Chinese real estate firms seems to be more willing to implement property technologies, according to a survey of 200 companies carried out by Jones Lang LaSalle (JLL), a professional services firm that specializes in real estate and investment management.
JLL’s “Reimagine the Future of Real Estate” report stated that around 47% of Chinese real estate companies plan to increase their proptech budget by 10 to 30% in the next two years, as these firms consider that the use of proptech could mitigate potential market risks and maximize long-term asset value.
Also, nearly 10% of surveyed firms plans to increase proptech budgets by over 30% for the next two years.
In 2018, only 37% of Chinese real estate firms surveyed planned to increase their proptech budgets by over 10% in 2019 and 2020, JLL said.
“In 2020, China’s commercial real estate market faces internal pressures from intensifying competition as well as rising uncertainty from external factors and events. Nevertheless, spearheaded by breakthroughs in emerging technologies such as Artificial Intelligence (AI), the Internet of Things (IoT) and the steady development of the Fourth Industrial Revolution (Industry 4.0), a transformation of virtually every aspect of the commercial real estate industry has begun,” said KK Fung, JLL’s CEO for Greater China. “Proptech, or property technology, serves as the key growth engine in reimagining the future of real estate. By enhancing the resilience of any commercial property, proptech can mitigate potential market risks and maximize long-term asset value with respect to four key areas: human experience, health and safety, operational excellence, and digital drive,” the executive added.
Fung also said that, in addition to cost reduction and productivity improvement, the enhancement of health and safety or human experience should also become an effective measure of valuing proptech in a post-COVID-19 era.
“The proptech ecosystem in China is still in its infancy. In the future, it will further accelerate the digital transformation of the country’s real estate industry in terms of integration, efficiency and talent development. Cooperation among proptech companies, real estate enterprises and professional organizations will collectively drive innovation forward in the industry,” he added.
JLL also highlighted that it is foreseeable that the development of IoT and AI applications in China will accelerate, and the marginal cost of adoption will decrease rapidly. “Our survey also shows that the inquiries for IoT, 5G, and AI among Chinese real estate companies will increase significantly over the next two years. On the contrary, since the market for big data and cloud computing is relatively saturated, future new demand from real estate companies will be somewhat limited. For emerging technologies such as BIM, VR/AR and robotics, many stakeholders have adopted a wait-and-see approach, though some solutions may see growth as remote working and contactless service becoming the next normal,” JLL said.
“As China continues to invest in its digital infrastructure, ensure regulatory frameworks, strengthen data security and privacy, demand for new technologies from the real estate industry is expected to further expand.”