Photo: VARUTH HIRUNYATHEB
Mention the word blockchain, and the first thing most people think of is cryptocurrency. But the reality is that the potential applications for distributed ledger technology (DLT) go far beyond bitcoin and its peers.
A free and almost instantaneous transaction of money from one currency on the other side of the world directly into the currency and account of your choice is just one of the beauties of DLT.
What the technology offers in terms of data security and high transparency can be put to work in many ways to benefit consumers and businesses. That includes taking the considerable headaches out of house-hunting, says Denis Nemtsev, the founder of the property portal Hipflat. He’s an enthusiastic advocate of using DLT to revolutionise the entire real estate industry.
“In some cases, up to 90% of online listings are inaccurate,” the Bangkok-based entrepreneur tells Asia Focus, noting that this imprecision is hardly unique to Thailand but can be seen throughout Southeast Asia.
Using Bangkok as an example, he points out that one popular condominium building in the Sukhumvit area could have hundreds or even thousands of listings for sale or rent. Anyone can confirm this by way of a simple search online. Just pick any attractive-looking condominium in the central business district and search it on three real-estate portals, and see how many listings you can find.
“There could be more than two thousand listings,” he says of the duplication problem. “They offer different pictures, different prices, and most of what you see is probably not going to be there, while you have absolutely no idea where are the actual listings for the available units.”
Buyers’ frustration is growing, but sadly this lack of clarity in search is now the norm, which creates a lot of “friction” between buyers and sellers, he says.
“This friction is happening because the buyer and seller cannot agree on what is the fair price,” Mr Nemtsev explains.
“If you compare this to more transparent markets, like the US or Canada, you will be able to see exactly what is for sale there … and you can go to the top three portals where they would show you only the available units and nothing else.”
A transparent market would also provide information on sales history, which would reveal how many units have been sold before, when they were sold, and at what price, resulting in a much more accurate picture of fair market prices that buyers and sellers can both refer to.
“This makes the market more effective and more liquid because there are more sales happening as a result of the transparency,” Mr Nemtsev said.
According to the Jones Lang LaSalle (JLL) Global Real Estate Transparency Index, Thailand currently ranks 34th out of 100 markets that the American investment management company has surveyed. However, the Kingdom’s ranking is still better than most of its Asean peers: Indonesia (42), the Philippines (48), Vietnam (61) and Myanmar (73) are all rank further down the table.
Only Malaysia (30) and developed Singapore (12) managed to have a better ranking than Thailand regionally, while the three most transparent real-estate markets in 2018 worldwide were the UK, Australia and the US respectively. Singapore, Hong Kong and Japan are all close to the “highly transparent” status enjoyed by the front-runners, said JLL.
Despite low scores, the two markets among the most improved in terms of transparency were Thailand (34) and India (35), and Mr Nemtsev believes technology could help Thailand up its game further. With blockchain, he aims to improve the level of transparency not just locally but globally, as he has ambitions to provide the system he espouses for free to anyone who wants to use it.
Mr Nemtsev was born in Stavropol, the largest city and the capital of Stavropol Krai region in southern Russia. The city has a current population of around 400,000 but he always wanted to live somewhere bigger, and Bangkok certainly met his expectations when he got here.
Before landing in Thailand, Mr Nemtsev was studying computer science at Moscow State University. “I’d liked computers since I was ten years old when my father brought me along with him to a computer club where I first learned how to do programming,” he tells Asia Focus. “With programming, you can create something from nothing.”
Hipflat has a combined 340,000 listings in Bangkok and Singapore from 40,000 agents and landlords, with 55% being rentals and the rest homes for sale.
His first coding adventures resulted in basic gaming programs which developed into a passion that prompted him to study how it works scientifically for five years at one of the most prestigious universities in his country.
After Moscow, Mr Nemtsev proceeded to work in the software development industry for over a decade before he convinced himself that in order to develop further as a person, he had to go out and “see the world”.
“So I applied for new jobs and I went for interviews in Denmark and France. Those were the options, but luckily, it didn’t happen and that was when I decided to come to Thailand as a tourist,” he says. That was in 2004 and it was his first visit to Asia. Like many, he has been here ever since.
When he first touched down in Bangkok, Mr Nemtsev realised he needed to find some way to make a living, but he had no entrepreneurial experience. That did not stop him from trying to create a business from scratch, which is how Sapsin Software came to be.
