Investors bet big on Vietnam’s proptech sector as startups diversify into allied services

Landmark 81, Vinhomes Tan Cang, Ho Chi Minh City, Vietnam/Photo: CreateTravel.tv on Unsplash

The burgeoning proptech market in Vietnam is increasingly catching the fancy of investors as startups look to diversify into other allied services such as decor, insurance and mortgage and not just be reliant on listings.

The total amount pumped in by foreign and homegrown investors in the sector touched about $75 million between January 2019 and December 2020, per venture capital firm FEBE Ventures‘s estimates. In fact, given the fragmented nature of the sector, the number could well be under-reported, cautioned experts.

In Vietnam, the development of proptech has been most prominent in market segments such as residential and office, with more than 50% of proptech players being active in these two areas, according to JLL.

“The investment in proptech space will continue to flow… with VCs investing in proptech startups and conglomerates investing in proptech to internalise and digitise their real estate operations,” said FEBE Ventures managing partner Olivier Raussin. “The investments will flow into different proptech verticals such as mortgages & finance, investment, distribution,” he added.

Real estate investors from more mature Asia-Pacific markets with limited real estate growth potential such as Japan and South Korea are increasingly spotting extensive opportunities.

“There’s significant consumer demand for property ownership in Vietnam and as such a function of that growth alone will lead innovative startups to come into the market to offer products and services for the real estate marketplace,” John Le, founder and CEO at Propzy, told DealStreetAsia.

SoftBank Venture Asia joined hands with Gaw Capital last year to lead a $25 million investment in Propzy.

“We expect investments to continue to flow into the Vietnam proptech space, particularly as Vietnam and the rest of the region recovers from COVID and as consumer sentiments continue to improve,” said Kenneth Low, principal at SoftBank Ventures Asia.

Meanwhile, Daren Tan, managing partner at Golden Equator Ventures, said that with the middle-class in the country expected to double from 13% to 26% over the next 5 years in the backdrop of a booming economy, the realty sector will get a boost.

Golden Equator Ventures with Korea Investment Partners together invested $2.3 million in proptech startup Rever in 2019.

Agreeing that Vietnam’s proptech market has gained market share within Southeast Asia, Neil MacGregor, managing director at Savills Vietnam emphasized that it will be important for proptech firms to demonstrate sustainable models and profitability going forward.

“The capital will increasingly be flowing to platforms that can show that they can grow sustainably and provide strong returns for investors, not just burn money but scale up rapidly,” he said.

Booming partnerships

The proptech market is expected to witness partnerships over the next three years as companies gear up to add e-wallets into their apps to provide a “1-stop shop” experience, said experts.

Every real estate company in Vietnam has a special relationship with banks to facilitate a seamless process for consumers to buy and sell properties. Therefore, it makes sense for proptech companies to forge partnerships with e-wallet players or even develop in-house fintech functions.

“This will become a unique market characteristic,” said FEBE Ventures’s Raussin.

Sample this: Propzy recently introduced FIRE-Tech, a platform that provides comprehensive real estate, finance and insurance services. The firm plans to announce more such strategic partnerships later this year.

Meanwhile, Rever, too, is looking to expand its operations in various segments. “In the secondary market, we are executing strategies to expand our relationships with property management companies, agents, and financial institutions such as banks, fintech,” a spokesperson of the company told us in an interview.

And these are not the only ones. Genesia Ventures-backed Homedy.com, too, has shifted its focus to offer a comprehensive network-based real estate platform – not only to help people find properties but also to provide the latest updates about the market, real estate projects, interior design and decor ideas, thereby connecting them to the best professionals.

Expand Table

Name of player
Year of establishment
Main services
Fund raised/Year
Investors
Partnerships in
Propzy
2016
Tech-enabled brokerage, proving financial, insurance and real estate technology. Its marketplace offers open house, closing-settlement services and turn-key mortgage financing.



