Property technology (proptech) is a fast-growing industry that uses websites, apps, and software to search, manage, and assist in transactions for homes and land. If current trends continue, the real estate market in Indonesia is on target to reach USD 9.53 trillion in 2024, and the industry's digitisation is showing potential to benefit the nation.
Proptech is bringing transparency and efficiency to Southeast Asia's real estate market. It makes renting, selling, buying land and houses, and managing properties accessible through technology. Other benefits have been providing access to real-time customer data, handling transactions seamlessly through digital platforms, and streamlining business operations.
Furthermore, digitising makes it possible to provide virtual home viewings and democratise access to real estate for those in underdeveloped areas. Since the world is more focused on protecting the planet and the environment, an essential feature of using technology is bringing sustainable solutions to the market. For example, using the Internet of Things (IoT) can help manage smart lighting fixtures and temperature controls, saving energy.
Challenges in the application of proptech in Indonesia
Even though Indonesia can grow by adopting technology, it faces several challenges in its property market. First, digitising requires customers to share their personal and financial information with up-and-coming real estate startups. Not only might they not be comfortable disclosing their details, but there is also a significant risk of cybercriminals hacking and stealing their identities.
Other blocks include rising home prices due to demand and rapid urbanisation, poor infrastructure in some areas, and an increasing population putting pressure on the industry to find land and houses. Companies may be reluctant to use technology because it is expensive and has restrictive maintenance costs. Additionally, ageing populations need special homes built, which may not always fit with a technological approach.
Tech trends impacting Indonesia's real estate market
Currently, introducing technology to Indonesia's real estate market is leading to the following trends:
- Online property marketplaces
Real estate agents have set up online marketplaces where buyers and sellers can congregate and transact. These platforms bring convenience, efficiency, and speed to the industry. They also enable customers to search, view, and pay for properties relatively hassle-free. Agents can enhance accessibility to customers outside urban areas and place advertisements to show off otherwise hidden listings.
- Using blockchain in transactions
Blockchain technology enables industry stakeholders to maintain unalterable records, especially regarding big-ticket items like housing. Thus, it plays a role in preventing fraud and money laundering. Moreover, this approach protects the environment by eliminating the need for paper records, reducing deforestation. Additionally, new tech provides the option of paying through cryptocurrency.
Technology enhances customer experiences by allowing them to view houses 24/7 without calling an agent late at night. Virtual house tours show houses in real-time, and potential occupants can interact with the lister and ask questions.
Furthermore, real estate agents do not have to leave the office, which benefits the environment by reducing travel and air pollution. They can automate the tour and collect data on who viewed the video to begin marketing to them.
- Government support to the market
The Indonesian government has encouraged the country's digital transformation. Nevertheless, it must do more to provide funding, improve industry regulations, and support real estate startups.
Reducing construction costs will lead to more affordable homes for its people, lessening the burden of homelessness.
Using real estate technology, startups can analyse historical sales data, check consumer behaviour and preferences, understand their market, generate reports, and make data-based decisions. Additionally, they can identify weaknesses in their sales funnel, making it possible to encourage customers to make the final purchase.
The future of proptech in Indonesia
Current property trends in Indonesia still have room for improvement in significantly shifting toward sustainability. This involves retrofitting older houses, building with eco-friendly raw materials, using clean energy, maintaining biodiversity and plant life, especially in urban areas, and recycling construction waste. Moreover, adding more tech features to the home, such as temperature controls, will improve energy efficiency.
Proptech will thrive if the stakeholders come together to improve regulations, build sustainable homes and cities, and find a way to subsidise technology costs for emerging startups. The public needs education on adopting digital solutions in real estate to enhance the industry's efficiency. Indonesia's growing economy will also benefit homebuyers by reducing interest rates and increasing their purchasing power.
The Indonesian government, foreign investors, and the World Bank currently fund affordable housing projects. The One Million Houses (OMH) program aims to construct at least a million homes annually. As new properties become available, it is vital to innovate financial technology (fintech) solutions to make them easier to buy or sell.
Finally, as the industry's growth creates more jobs, innovative companies will emerge that will benefit Indonesians.
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