“I asked my boss at Egar Technology (in Russia) about creating an outsource for programming in Thailand because we can save costs and the answer came back as ‘let’s try’,” he recalls of the financial software provider that he helped set up.
When he was preparing for his first visit to Thailand, Mr Nemtsev did some research on web boards for independent travellers, which is what most Asia-bound Russians do as they dislike package tours.
The web board was also how he met his business partner in Moscow in 2005 when both of them decided to one day go to invest in Thailand. Together they built FarangForum.Ru, a Russian platform and online consultancy based in Bangkok.
The website also produced a printed monthly magazine in 2008 with the Russian-speaking audience in Thailand. Farang.Ru magazine covered local news and events, travel tips and essays on Thai culture that was a hit for a year.
But the global financial crisis of 2008-09 hit Russia extremely hard and visits to Thailand plunged. FarangForum.Ru had to close its offices in Pattaya and Phuket along with the print magazine, but its online version and the community it has built is still intact, with real estate a major emphasis.
Besides property, FarangForum.Ru is now the largest community of Russian-speaking tourists and expats in Thailand, reaching over 150,000 unique visitors per month.
“We were getting a lot of questions about how to open a business or buy property in Thailand, so we decided to open an online consultancy to help people establish themselves here,” said Mr Nemtsev. “But then the questions about buying real-estate became more prominent.”
After five years with the real-estate brokerage, he established Hipflat as a user-friendly, map-based search engine for home buyers and renters in Thailand and Southeast Asia. He saw it as an answer to the pain points that he had witnessed from clients and personal experience since he moved to the country.
“At that point, I was already working in real estate in Thailand for more than five years and I can program, and I could see the problem as a buyer myself,” he recalls.
“Then I saw a website called Zillow in the US which allows people to compare prices, check historical prices and validity so I thought, why can’t we do this in Thailand?
“The killer idea was that we did not want to be just a property search as we want to stand out in terms of data, and that was not being done in Thailand at all back then.”
This helps explain why the Bangkok-based startup is now registered in Singapore and features more than 340,000 listings from 40,000 agents and landlords in the two countries with 55% of them being rentals and 45% homes for sale. Over the past 12 months, home buyers and renters collectively spent more than one million hours browsing property listings on Hipflat and viewed around 3.7 million of its web pages monthly.
“It is more than a place to list your property as we have the historical data to support your searches and we also provide tools to help owner or agent advertise property on social media from our advertising package,” says Mr Nemtsev.
Even with more information, the problem of a lack of reliable data persists in the real-estate business. That’s a challenge that Mr Nemtsev is determined to address with a blockchain solution by next year.
The idea, he says, is to utilise blockchain to offer a feature that creates greater clarity and accuracy in the real estate and rentals market by building community-driven property databases. These would collect crowd-sourced property information by rewarding Hipflat members who contribute high-quality data.
The verified listings feature on the website ensures that property details have been independently validated by Hipflat members through either direct contact or site visits. Basically, it is like the grading system for both drivers and passengers in the Uber app.
“Finding more than 1,000 listings in three portals for 30 available rooms is crazy so we are launching a feature which provide a feedback about the listings,” he explains. “Buyers and sellers will see two buttons in the feature which they can either click to confirm the listing as valid or report it as a bad listing when it is actually unavailable or the price is wrong.”
Once the listing is verified by a number of people, the company will add a badge to the listing to validate it. To encourage people to provide accurate feedback, you need to give them rewards and Hipflat intends to eventually start paying people for their responses.
“Initial calculations show that we could pay someone around 10,000 baht a month if they can provide regular and accurate feedback, which is the next step in the development,” says Mr Nemtsev.
“The blockchain is used to collect and store information and independently calculate the collective opinions by way of smart contracts, and once it starts paying rewards, blockchain can also be used to provide a coin if we make one.”
Mr Nemtsev looks to provide the software for the feature he is developing for free to help create greater transparency for the industry as a whole, as he believes that as the market becomes more transparent, it will be better for his business and for everyone in it.
“Hipflat utilises Domus Protocol blockchain technology but we want to develop it independently from Hipflat as a non-profit software, which we want to make available to other property portals so that they also start to refine their listings,” he says.
“The blockchain will also be used here when we share the software to ensure that Hipflat will not be able to gain access to competitor databases in any way.”
His plan for one grand, unified market platform is an unprecedented vision that he hopes will ultimately generate more business activity for the entire system.
If it makes finding, buying and renting a home easier and less stressful, Mr Nemtsev will no doubt earn himself a lot of new friends.