Days before Hong Kong’s typical weekend sales launch of residential property, Sammy Po Siu-ming would arm himself with thousands of cashier’s orders for a quaint ritual in the world’s costliest real estate market. Across 400 branches at Midland Realty, the chief executive of one of the city’s biggest realtors’ network must get ready for customers who walk in without the requisite HK$100,000 (US$12,800) cashier’s order that qualifies them to bid for new property. Po would exchange a cashier’s order for every fee paid by credit card, because agents are forbidden by law to lend money to customers. For particularly popular projects like Chinachem Group’s Parc City in Tsuen Wan – where Po remembered preparing a record HK$700 million in cashier’s orders during the 2017 launch – only the agency with the deepest pocket stands any chance to broker a sale. That sale proved to be a success, with 43 people registering to bid for every available flat. Hong Kong set for first annual decline in home prices for 12 years Those days are coming to an end, if Adrian Cheng Chi-kong’s idea gains sway. The executive vice-chairman of one of Hong Kong’s biggest developers ended the decades-long ritual in October when he sold New World Development’s The Pavilia Farm apartments online. Several steps of the process – the qualification to bid, the customer’s inspection of available units, the drafting of the contract, mortgage application and first payment – were paperless and could be done online. Customers still had to sign their contracts in person at New World’s sales office in accordance with Hong Kong regulations. “In the past 30 years, the real estate industry has seen very little innovation in property sales, if any at all. Procedures are largely the way they were decades ago, which is laborious and slow,” Cheng said in an email response to a query by South China Morning Post . “The time is ripe for proptech in real estate purchases to provide a hassle-free customer journey for buyers.” New World added a blockchain platform to its two-year-old Artisanal Living smartphone application in October before sales began at the first two phases of The Pavilia Farm, which featured 2,198 flats in five tower blocks, with sizes from 264 square feet to as big as 1,383 sq ft. From the outset, the online process saved time and paper. The traditional, offline registration of interest needed four sheets of paper: registration, appointment of sales agent, a copy of the cashier’s order and a credit card receipt. The 22,700 people who registered to vie for the first 391 flats at The Pavilia Farm would have used up 90,800 sheets of paper. Cheng’s online process avoided all the paper. Conveyancing lawyers could download templates – its blockchain records are immutable – for drafting their sales contracts, cutting the processing time to one hour, from two working days. Eight banks including Hang Seng Bank , Bank of China (HK) and Citi put their mortgage applications online, letting customers compare rates and terms on the same platform. The paperless application could be completed in 15 minutes, compared with the offline process that took six hours, requiring 120 pages of terms and conditions, forms and documentation in each application. “The reception [of the blockchain platform] has been great,” Cheng said. “We are now offering an advanced online registration system for much sought-after The Pavilia Farm. This is a significant leap in the digitisation of property sales with the aid of high technology. I look forward to introducing more innovative solutions to the market in the future.” Helped by the smartphone app’s convenience, The Pavilia Farm’s first batch of flats were oversold by 58 times, receiving 22,763 bids in the biggest turnout for a sales launch in Hong Kong since 1997. New World ended up selling 2,100 apartments at The Pavilia Farm over six weekends for HK$23.8 billion, about 90 per cent of its sales haul for the first 11 months of 2020. The project’s success helped New World surpass Sun Hung Kai Properties as Hong Kong’s biggest seller of new homes this year, giving Cheng’s idea good legs to run on. “If The Pavilia Farm had been sold through [the traditional offline] method, we would have had to set aside HK$800 million for 8,000 cashier orders,” Po said, adding that the online registration process saved his agency HK$160,000 in bank fees. “Software solutions with advanced AI technology can provide property agents and developers with management tools to improve prospect engagement, sales automation, and ultimately closing more deals,” said Justin Lau, chief executive of the Hong Kong start-up Property Raptor , which matches buyers with developers. “This transformation provides more value-added services such as data-driven advice to enhance client-property matching,” Lau said. “Agencies can reduce their commissions, allowing developers to pass on these cost-savings to customers with lowered property prices. Buyers will emerge from this shift as the ultimate beneficiaries.” Hong Kong’s property agents earn between 2.5 per cent and 4 per cent of the price of a newly launched property in fees, higher than the 1 per cent commission for lived-in homes. Some projects, typically pricey homes that generate scant interest, offer up to 7 per cent in fees to incentivise agents. Online registration is a very effective way for developers to get accurate data of prospective buyers, said the Chinese University of Hong Kong’s assistant professor of real estate and finance Maggie Hu. “This makes it easier for property firms to analyse market demand and gives them a good opportunity to launch direct and targeted sales,” she said. The rise of proptech does not necessarily mean the end of the salesperson’s role, as every bid still requires an agent’s license number, even if the process is done online. Hong Kong’s regulations still require provisional and final sales contracts to be signed in person. Midland Realty alone mobilised 4,000 sales agents to sell its allocated flats at The Pavilia Farm, notwithstanding social-distancing rules during Hong Kong’s coronavirus outbreak, which severely limited the number of agents who can interact with customers . “Property agents still play an important role in the interaction with potential clients to build trust and facilitate communication before artificial intelligence-based tools are sufficiently intelligent,” said Hu. For other developers like Chinachem Group , developing several projects with 3.89 million square feet of combined space, the chance of entirely eliminating real property agents or brokers is still remote. “Buying a [home] is a big decision for the average person,” said Chinachem’s real estate managing director Dennis Au. “The average price of Chinachems flats costs about HK$5 to HK$6 million, so homebuyers need professional advice from agents.” Chinachem said it will go part of the way to embrace proptech. The developer’s forthcoming Mount Anderson project in Kwun Tong will launch online when the first batch of 334 apartments go on sale next year. “The trend for the real estate industry is to go digital, and Covid-19 has accelerated that trend,” Au said. For some customers, proptech-driven sale is neither as fast, nor as pleasant, as promised. A buyer of The Pavilia Farm, identifying herself only as Mrs Yeung, said she took three hours to complete her online registration to bid, even with the help of her agent. “We tried several times to log on to the app to register online and pay HK$100,000 in the jam-packed sales office,” she said. “After that, all registered buyers had to show their identification to the developer’s staff for verification.” Four days later, Yeung said she received a 100-page balloting result by email. She was the 390th registered customer, which gave her a high chance to pick the property of her liking on sales day, her agent said. Parking space deals rise as investors capitalise on removal of double stamp duty On the day of the sale, Yeung waited at a nearby restaurant for her number to be called, receiving regular updates from her agent on how the launch was progressing. She entered the sales office at 1:30pm as her turn approached, and was informed that her first preference had already been snapped up by another buyer. “My agent told me I had only two available units that were close to my budget and my requirements,” she said. Yeung eventually paid HK$10.78 million for a flat measuring 557 square feet at The Pavilia Farm, slightly more than what she had budgeted for. “Online shopping is supposed to be cheaper, so flats should also be cheaper if they are sold online,” she said.