the currently developing proptech platforms. For foreign investors, the time is right to become an aspiring pioneer in the Vietnamese real estate market. If you still have doubts about the market as well as how to invest in proptech, reach out to Viettonkin immediately for the latest and most accurate information. With over 12 years of experience in the fields of investment and business consulting, Viettonkin and our team of experts are here to provide you with insights and the most effective solutions.  Contact us now.