Where is proptech’s trendline pointing?

Data collection for the first ever Yardi / Property Council New Zealand Proptech Survey is underway. What did we learn from the Australian data and where is the proptech trendline pointing?

Three key takeaways:

• The 2021 Yardi / Property Council New Zealand Proptech Survey  is open until 8 December
• A similar survey is run in Australia by Yardi and Property Council of Australia.
• The 2020 Australia report found 27% of property companies were pumping funds into new technology in response to the pandemic, while 55% were beefing up their investment in existing technology
• The largest obstacle to investment remains resources, cited by 34% of respondents; Yardi’s Bernie Devine and Kylie Davis, president of Proptech Association Australia, reflect on the research.

Last year’s pulse check of 216 Australian property companies – taken while deep in the COVID-19 crisis – found the pandemic had, unsurprisingly, accelerated proptech adoption. But significant barriers, both real and perceived, were also preventing large-scale investment.

The largest obstacle to investment – cited by 34 per cent of respondents – was resources, followed by resistance to change (26%), cost (23%) and time constraints (11%).

Yardi’s regional director Bernie Devine is fascinated by this insight.

“People are beginning to understand that resistance to change remains a barrier because there’s a lack of resources focused on the change. Expertise is needed to shepherd proptech projects through that resistance – but that expertise can be hard to find.”

Around a third (30%) of survey respondents thought Australia was trailing the rest of the world in terms of proptech investment. Interestingly, 35 per cent of respondents to a comparative Asian proptech survey also thought their region was lagging the leaders.

Devine expects these figures to fall as proptech investment accelerates. “An awful lot of innovation is underway across the Asia Pacific region. Hong Kong, for example, is setting up a second CBD right against the border to take advantage of innovation hub in nearby Shenzhen. As the new city takes shape we can expect innovation and integration with real estate.”

While the signposts are all pointing towards accelerated proptech adoption, nearly a quarter (23%) of respondents last year still depended on Microsoft Excel to manage leasing, sales and property management information, and a whopping 39 per cent still used Excel for investor management and reporting.

This doesn’t surprise president of the Proptech Association Australia, Kylie Davis.

“I think we’re seeing a slow dawning realisation of the power of data to better manage billion-dollar investments. We’re seeing the conversion of analog assets – buildings – into dynamic data. This is like upgrading from a Morris to a Ferrari.”

Davis, a serial entrepreneur who co-founded the recently-acquired content marketing automation proptech, HomePrezzo, also spent five years mining data with CoreLogic. She says a host of new tools are emerging to help property owners better capture, assemble and understand their data.

“AI Assets, for example, transforms asset registers with an app, artificial intelligence and a database of more than 1,800 common assets. The technology recently tagged more than two million assets in 1,500 Australian buildings in less than a year – 80 per cent faster than with the traditional pen and clipboard method and with a fraction of the people.

“Another technology, Exergenics, uses big data, AI and digital twins to optimise HVAC systems. With a pile of algorithmic modelling work behind it, Exergenics is able to get between two and five per cent more efficiency from every unit – something that can translate into hundreds of thousands of dollars in savings over the life of a building and an extraordinary amounts of carbon.”

While the potential for proptech is astronomical, Davis concedes it can be confusing for building owners and asset managers trying to pick winners.

“The smart building narrative has been too ‘pie-in-the-sky’. We need to bring our focus to proptechs that are solving real problems we have right now. We need to start with the low-hanging fruit.”

Davis recommends setting a vision based on the end-user experience. “And then work out how risk tolerant you are, because that will determine whether you go with a start-up, a scale up or an established provider,” she says.

“You can’t rollout a start-up across 100 buildings on Day One. You need to test and trial, or else you’ll break the proptech.” Not all proptechs are the same, she adds. “It’s not a universal term that means the same thing for every business – just as there’s extraordinary complexity and colour in the commercial property industry.” The secret to finding the right proptech is to “look to solve problems that are real and present in your business”.

Devine agrees.

“People now understand the value of data. In fact, 27 per cent of respondents last year expected big data to have the greatest impact on the industry. But people think they need big data, when really they should start small – by fixing the data they already have.”

Devine says the long-term aim of the collaboration between Yardi and the Property Council New Zealand is plain and simple: “education”.

“Over time, we will start to see trends in the report data and gain a better picture of where the industry is heading. And that’s good for everyone – vendors, consultants, practitioners, owners – everyone.”