Technology reshaping the way Australians invest in property
Property technology advancements have made it easier for investors to manage their own portfolios, but is there still value in having a human element to liaise between landlords and tenants?
Property technology advancements have made it easier than ever for investors to manage their own portfolios, but is there still value in having a human element to liaise between landlords and tenants?
Consumer apps and industry tools that improve lead generation, client management and off-site work processes are now fundamental components in Australia’s rapidly evolving property industry, which is increasingly being populated by platforms that aim to disrupt traditional methods of viewing, buying, selling or managing property.
Founder and president of the Proptech Association Australia, Kylie Davis, said there were now more than six hundred proptech businesses in Australia and the industry continues to grow rapidly, with an explosion of start-ups over the past three years.
“There is a major disruption that is taking place in how real estate is being transacted,” Ms Davis told Australian Property Investor Magazine.
“It is being driven by buyers and investors who are seeking more transparency, better service and time-saving measures.
“There was a time when buying a cup of coffee you got better service than when buying real estate and now people are not standing for it.”
Ms Davis, whose not-for-profit association connects proptech businesses and services to industry, said the pandemic had proven to businesses that technologically aware and capable operations were the best equipped to function during a crisis.
“The businesses succeeding are the ones that have a forward-thinking culture and high EQ (emotional intelligence) between the exec’ and tech’ teams,” Ms Davis said.
“We saw tech-savvy companies taking market share from the slow movers that couldn’t adapt to work-from-home, conduct virtual inspections or provide buyers with a seamless service.”
There was, however, no shortage of industry players that took their time about embracing technology.
Director of sales for Image Property in Brisbane, Adam Empringham, said real estate had been a late adopter of proptech but savvy investors had embraced it to bring more transparency to sales data and price negotiation and self-management of portfolios.
“Tech is making it easier to go direct to market and those that have wanted to do that have always been there,” he said.
“We haven’t yet seen it have a significant influence (a major shift from agencies to self-management) by way of market share, as the requirements for negotiations and dispute resolution are still required and some find that difficult to do without a mediator.
“For most, the savings in agency fees aren’t worth the responsibility and effort required to DIY.”
Investors looking to cut out the middle man were still plentiful, however, and proptech made it easier than ever, according to Ms Davis.
“It's definitely making it easy for investors who own multiple properties to either manage their properties themselves or have one property manager who looks after their portfolio nationally, rather than the traditional model of having a different property manager in each location,” Ms Davis said
She named proptech like Instarent, which gives landlords all the tools of a project management system, and :Different and Yabonza that manage property centrally, as some of the more popular innovations.
“The benefits as a landlord are that you have one point of contact and all your records are centralised, so your property manager has a complete overview of your portfolio, and their fees are usually cheaper than traditional agents too,” Ms Davis said.
The key tools for buyers, according to Mr Empringham, were the apps that offered market reach and possibly knowledge not available to those competing for the same property.
“Apps such as Domain Real Estate and Property and realestate.com.au Property are a must-have, and I’d recommend prospective buyers take a few minutes to set up a profile, which can save time on the search process and alert you to new listings that suit your preferences,” he said.
Such apps allow users to search across Australia's largest sets of properties for sale, rent or that have sold previously (including auction results and rental history), and to find properties for sale, house and land packages, off-the-plan apartments, rental properties and rooms for rent.
“There’s also a range of buyer advocacy apps offered by local realtors that will give buyers potential access to early bird listings that the rest of the public doesn’t see,” he added.
From accessing listings and data, to mapping out a renovation floor plan, there are now an array of apps helping property investors.
Property analytics group RP Data’s RP Data Pro, and of CoreLogic subsidiary onthehouse.com.au, are a couple of the market leaders whose apps provide access to a range of property data, including sales history, ownership details, valuations and rental estimates. Houzz and magicplan have appeal to renovators.
Purple bricks or golden future?
With the increasing demand for tech-enabled real estate platforms, trends like the use of AI, machine learning and robotic process automation (RPA) are witnessing significant momentum, enabling a systematic and comprehensive evaluation of a large spectrum of properties in real time.
But, in Australia at least, predictions of the demise of real estate agents seem premature.
Purplebricks, which launched in 2014, is now the largest estate agent brand with almost four per cent share of the total market in the UK, having set out to do for the property buying and selling model what Uber and Airbnb had done for taxis and holiday rentals.
But it is just one example of a technology-focused property agent business that struggled in Australia, ultimately winding up operations in 2019 despite its success in Britain.
James Nihill, Managing Director of Patrick Leo, said AI still lacked the ability to compensate for the myriad of soft skills required in the real estate sector – from the hand-holding and reassurance needed when making a first property purchase or sale through to problem-solving and understanding client’s needs.
“Almost every role in our industry revolves around people and relationships – from mortgage brokers to real estate agents to property managers.”
Citing the example of Commonwealth Bank’s recent announcement of a $25 million investment into property management company :Different, Mr Nihill expressed concern that “buyers lured in by the prospect of cheap fees and the opportunity to DIY-manage their portfolio would, in the long-term, will find themselves short-changed without the skill of a professional management team.”
“Big business has a terrible history for over-promising and under-delivering and once the lure of cheap fees passes, investors will be left wondering what service they really have.”
Mr Nihill said while some administrative elements could be automated, there was a bigger number of management techniques and processes that could not be replaced by technology.
“Experienced property managers add significant value with regular reviews and providing advice to investors,” he said.
“They are usually shrewd and accurate judges of character and adept at choosing the right tenants.
“Usually, property professionals are qualified in real estate and finance and their insight into the market helps to maximise performance of the asset and ensure it delivers to client’s objectives.
“Moreover, they tap into a broader agency skillset and can be invaluable when it is time to sell the property or add to the portfolio.
“They are a person who jumps in with the advice and help needed when situations change, and strategy needs to roll with that.
“It is hard to see this being automated!”
Proptech expert Ms Davis said Australia’s ingrained psyche towards property ownership, and the legacy of the Great Australian Dream mentality, meant the country had a different take on property transactions than those in the UK.
“Proptech has to fix a problem that buyers have and sacrificing service relationships that Australians regard highly for a marginal saving on agency fees is not an issue that needs to be addressed,” she said.