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The real estate industry in Asia Pacific – part 1, a regional overview 

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Venture capital investments in PropTech have been on the rise globally, with increasing deal volumes and funding amounts in all regions. 

We recently featured a blog post on the PropTech landscape in Europe; in this article we now start to explore the Asia Pacific region, how it differs from other parts of the world and how it offers vast potential for PropTech solutions. 

The Asia Pacific region presents a massive market opportunity for PropTech due to its population, rapid urbanization, and increased demand for real estate services. With over 48 countries and a population of over 4.6 billion, there is no question that Asia Pacific is a huge market opportunity. 

According to JLL Research, the commercial buildings in the Asia Pacific region have a total market value exceeding $12 trillion, encompassing more than 260,000 individual properties valued over $10 million each. This presents an intriguing contrast when compared to the United States, which boasts 900,000 buildings with a total market value of approximately $13.5 trillion. 

According to the 2023 Proptech Venture Capital Report by CRETI, the analysis of the top 10 most active PropTech venture markets also revealed some interesting results. The US was by far the most active market, accounting for 56% of the total deal count with 410 deals. India secured the 3rd position with 7% of the deals, while China ranked 8th with 3% and South Korea came in at 9th place with 2%. Collectively, these three Asia Pacific countries represented only 12% of the deal count, while Canada, the UK, and other European markets accounted for the remaining 31%. 

So, with this many people and so much opportunity, why is there a lower volume of PropTech venture capital investment compared to the US and Europe, and what does this mean in terms of PropTech adoption? 

It is not easy to tell the story of PropTech adoption in Asia without first exploring the region itself and how the real estate industry operates in various countries, including major economies like China, Japan, India, Australia, South Korea, and Singapore, as well as smaller nations in Southeast Asia, Oceania, and parts of the Middle East. 

Specifically, the real estate industry in the Asia Pacific region stands out from other regions in several ways: 

  • • Significant and rapid economic growth and increased urbanization over the past few decades has led to a rising middle class, which has spurred sharp demand for residential, commercial, and industrial real estate. 
  • • Asia Pacific is home to more than half of the world’s population, with many extremely densely populated cities, leading to the rapid development of mega-cities and the need for sustainable urban planning.  
  • • The Asia Pacific real estate market offers a wide range of investment opportunities, including emerging markets like China, India, and Vietnam, as well as more established markets like Japan, Australia, and Singapore. 
  • • Different countries have different rules and regulations regarding property ownership, foreign investments, taxation, and land use. 

Understanding the region’s rich tapestry of cultural nuances is essential for business success, as it impacts design preferences, market behaviors, and business practices. Building relationships and adapting to local customs are necessary to facilitate adoption of PropTech in the region, determining which solutions will be successful in which markets. For example, in many of the less developed countries, high availability of a low-cost labour force reduces the urgency to seek technology solutions for labor optimisation and automation of manual tasks. Another example is manufacturing costs. Imported hardware-based solutions face fierce cost competition against locally manufactured and supported solutions.  

These challenges sit alongside big opportunities, however. The enormous volume of construction and urbanisation means that JLL Spark products like OpenSpace have been deployed in multiple Asia Pacific countries, enabling remote monitoring and inspection of development sites at large scale. 

JLL Spark offers PropTech startups valuable access to JLL’s vast industry network of staff and clients. This is especially true in Asia Pacific, where JLL operates in 16 regions with over 46,000 staff – almost half our employee base. This gives us deep and broad understanding of the real estate industry across the region and positions us well to identify the best investment opportunities in the market. 

Written by Carolyn Trickett, Growth Principal at JLL Spark

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