By Shona Yang | In the era of digital disruption, new technologies are pitched as a solution to our everyday problems. In Australia, emerging PropTech startups aim to disrupt the typically slow and costly process of buying a first home or selling a property.
Much like the rest of the region, startups utilising virtual reality software and artificial intelligence are creating operational and transactional efficiencies across the value chain, but PropTech startups in Australia still face growing pains.
Not Slowing Down
Property technology or ‘PropTech’ streamlines the way we buy, sell, manage and finance commercial or residential properties. From brokerage to leasing, PropTech across Asia Pacific is growing fast.
In Australia and New Zealand, an estimated US$54 million has been invested into 19 PropTech startup deals since 2012, and according to commercial powerhouse JLL, growth is not slowing down with regional investment predicted to be worth US$4.5 billion by 2020.
Aidan Coleman is Chief Technology Officer of Charter Hall, one of Australia’s leading property groups. He says Australia’s PropTech industry is vibrant, with plenty of entrepreneurs that are seeing opportunities in the real estate space.
To stay at the forefront of Australia’s commercial property market, Charter Hall recognises the importance of investing in PropTech startups that can benefit the company’s A$19.8 billion (about US$15.21 billion) property portfolio.
“There has been a fundamental transformation and appreciation of the impact of technology in the industry in the last three years. The marketplace in Australia’s commercial real estate space is still relatively untapped and small,” says Coleman.
The Charter Hall accelerator program, in collaboration with Collective Campus, is the first accelerator in the region dedicated to mentoring PropTech startups as they face the challenge of attracting buy-in from traditional players in the real estate industry.
“The reality is that the industry has been slow moving… There is no shortage of capital available, but investment hasn’t really flown on as much as one may have thought. Scale and size is a challenge here,” says Coleman.
Despite the challenges, Coleman says PropTech in Australia is still in its early days with a lot of expectation and opportunities to grow.
“The game has changed forever. The PropTech sector is a viable and vibrant investment opportunity that will continue to get stronger,” Coleman says.
Rippling Concern Across Industry
Justin Liang, Co-Founder & CEO of Inspace XR leads one of the startups recently selected to participate in a 13-week incubation period at Charter Hall. Liang’s virtual reality software helps architects visualise a project in 3D, leading to better design outcomes, reduced iteration times and easier discussions with engineers and project developers.
“The majority of the top 10 architecture firms already have VR headsets and younger architects who know it’s the future of the profession, are a lot more active and receptive in picking up the tools. It’s moving in the architecture space, but I’m not sure if we’ll see the same kind of adoption rates across the rest of the industry,” says Liang.
With the upcoming launch of his software to market, Liang recognises a mindset challenge in Australia in comparison to the tech hubs of the world.
“Most of the venture money here is still in Series A, and some of the investors may not have tried on a VR headset before. There’s not enough ‘risk-taking capital’,” he says.
“People are resistant to change… They will only change if the technology enables something that’s 10 times better, or when jobs demand them to learn the tools to make their work more efficient,” he explains.
A 2017 KPMG survey to assess attitudes to PropTech in 33 countries found that 86 percent of respondents in the real-estate sector see digital and technological innovation as an opportunity, but only 24 percent have an enterprise-wide strategy to enable technological change.
Real Estate Institute of Australia President Malcolm Gunning says there is a climate of concern in the industry as technology is disrupting the traditional job description of a real estate agent as the custodian of the market.
“What’s taking place now is a disruption in that the services provided by real estate agents are also available to the public. Information and marketing is freely available… anyone can research and workout the current market value of their property,” he says.
The rise of agent services and lead gen tools, coupled with a lower operational fee, is changing the workplace dynamics and defined roles of the real estate industry in Australia.
Gunning says new technology has been met with some resistance in the multi-billion dollar business, and residential agents are struggling to remain relevant.
“PropTech provides services to the public, which erodes the broader agency business. The modern real estate agent has to be tech-savvy and multi-faceted. Unless you evolve, you’re not going to exist in the near future because the competition will beat you,” he says.
Stronger Need For Online Tools
The Asia-Pacific region is home to a third of the world’s commercial real estate and attracts 61 percent of PropTech investment in the world.
Soho App Founder and CEO Jonathan Lui recognises the regional differences in the real estate industry across Asia Pacific. The former Co-founder of Airtasker recently secured A$1.65 million to expand its Singapore-based team.
“Australia’s market has definitely matured and investment has definitely picked up and property is starting to get more attention. There is more awareness in the industry about the role technology can play in the future, whether that’s good or bad,” Lui says.
The ubiquity of online marketplaces and delivery portals has strengthened the need for online tools that directly connects landlords with retailers. Soho App enables communication between buyers and sellers well before a property is listed on the market. Investors and homeowners can utilise the app to manage a portfolio of properties, as well as agents that can access a suite of tools to grow their networks.
Soho has received positive uptake from property owners, which surprised Lui. He says most real estate agents are looking for a better alternative to incumbent portals such as Domain.com.au and Realestate.com.au, but most PropTech startups have typically positioned themselves against agents, which he thinks is a mistake.
“It’s not about the agent, it’s about the industry and what the market wants. We’re not here to destroy anyone’s business, we’re trying to enable the A$6.9 trillion of properties that really should be online in 2018. We’re seeing lots of agents signing up in Australia. We’re still far from where we want to be, but we’re going in that direction,” says Lui.
The property industry in Australia is next in line to be disrupted by technology. With more PropTech entrants expected on the horizon, the real estate industry as we know it will need to keep up with the changing technology.
About The Author
Shona Yang is a freelance writer and blogger based in Sydney, Australia. In addition to being Jumpstart’s Journalist In Residence (JIR) there, she writes for startups, enjoys travelling and is passionate about human rights in Southeast Asia. See what she’s up to at shonasays.com or email her at [email protected]