The impact of AI on China's proptech landscape

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The impact of AI on China’s proptech landscape

July 24, 2024 / By Susan Zhang

JLL’s 2023 Global Real Estate Technology Survey identified AI and generative AI as two of the top three technologies. AI is expected to have a significant impact on the real estate industry in the next three years, as acknowledged by investors, developers, and corporate occupiers. As one of the world’s fastest-growing countries in AI development, China’s proptech sector has attracted substantial venture capital investments in AI-related technologies over the past decade. Data from the JLL China proptech database reveals a consistent investment trend in AI since 2012, with over 830 investment transactions aggregating more than USD 38 billion. Although recent fundraising market activity has decelerated, the bigger size of individual investments and the growing proportion of AI-related startups in late funding stages suggest that these companies are maturing and are crucial to the future of the real estate industry.

Figure 1: Trends in AI-enabled Proptech investment (2012-2023)

Source: JLL China Proptech Database & Jing Data, 2023

Figure 2: Distribution of latest funding rounds across AI-enabled Proptech companies

Source: JLL China Proptech Database & Jing Data, 2023

Wider adoption of AI-related technologies has increased the penetration rate of AI in China’s proptech market, reaching around 40% in 2023. One notable aspect of this trend is the prevalence of AIoT (Artificial Intelligence of Things)-based applications. AIoT refers to the integration of AI technologies with Internet of Things (IoT) devices, enabling them to perceive, learn, and make intelligent decisions. In China’s proptech landscape, nearly half of the AI implementations are based on AIoT applications, predominantly applied in property and facility management, as well as asset operation and management. These applications encompass various areas, such as smart buildings, smart offices, and whole-house intelligence. The integration of AI’s analytical capabilities and IoT’s connectivity empowers property owners and managers to optimise processes like energy management, predictive maintenance, and security monitoring. Moreover, the evolution of intelligent manufacturing has facilitated the integration of AIoT in scenarios like smart construction sites and digital factories, leading to enhanced production efficiency and improved safety measures.

Figure 3: AI-related technologies in real estate applications

Source: JLL China Proptech Database, 2023

Besides AIoT, the real estate industry has witnessed the application of various other AI technologies such as computer vision, robotics, machine learning/NLP (natural language processing), and GenAI. For instance, computer vision plays a crucial role in real-time image and video analysis for security management and parking systems. Robotic solutions have been adopted to address labour shortages, control costs, and enhance safety in customer service, facility maintenance, logistics and construction. Machine learning and NLP are invaluable in big data analytics and predictive modelling for investment data analysis, property valuation forecasting, energy management and personalised recommendations. Finally, the emergence of GenAI holds immense potential for the real estate industry. While still in its early stages, GenAI is demonstrating its ability to automate innovative planning and design processes. With the increasing popularity of the Model-as-a-Service (MaaS) business model and integration of plugin tools, AI companies are poised to offer more efficient, higher-quality, and cost-effective solutions. Moreover, these AI companies will facilitate the implementation of GenAI technology in the real estate industry and unlock new possibilities.

For more details, please download “Navigate New Horizons: 2023 China PropTech Whitepaper”.