HONG KONG, Feb. 17, 2020 /PRNewswire/ — Real estate companies are increasing their engagement with digital, with 58 percent stating they have a digital strategy in place, up from 52 percent in 2018, according to KPMG’s third annual Global PropTech Survey.

The annual report, titled Is your digital future in the right hands?, surveyed 188 real estate companies from Europe (48%), Americas (36%), Asia and rest of the world (16%), and 92 PropTech companies worldwide. It finds 95% of real estate companies have someone responsible for leading digital transformation and innovation, although in most cases (65%) they are not digital or technology specialists, and the survey with PropTech firms reveals skill gaps within real estate firms.

The survey with PropTech firms also found that they are hugely optimistic about the growth of their market, with 87 percent believing that the real estate companies they work with will increase spending on PropTech solutions in the next 12 months. No respondents expect investment to halt or decrease.

Despite the positive momentum, the extent of digital implementation differs, with only 29% of those real estate companies surveyed saying they have a digital strategy in place across their enterprise, another 29% stating it is in place “in some areas”, and 23% saying it is “in development”. Close to a fifth (19%) lack a strategy altogether. Levels of system integration are also low, with respondents rating themselves only as average, a 5.4 out of 10.

Andrew Weir, Global Chair, Real Estate and Vice Chairman of KPMG China, says: “The real estate industry is making major and exciting progress with its digital transformation. Collaboration is essential, as is a need for industry-wide standards and common approaches for data management and digitalisation. The industry’s mindset is changing to see digital transformation as a major transformative force impacting on strategy and risk.”

While all stages of the property life cycle are likely to benefit from investment in IT, digital technology or PropTech collaboration, asset management is an area most likely to benefit, with 64% of real estate respondents saying there would be investment in this area over the next 12 months.

However, PropTech companies identify a number of barriers to closer collaboration with real estate companies, including unclear returns on investment (40 percent); not being a business priority (40 percent); the lack of a designated person to drive the strategy (34 percent); and the lack of the appropriate talent at real estate companies (27 percent).

Kim Kan, Director, Global Real Estate and Construction of KPMG says: “With the speed of development over the past five to ten years, it’s easy to understand why this traditional industry is feeling challenged by these new innovations. This can be easily resolved by highlighting the values and benefits of using technologies.”

According to the survey, the main objective in adopting digital is to improve efficiencies (65%), reduce costs (47%) and improve decision-making (44%), rather than increased revenues. However, the real estate industry is opening up to new, technology-driven business models, such as Property as a Service (PaaS) – whereby customers buy a package of services that lets them make best use of the space with the asset owner operating the building and incurring all the related costs.

Most survey respondents (64 percent) offer some sort of PaaS, but despite its potential, PaaS still accounts for only a small proportion of space. Of the two-thirds of companies with some PaaS offering, half have it in 10 percent or less of their space. This may be because the returns on investment are unclear, or because the size of a company’s portfolio does not warrant a larger proportion of PaaS.

Alan Yau, Partner, Head of Real Estate, Hong Kong, KPMG China, says: “The widespread adoption of PaaS is an acknowledgement of the need to become more customer-centric, and PaaS is a significant market. If we look at flexible/co-working workspaces alone, the global market value is estimated at around USD 26 billion, and the number of coworking spaces is expected to grow at an annual rate of 6 percent in the US and 13 percent elsewhere. There is still ample room for upscaling for real estate companies in the adoption of a service model.”

Meanwhile, real estate companies have made relatively little progress in developing integrated digital strategies that incorporate data management or a data strategy, according to the survey. Only 25 percent of real estate companies have a well-established data strategy in place, while almost a third said they did not have a strategy at all. Seven in ten real estate companies surveyed are confident of their cyber security, however companies with digital strategies were more confident.

Weir concludes: “Our experience is that data has to be at the heart of a broader digital strategy. Cyber security also provides an opportunity for forward-thinking real estate companies to differentiate themselves from their peers. That differentiation will only grow in importance.”

About KPMG China

KPMG member firms and its affiliates operating in mainland China, Hong Kong and Macau are collectively referred to as “KPMG China”. KPMG China is based in 23 offices across 21 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Wuhan, Xiamen, Xi’an, Zheng Zhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG’s appointment for multi-disciplinary services (including audit, tax and advisory) by some of China’s most prestigious companies.