Can crowdfunding transform real estate brokerage in Southeast Asia?

Philipp Kristian Diekhöner
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For real? Unrealestate aims to marry crowdfunding with property ownership; Perhaps it’s the new face of time shares or mutual funds

I do not know about you, but as a millennial, the prospect of owning a property sounds a little daunting to say the least. From selecting the right property, the sizeable downpayment, the mortgage and the paperwork, it all seems strangely out of tune with the world we live in today. Perhaps that also has to do with the good old property agencies, whom I would not necessarily trust to get me the deal I want. In fact, personally, I would try to avoid going through an agent in whatever way I can, and never understood the rationale behind those juicy the commissions in selling real estate.

After all, real estate has the huge advantage that it is tangible. I can research it, look at it, get in touch with the owner, visit it and then purchase it. Based on my usual technology usage patterns, I would probably do most of the research on-the-go and use what I find to ask probing questions about the property. Were it possible, I would happily find a way to make the entire contractual and payment process come online, too, because it just makes much more sense than pushing paper. Why would I need an agent for that at any step of the way? Real estate is a preferred asset for many people in Asia, and the market has gigantic potential. Yet, the industry itself has staid pretty much the same for decades.

Also read: There’s a huge problem with how property portals function, and here’s how to fix it

Globally, seems like that is starting to change. Radical advances in technology are making their way into the real estate space. Blockchain-powered smart contracts are being trialled to pretty much automate the expensive, paper-based ownership transfer transactions property sellers and buyers have to go through – usually involving a notary public. The Internet of Things (IoT) is impacting the way real estate projects are conceived in the sense that our homes and offices of the future are expected to be inherently plugged in and smart. And finally, virtual reality technology is making it possible to visualise the look and feel of a property in a close-to-life fashion from anywhere in the world, even before it is built.

Finally, property ownership models themselves are slowly starting to evolve. The global rise of crowdfunding in other industries opened up an opportunity for applying the idea to real estate. Instead of crowdfunding a product or a company, why not crowd-fund a property? The benefits may be far-reaching – chief of which is the lower investment amount required. In terms of investments, it is good to have a diversified portfolio, but with real estate that is hard unless one is very wealthy.

Crowd-ownership could solve that problem very elegantly by allowing people to invest smaller amounts in different properties. Further it could encourage millennials to invest in property at a younger age due to the affordability of the investment.

Putting the “unreal” in real estate

Unrealestate, a new face in the Singapore start-up scene, is looking to bring this model to Southeast Asia. With a founding team of three Estonians bringing real estate backgrounds and fresh perspective to the scene, it is yet one more coup of the enterprising group of young entrepreneurs from the country that brought us Skype and TransferWise, among many other technology companies.

The trio is entering the market with a new brokerage model and experience for commercial and residential properties, facilitated by virtual reality. Aimed at an initial high net worth clientele looking to invest in a diverse range of real estate assets with ease and convenience, the company makes virtual walkthroughs available for every listing on its platform, and allows investors to commit relatively small funds to own a share of the properties on offer. Positioned as a full-service provider, the start-up aims to take care of administrative matters pertaining to the sale of its properties both for sellers and investors, largely relieving buyers and sellers of the paperwork – and agency intermediary – customarily involved in real estate deals. The company’s launch offering will focus on aftermarket properties, while new developments are expected to complete is value proposition in due time.

Also read: Huge problem indeed, but not with property portals: A response by 99.co

Considering that the local Singapore market is taken by a small set of digital players such as PropertyGuru and 99.co, newcomers like Unrealestate could shake things up with their reimagined digital distribution model for real estate assets that no longer requires a physical intermediary. The crowd-funding approach also invigorates property as an asset class by allowing small chunks of properties to be purchased, traded and held without any hassle.

A new form of property ownership?

By offering convenient and trusted access to curated property investments, the platform could succeed in bringing together property owners and investors in increasingly convenient and cost-effective ways and giving both sides a new option for transacting in tune with the sharing economy and digital age we live in. That makes it a seriously interesting fintech proposition and noteworthy addition to the local start-up ecosystem.

Of course, it remains to be seen how the market reacts to Unrealestate and its potential future competitors – but the sheer presence of a start-up going looking to leverage both a technology and a business model innovation is a sound effort in contributing to Singapore’s innovation economy.

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