In the last year alone, the average house price for all of Australia increased by almost 10%, surging 44.2% from 2011 to 2016. This swell has made the Australian real estate industry an appealing target for disruption through technology, both because of its enormous market and the general confusion and unnecessary costs involved in the renting, buying, or leasing of a home.
The confusion and costliness is shared around the globe. It results from a lack of progression and adaptation in the real estate sector and is partially due to the complex legal structures involved. According to Savills, a London-based real estate specialist, the global real estate market was worth approximately $217 trillion in 2016, three quarters of which was residential property.
“To give this figure context, the total value of all the gold ever mined is approximately US $6 trillion."
Yolande Barnes, Head of World Research for Savills explains the size of the market: “To give this figure context, the total value of all the gold ever mined is approximately US $6 trillion."
“Real estate is the pre-eminent asset class which will be most impacted by global monetary conditions and investment activity and which, in turn, has the power to most impact national and international economies.” (Fortune)
Proptech, or property technology, is technology built to facilitate the way consumers manage, buy, sell, and finance their property. James Dearsley, a Futurist and Proptech specialist, provides a more widely shared definition of the industry: “Proptech is one small part of a wider digital transformation in the property industry. It concerns both the technological and mentality change of the real estate industry and its consumers to our attitudes, movements, and transactions involving both buildings and cities.”
Considering the size of the real estate and construction industry, it isn’t surprising that technology built to offer a more efficient and effective means of day-to-day operations has received ample interest from customers on both sides of the table.
Tech built to offer a more efficient and effective means of day-to-day operations has received ample interest from customers on both sides of the table.
The implemented technology sits under two main channels. The first offers support to real estate professionals through tools to enhance their service and productivity, while the latter provides a service aimed to completely eliminate real estate professionals.
A recent study by Taronga Group’s tech investment arm, Real Tech Ventures, in partnership with KPMG, has found that investment capital into Proptech companies is expected to reach $20 billion by 2020, as more start-ups are built to conquer the sector and big banks, VC funds, and real estate businesses pour money into the sector.
ANZ Bank has recently made the decision to tap into the Proptech start-up market, with the acquisition of an emerging Aussie start-up that built a platform called REALas. It allows customers to gain sale price predictions for properties across the market.
REALas uses in-depth analytics based on previous purchases in the local market, along with house price fluctuation in the surrounding market. The unique algorithm offers extremely accurate price predictions. Peter Dalton, ANZ Managing Director of Customer Experience and Digital Channels, supported and saw value in the acquisition.
"Purchasing a home is one of the biggest decisions many of our customers will ever make."
"Purchasing a home is one of the biggest decisions many of our customers will ever make. Today buyers find it difficult to know what prices properties will sell for, and they can spend precious time trying to figure out what they can really afford," says Mr Dalton.
Another example in its early stages of development is Property HQ. This Sydney-founded Proptech start-up capitalises on the demand for commercial property across Sydney. The start-up, having recently undergone a full rebrand and a launch of its beta website, offers a commercial real estate portal with over 20,000 listing from landlords such as Dexus, Savills, Ray White, and LJ Hooker, along with video-enabled listings, map view locations, near me location searching, a built-in translator, and the options to share and favourite chosen locations.
Property HQ is also working towards expanding its service to automate and streamline traditional property transactional and administrative tasks to offer a seamless process. Piers Kennard, Managing Director of Property HQ, discussed the reasoning behind the platform.
“Agents, landlords, and the wider property community have been crying out for years for more competition when it comes to listing commercial property online. They feel like they’re being held to ransom, especially with double-digit price hikes year-on-year, some of the highest property advertising costs in the world and only one or two players to choose from,” he said.
Other Proptech businesses have found significant success in the Australian market, delivering a new angle to the enormous market.
“We saw a clear gap in the market and the opportunity to reinvent commercial real estate search, putting agents and landlords in the box seat for a change.” (Anthill)
Other Proptech businesses, such as Rent.com, Purplebricks, LocalAgentFinder, BuyMyPlace and, of course, Airbnb, have found significant success in the Australian market, delivering a new angle to the enormous market. With the real estate sector ripe for innovation, it comes as no surprise that technology made to offer efficiency and simplicity at a fair cost is snowballing in size.