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Proptech: Slow because too specific

The value based on the location of the real estate, the complicated legal procedures, and the unclear construction and operation process is the three factors that are slowing down the real estate sector in digital transformation, according to Mr. Chu Quang Thai – digital asset project development specialist, in charge of the Southern office of the National Startup Support Center – The Ministry of Science and Technology. 

Some experts believe that it is necessary to take a candid look at the application of technology and digital transformation in the real estate and construction industry: Proptech is a bit behind compared to other industries because of the specifics of the industry. 

Slow down because of specific

The first reason comes from real estate being a high-value asset, for many people, it is a lifelong accumulated asset. Homebuyers want to see the property they buy with their own eyes, the purchase and sale transaction must be in writing. 

The second reason is that the legal procedure is too complicated, leading to many consequences. Only paperwork and legal documents in the supply chain of the construction sector, real estate accounted for 25-30% of the cost in the investment structure, according to statistics of Global Property Guide. 

Mr. Thai said he had witnessed projects worth about 8 billion VND but needed a three-wheeler carrying documents. Each bid has up to 100 signatures and if there is an error, the re-signing alone can take up to a month. 

The third reason is that the process of building and operating real estate of the property owner or hired to operate is not transparent. The traditional operating process has revealed many weaknesses that businesses (DN) only realize in the process of accessing digital tools. 

To change a process with many businesses is a challenge. But they cannot skip this stage. Mr. Thai affirmed that it is necessary to digitize the process before digitizing. This not only saves management costs but also manages real estate products from the time it is vacant land until construction is completed and maintained. These stages are done with just a click. 

Need to connect all components

The industry’s need for digital transformation is not just encapsulated in the demand between buyers and sellers. The real estate and construction sectors also require connectivity throughout the supply chain. 

The real estate and construction industries are facing increasingly diverse needs, so the connection between businesses becomes very complicated. According to Mr. Thai: “How can a person in Hanoi build a villa or resort in Ca Mau or Phu Quoc if they are still confused. Sure, they want to both manage the project and optimize costs, but they don’t have a management tool, so sometimes they have to let it go. That is not to mention the case where they encounter “fake” contractors and hand overworks that do not guarantee quality compared to the original commitment. 

The time has come when people in the US can hire contractors in Hanoi to build houses in Phu Quoc with designs by architects in France and construction supervision in Singapore. This expert believes that technology will create a cross-border as many people buy an item on Amazon or Taobao today. 

To meet the new needs, digital transformation in the industry has become more complex and must cover the entire process in the industry. According to Truong Thanh – founder and CEO of XIXO, the real estate and construction industries need a common platform to connect many components in the ecosystem. 

It can be between the team and the general contractor, between production, supply, and consulting enterprises with real estate, industrial construction, or between the people who need to buy and those who need to sell. Thereby, all components of the asset ecosystem associated with real estate can connect, transact and transmit value to each other through smart contracts. 

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