Can Technology And Property Mix? CapitaLand Limited Certainly Thinks So

With the rise of the internet and smartphones, more and more companies are putting emphasis on adopting new technology in their businesses.

We have seen traditional businesses such as banks allocating funds to invest in technological companies in the finance industry – United Overseas Bank Ltd (SGX: U11) is one bank that comes to mind.

We are also seeing technology companies such as Uber and Grab threaten traditional businesses such as land transport services provider ComfortDelgro Corporation Ltd (SGX: C52).

But real estate is one industry that most people likely would not relate to technology. At first glance, it’s hard to see real estate companies being threatened by technology or having the need to work with technology firms. After all, real estate developers will continue to remain a bricks-and-mortar business, mainly because a property is the product itself.

Yet, one of the largest property developers in Asia believes that not even the real estate industry is insulated from the rise of the digital world.

Earlier this month, CapitaLand Limited (SGX: C31) announced that it had joined the Microsoft Accelerator programme together with Singapore’s sovereign wealth fund, Temasek. Through the programme, CapitaLand hopes to invest in startups that can help its business in areas stretching “from design and construction, operations and maintenance, sales and leasing, customer engagement, to workplace productivity and smart living solutions.”

CapitaLand went one step further last Wednesday by announcing that it will be setting up a venture fund, C31 Ventures, to invest directly in technology startups. And, the real estate developer is not treating the fund as an inconsequential pastime either. CapitaLand stated that it is prepared to invest up to S$100 million for the fund.

This might present a new way to grow for CapitaLand. The company has already expanded overseas in its property development business. It has also transformed itself over the years to be a property company with multiple recurring income streams via its stakes in and management of many real estate investment trusts. Expanding into real-estate related technology companies might be a great avenue for the company to move up the value chain.

If C31 Ventures does prove successful, CapitaLand could have a portfolio of companies that have the technologies to improve the real estate industry in various ways. And if this scenario comes to pass, CapitaLand might even become a key supplier and service provider to other real estate companies. Instead of competing with them, CapitaLand can move up the value chain and become an instrumental player in the entire property industry by working with them.

Admittedly, what’s described in the preceding paragraph is just speculation on my part. But with the establishment of C31 Ventures, it seems the sky is the limit now for CapitaLand. That said, how high the company can fly would be another story altogether.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned.