New tool to remove the risk for mum and dad developers
New tool to remove the risk for mum and dad developers
A new investor-facing platform from data insights and analytics company smrtr promises to take away the risk and guesswork involved in selecting and curating sites for small-scale property developers.
Sydney-based smrtr’s platform will combine historical sales data overlaid with development approvals, population growth, and infrastructure spending, among other data sets, to create a holistic view of development opportunities in a particular area.
Smrtr, which was established in 2009 and has a core business offering of creating bespoke analytics solutions for large corporate clients such as AMP, NBNCo, NewsCorp and Budget Insurance, expects to launch the product later this year.
ASX-listed Stockland recently invested $2.5 million in smrtr, a boost smrtr co-founder Georgie Brooke said would accelerate the rollout of the company’s first consumer facing offering.
“Within our smrtr data universe of 16 million Australians we have close to 50 billion transactions and data points on mobile usage and location, purchasing behaviour, financial transactions, property insights and automotive buying behaviour,” Mr Brooke said.
“By analysing and overlaying this data, or utilising our audience segments, we enable our clients to see the bigger picture leading to better decision making and outcomes.
“Most local developers would use a bit of local knowledge, they would find a site that they know and would make decisions based on a gut feel.
“What we do is to create a view of the market and the whole market.”
Mr Brooke said the new platform would have similar functions to a risk analysis solution the company had developed for national diversified developer Stockland, although it would be tailored specifically for an investor-developer user base.
“We can say ‘tell us what you’d like to build and what your budget is’, and they could say ‘I am looking to find a piece of land to subdivide, I’m looking to build two townhouses, four bedrooms each and my budget is X’,” Mr Brooke said.
“We could use that insight, blend it with ours and produce a report that says ‘here are six sites you should consider.
“This draws in data from the likes of Archistar, who can tell you exactly what the local council rules are about what can and cannot be built on that land, blended with our ability to understand how easy it is going to be to sell it once you complete the project in nine months’ time or whatever it might be.
“We also look at what the local area looks like, recent sale prices for similar properties in the area and how much stock is coming online so when you go to sell you will know what you are going to be up against.
“It might look like there is not much stock there today, but if you can see that there are DA approvals everywhere in the area, that means the marketplace is going to be a lot more crowded when it comes time to sell.
“It also massively reduces their risk. If we are using data for better decision making, it increases confidence of completing a project and getting a good return on investment.”
Mr Brooke said the platform would be kept as simple as possible, allowing a small scale or mum and dad developer to provide a budget, location or dwelling type which smrtr would then use to create a customised report.
“It will be some kind of easy to use interface, a website or an app, and there are two places a developer can start - they’ve either identified a plot already, and they want to evaluate that particular location, or they might not have a clue where they want to select a site, therefore they start a view that says ‘I am looking to build X, show me some candidate sites in this area’,” he said.
Mr Brooke said smtr was also developing future platforms to leverage its data insights in the automotive industry, and how it can be used to predict changes in individual property markets.
He said analysing the crossover between automotive sales and property prices over time produced some interesting insights.
“There is this beautiful corridor along Parramatta Road, in the inner western suburbs of Sydney, where what was happening was Audi Q7s and BMW X5s were moving into properties, then we saw an extra bedroom being added and DA approvals were being put in to expand these homes,” Mr Brooke said.
“Two years later, property prices had rocketed and we were able to see that car purchases were a lead indicator to the gentrification of an area.
“Then if we compare that to some of the western suburbs, where there has been far less migration because people are far less transient in the Hills District.
“People were staying in their houses, their house prices rapidly increased, their net worth was increasing, and as a result people were going out and buying nicer cars, so the car became a lag measure in that scenario.
“It’s just an example of how you can take a different view of what’s happening in the market and look at it through a number of different lenses.
“From there, we can now predict gentrification of areas and increased property prices by having a look at what cars are being bought.”
Mr Brooke said smrtr would then blend that data with its other insights, in particular an algorithm it had built that calculates how much land will be worth, historic prices, population growth and demographic shifts and future housing supply.
“We have a 20 year back history of insights from CoreLogic, we are able to look at that and work out what the features were that made a suburb rapidly increase in price,” he said.
“So when we talk about site selection for developers, one of the features we have got is we look at how much we predict what a return on investment will be based on a whole range of factors.
“It’s not only what are house prices doing now, but how much will that land be worth in 18 months’ time.”