Opportunities and challenges of digital transformation in China's real estate industry

Abstract

The real estate industry has always been an important player in the global economy. And in China, the important role of real estate industry has been furtherly highlighted. However, since 2012, the real estate market in China has been slowing down and this tendency has become more obvious these years. The industry began to go through a structural change and many real estate companies has been looking for more effective ways to drive transformation. Being attracted by the rapid development of digital technologies, these companies began to look for chances in the 4th Industrial Revolution and the digital transformation of China’s real estate industry was started. The concept of PropTech is exactly used to describe the digital transformation within the real estate industry. During recent years, the development of PropTech is on the rise in China. In addition, the pandemic of COVID-19 has probably played a significant role in driving it forward. Yet considering the PropTech is still an emerging concept which has only appeared in the last few years, challenges will probably coexist with opportunities when the industry is undergoing the digital transformation with the help of PropTech. It is obvious that the research on PropTech in China will be of great significance not only to the industry itself but also to the healthy development of China economy. Therefore, this research aims to take the application of PropTech platforms by real estate developers as the entry point to explore the opportunities and challenges of digital transformation in China’s real estate industry. This study was conducted in three stages. In the first stage, three search engines were used to search relevant literature. 63 documents were synthesized and 20 key challenges/risks/barriers were identified based on the TOE framework. In the second stage, an online questionnaire was designed for professionals in real estate developers so as to obtain their assessment on the impact as well as the probability of each key factor. The assessment results showed that among the 20 key factors, “high costs of the application” and “lack of stakeholder’s coordination” won the highest score, closely followed by “lack of efficient data management” and “highly rigid market attributes of the real estate industry”. And other two TOP 6 factors are “lack of trust in outsourcing of organizational data” and “lack of willingness to invest in digital technology”. Results of respondents working in companies with different scales were also discussed separately. In the third stage, two digital service providers, WakeData and YUNXI, were studied to investigate the common digital transformation mode in real estate developers and discuss the benefits and opportunities brought by the digital transformation. After these three stages, this study was concluded with conclusion and recommendations based on the particular opportunities and challenges, and potential future research area related on this topic were also proposed.