$25M (2020)
$6 million (2019)
Gaw Capital, Softbank Ventures Asia, Next Billion Ventures, RHL Ventures, Breeze, FEBE Ventures, RSquare and Insignia Ventures Partners, Stonebridge CapitalFintech, banks, insurance
Homebase
2019
Provides real estate financing to buy and invest in property
7 figure Pre-Series A (December 2020) and Pre-seed (February 2020)
VinaCapital Ventures, Class 5 Global, Pegasus Technology Ventures 1982 Ventures, Antler, Brian Ma, co-founder of Divvy Homes
Hoozing
2015
Leasing and renting. Providing solutions to digitalize real estate transactions in Vietnam
Undisclosed amount (2020) Smilegate Investment, Expara Ventures
RealStake (now Infina.vn)
2019
Providing a realty investment platform where investors with US$1,000 can invest
Seed funding (2020)
500 Startups Vietnam and angel investors
fintech, banks
Revex
2018
Providing intermediate platform connecting real estate developers and investors.
$1M (2020)
Vietnam's real estate developer Cen Group
Rever
2016
Tech-enabled brokerage. Rever offers price preference tools using real market data analytics.
$4M (June 2019) and $2.3 million (September 2019)
VinaCapital Ventures, Golden Equator Capital and Korea Investment Partners, Chairman of VNG Le Hong Minh and STI Holding

"
Property management companies, agents, banks, fintech
Homedy
2015
Listing and marketplace
The first round in 2017 and second round in July 2018
"Genesia Ventures, Access Ventures, Mynavi Corporation, ESP Capital

"
Fintech, banks, interior design

James Vuong, CEO of Infina.vn, which is a real estate investment and wealth management app, said that it is open to forming synergistic partnerships that can take the firm to the next level.

Infina.vn currently taps into other investment products such as certificate of deposit (CDs), as well as mutual funds, enabling investors to diversify their portfolios, generating high levels of returns.

Due to limited resources, a startup can only focus on one position in the value chain, so it is a good idea to team up with other players, especially when there is synergy, Vuong indicated.

By providing relevant value-added services, startups can generate higher engagement with customers.

“With partnerships between proptech and fintech, customers will be able to access financing services at one place instead of going to multiple platforms or services, said Yuto Kono, principal at Genesia Ventures.

Braving the pandemic 

Propzy, which has so far raised 37 million since its inception in 2016, claims to have experienced a 4x increase in activity last year from 2019 — both on the buy and sell-side.

“The pandemic gave us an opportunity to re-examine and refine our sales engagement methodologies. We also expanded at a time when the market was very ominous with most industry businesses downsizing or closing,” Le added.

Meanwhile, Rever is understood to be raising $8-10 million in a new funding round.

“As investors, we have taken notice of this and believe that investors, local and from abroad, will continue to look positively at the proptech space in Vietnam particularly as we emerge out of the COVID pandemic,” Low said.

Opportunities and challenges

James Vuong, CEO at Infina.vn, indicated that investors did not have to overpay during the pandemic due to stiff market competition. Also, startups needed more capital because it would take longer to be profitable or raise the next round.

“Being able to deploy more capital (to get more shares) into a company at a low price and favorable terms is what any investor would love,” said Vuong.

However, that’s not to say that the sector has not been devoid of challenges.

According to Nguyen Ba Duc, founder and CEO at Homedy, a large number of brokers quit their jobs or had to take pay cuts in a market that lacks professional brokers.

Meanwhile, the market lacks professional brokers. Vietnam has more than 300,000 brokers, but only 10% have a license issued by the Real Estate Brokerage Association of Vietnam (VARS).

Besides, with traditional agencies still playing an important role in determining consumers’ choice, there is a significant challenge for proptech startups in the sales and marketing space.

Take for example, One Mount Group, a traditional company founded by Vietnam’s real estate giant Vingroup and its partners. It is developing OneHousing, a complete one-stop-shop platform for real estate transactions, embracing the digital wave.

Not only Vingroup, other developers such as Hung Thinh Land, Gamuda Land and Sunshine are also deploying their own digital platforms.

“While the proptech initiatives are great, what we will see is those traditional agencies taking onboard tech, whether they are developing their own platforms or using online subscription-based services, they will become increasingly tech-enabled,” said MacGregor.

Savills, on its part, has started developing its own property management platform, now referred to as Property Cube. This has been rolled out across our property management platforms in Vietnam, consisting of more than 100 buildings throughout the country.

Nguyen from Homedy forecasts that proptech startups will soon be creating interactive content, particularly 3D real estate models for a better user experience in the online platform.

“As that segment of the property market grows relative to the overall market, we can anticipate the adoption of virtual touring and purchasing potentially happening sooner rather than later,” Le of Propzy said.

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.