On September 12, John Le, the CEO of Propzy, issued a letter to staff announcing that the company had ceased all operations in Vietnam, despite having been a market leader.

Sound business strategy crucial for proptech players-illustration photo

Nguyen Minh Hoang, an investment specialist and fintech expert said, “Many people share the opinion that Propzy’s shutdown is not that unexpected when examining the business’s operation and execution. Gloomy forecasts for the company’s future started with the layoff of half of the workforce and the closure of a subsidiary in June. The conclusion is a dismal one that was predicted.”

Propzy launched in 2016, specialising in townhouses in Ho Chi Minh City and providing a platform for customers to access property. The company raised $30 million from investors like Gaw Capital Partners and SoftBank Ventures Asia and soon became the biggest physical and online real estate trading platform in Vietnam, overseeing over $1 billion in transactions.

Due to complex legal processes, purchasing and selling homes is said to have several hidden angles. Propzy’s platform was anticipated to address these issues. However, the technological aspect was underutilised, preventing Propzy from creating a sufficient competitive edge.

“Propzy’s business strategy is not built on an innovative, never-before-done solution,” Hoang said. “Propzy created new services, but only in terms of business processes, and not technical solutions.”

Confronted with challenges as the market cooled and revenue decreased, the company was forced to reorganise into four segments: a real estate connection trading floor, real estate transaction support services, transaction solutions, and home buying, renovation, and resale assistance. However, this did not erase the problems.

Hoang said, “The creator did not have much actual expertise in Vietnam’s real estate sector, which has many unique features. Because its capacity to act was insufficient, it was challenging to track market fluctuations. Even after many years on the market, major corporations must continually adapt their operational practices. The lack of mobility shown by Propzy is a serious flaw.”

Buying and selling real estate in Vietnam requires face-to-face interaction, he added, saying that concluding transactions online is extremely complex. In the end, Propzy spent too hastily with a poor approach, and income fell short of expenses.

“Propzy’s shutdown is a tense time for the community bringing technology to real estate, which has risen swiftly but slowed in recent years. The tragedy forced investors and venture capitalists to reconsider and hesitatingly invest in proptech initiatives.”

On the other hand, Propzy’s collapse provides proptech businesses with a moment for self-reflection and to look again at opportunities after a time of rapid growth.

The objective of proptech is to tackle three major issues: information access, transaction assistance, and asset management and optimisation. Furthermore, proptech is integrated into the procedure of real estate project creation, helping to minimise costs throughout construction and operation. Proptech aims to provide diverse and useful advantages.

The Vietnamese real estate market has the greatest growth potential in Asia. The urban population is 44 million, or 45 per cent of the total population, covering 862 municipalities. In 2025, the urban population of Vietnam is expected to reach 52 million, or half of the population, with around 1,000 metropolitan districts. According to the Vietnam National Real Estate Association, the country’s real estate industry will surpass over $1.2 trillion by 2030, representing 22 per cent of the country’s total economic assets.

The PropTech Vietnam Network notes that there were around 150 proptech firms in Vietnam in 2021, the bulk following a real estate brokerage model. And according to the Property Insight programme, the proptech business in Vietnam has received around $500 million in total investment capital.

Southeast Asia has seen a strong investment wave in the segment, generating approximately $73 million and topping Asia in deal volume for 2019 with 11 of 38 transactions.

Experts anticipate that proptech businesses will continue to be in high demand and will spend extensively on transaction technology for brokerages, real estate management systems, and online investment solutions.

In Vietnam, proptech companies are gaining a significant presence in the market. Rever, a real estate brokerage platform, has received over $16.5 million in investment; Homebase, a provider of real estate investment solutions for subprime borrowers, received $30 million; and Citics, a real estate data provider gained over $1 million.

In addition, real estate giants such as Hung Thinh, Sunshine Group, Dai Phuc, and Cen Group have invested extensively in proptech or engaged in mergers and acquisitions.