VinaCapital’s flagship fund the Vietnam Opportunity Fund (VOF) and Dragon Capital last month announced they spent $21 million acquiring a 25 per cent stake in the Century Land JSC (CenLand), one of Vietnam’s leading real estate brokerages and the leader in the northern region.
CenLand has focused on traditional sales channels since 2002, with its popular real estate supermarket system STDA, and has developed its online brokerage platform Nghemoigioi.vn over the last two years.
Online channels contributed to the surging number of the company’s transactions in 2017, at 11,555, an increase of 20 per cent against 2016, thanks to real estate support technology.
“Online real estate has seen impressive growth of more than 60 per cent over the last three years and is expected to continue growing into the future,” said Ms. Le Hoang Uyen Vy, General Partner at ESP Capital.
In line with Vietnam’s burgeoning real estate market, online brokerage has also found greater appeal among both local and international investors.
The local market has witnessed a number of foreign investors setting up business as well as many newly-established Vietnamese startups receiving private equity (PE) investment over the last two years.
After Dot Property, a rapidly-growing property portal based in Singapore, opened its first representative office in Ho Chi Minh City in September 2016, another leading Asian online property group, PropertyGuru, also announced a strategic investment to secure a 20 per cent holding in Vietnam’s No. 1 property site, Batdongsan.com.vn, a month later.
With support from PropertyGuru, Batdongsan.com.vn has maintained its leading position in the country’s online property listings market, with the highest traffic, of 6.4 million visits, every month, according to figures from web measurement tool SimilarWeb.
2017 was an active year for fund raising by local startups in the online property brokerage business. The Ho Chi Minh City-based PE firm the Vietnam Investment Group (VIGroup) led a $2 million Series A funding round in the first quarter to pick up 15 per cent in the online-to-offline (O2O) real estate platform Congnhadat.net.
In the second quarter, one of the leading transaction-focused classifieds businesses, Propzy Vietnam, successfully mobilized $2 million from the Malaysia-based online classifieds business operator Frontier Digital Ventures and other investors.
Another investment was made in Vietnamese property portal Homedy.com, co-led by two Japanese early investors Genesia Ventures and the Singapore investment house Vine Capital last year, following a previous investment from ESP Capital.
Norway’s telecom group Telenor, meanwhile, last year fully took over one of the largest online marketplaces in Vietnam, Cho Tot, including its real estate classifieds platform, Cho Tot Nha.
Real estate inventories were estimated at around $1.15 billion last year, according to the Vietnam Housing and Real Estate Agency at the Ministry of Construction.
There are no exact figures on the country’s online property brokerage market, but it was estimated at nearly $400 million as at the end of 2017, according to Mr. Phan Nhat Minh, Co-founder of Rever, a brokerage startup on the O2O property platform and a provider of data analysis.
Top 10 real estate websites, per visits
Source: VET research on SimilarWeb
From offline to online
Founded in 2016, Rever has been a pioneer in using 3D technology to introduce housing to customers. Mr. Minh believes that future homebuyers will mainly be the younger generation, who are familiar with technology and can save time seeing a 3D perspective online and not having to actually visit the property.
“This has been a part of our digitalization itinerary,” he said. “Over the past year, we have introduced a new search interface and continued developing interactive and 3D models for real estate projects that are able to be integrated into the Rever platform.”
Rever is a real estate brokerage startup on the O2O platform, with online promotional products, marketing, and multi-link pages for advertising for customers to make transaction quickly and for free. This year it will offer new features for users, such as financial comparison and calculation tools, data analytical tools to forecast real estate prices, and an NPS measurement tool.
“From our first office in Ho Chi Minh City’s District 2, we have plans to expand to 14 locations in the city with 200 qualified staff and record four-fold growth this year,” Mr. Minh said. “We are also working with potential investors for upcoming fund raising.”
The 5,000 newly-registered real estate enterprises in 2017 is part of the rising quantity and quality of local brokerage startups in Vietnam, according to Mr. Nguyen Ba Duc, Founder of Homedy.
The three-year-old startup is now among the Top 3 online real estate portals, with around 1.5 million visits per month, after receiving financial support of around $1 million from three foreign investors last year.
Homedy has invested in technology and in upgrading its system infrastructure to provide greater access to its website. Its big data system has been developed to support user behavior analysis and optimize products. It has also researched and is in the process of testing intelligent and highly-automated technologies.
“This year we plan to launch new versions of both the website and the mobile app to further improve users’ experience and allow them to find full information and increase ads by at least five-fold every year,” Mr. Duc said.
With a tech-savvy population and high internet penetration, online property brokerage and listings in Vietnam help to further grow the local real estate sector, as buyers are exposed to more choices in a transparent manner, which enables them to compare and make informed decisions, according to Mr. Bryan Teo, CEO of Cho Tot.
“We experienced this exciting trend when monthly successful transactions so far in 2018 have risen 24 per cent and the number of ads in the first quarter increased 40 per cent year-on-year,” he told VET.
Cho Tot Nha is a customer-to-customer (C2C) platform where users can buy and sell property directly from each other and are responsible for the transaction and payment, which take place offline. “We have invested resources and technology in an ad-review system,” Mr. Teo said.
“Cho Tot Nha’s ad-review team has been trained in the specific characteristics of this sector to increase the accuracy of ads.” It has also developed a feature that allows buyers to report ads on the site and quickly handle any reports from buyers. He also said that, in the future, Cho Tot plans to work with stakeholders to identify brokers, ask them to create their own profiles, and record their transaction history to build up and strengthen the trust of users.
Technology, by definition, involves innovation, so all online real estate brokerages must change and develop in order to stay abreast of the market, according to Mr. Duc from Homedy.
“Technology investment is among the challenges not only for Homedy but also for others,” he said.
“Both online and offline hold certain advantages and disadvantages. Traditional brokerage is not competitive in closing deals, as it takes much time. Conversely, the online model can classify potential customers for brokers, saving time and human resources.”
In the long run, the online property brokerage business has been forecast to increasingly compete and replace traditional real estate agencies, using technology to supplement or even replace agents so that buyers and sellers pay lower transaction costs, according to Mr. Teo. This is generally in line with other “disrupting” technologies that result in consumers getting faster and better service at a lower cost.
However, “along with local customers still preferring to purchase property via an actual agent, legislation to regulate property ownership in Vietnam is still evolving and the property conveyancing process is also in the development stage,” he added.
“In such a complex environment, buyers and sellers still need professional advice to guide them in property transactions. As such, technologies will not replace agents in the immediate future.”
He also said that Vietnam’s online property brokerage market has lots of room to grow. The first step in such development is information transparency, where online listing sites come into play.
There’s a growing demand for efficiency and transparency in the real estate industry, and one online platform has been listening. By striving to create an open, user-friendly platform where demand and supply can be matched by just a click, online property brokerage sites have gradually eked out a position in the market.
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