How proptech is enhancing the real estate experience for the industry and consumers
The future of property technology (proptech) is here and I am excited about the opportunities it presents us in New Zealand.
If investment by venture capitalists in technology is an indicator of where innovation is headed, with financing having increased from a humble USD $519 million per year in 2013 to a staggering USD $3.945 billion in just five years, we're moving at warp speed. At this pace, there's no doubt New Zealand's stable real estate market and our ideal 'test-market' size could put us at the forefront of proptech innovation.
“Generally, proptech (also referred to as property technology or real estate technology) is a set of cross-industry technologies changing the way we research, rent, buy, and manage property.”
Proptech includes everything in commercial and residential real estate, from listing and search services, investment and crowdfunding, tech brokerage, online settlements, real estate marketing, leasing and deal/property management, mortgage and lending, data collection and analytics, and property and energy management, agent tools, title and closing, and direct home buying.
So how do we leverage the technology?
First of all, proptech is here to enhance not replace the human experience needed to complete real estate transactions. Nothing can replace the talent - the people - who lead the critical processes of selling, buying and renting properties, so it's something to be embraced rather than be wary of. Experience and local market knowledge are human attributes that software, apps and AI simply cannot replace.
Proptech optimises some aspects of real estate however, making processes more efficient, seamless and agile, ultimately saving everybody time, which is a win for all. Removing some basic admin tasks enables real estate companies to spend more time with clients to focus on the negotiation and the really important parts of the value chain.
Because proptech is much more targeted and attuned to people's search requirements, particularly in using AI rather than a scattergun approach, it also greatly enhances the consumer experience, which also can save time.
While this is a huge topic and one that I will talk about further, to kick start the conversation I share a few examples below of how proptech is enhancing the real estate experience for the industry and consumers and why I am excited about its potential.
Rent to Buy
While there have been a few schemes operating in New Zealand, I can't see why already proven overseas startups that maximise the potential reach by using sophisticated apps and websites, such as Divvyhomes and Verbhouse, can't operate as effectively in New Zealand. Divvy states on its website that:
"We work with agents, mortgage professionals, capital partners, governments and cities." - Divvy
So, the door is open for our industry champions to lead the way, and it's something I am investigating.
Home equity schemes
Home equity solutions answer the question: 'How do we help people who don't have enough to save up for their home deposit?' House prices are on the rise globally and more and more investments and groups are coming together to support the home buying process.
Mid-year, Phil Twyford announced a potential new co-funding model to support Kiwis looking to own their own home based on a shared equity model whereby the home owner is in partnership with the government or a bank, which co-owns the property.
Twyford's shared equity proposal recognises that KiwiBuild housing is still out of reach for many New Zealanders, and states that any shared equity scheme would operate alongside the HomeStart grants.
"The shared equity scheme would allow a third party such as a bank or a government agency to co-own a property by taking on a share of the mortgage. That would reduce the owner's deposit and weekly mortgage payments.
The owner could then buy the remaining share off the third party when they could afford to, including any capital gains. - Isaac Davison, NZ Herald
Home Equity is a significant opportunity for more people in New Zealand to get into their own home sooner rather than simply saving for a deposit for many more years. It's estimated that a New Zealand shared equity scheme could save first-home buyers up to $100 a week, adding up to a lot over the time of a mortgage.
There are other models in existence where people can share with others, or co-fund a property purchase, enabling more Kiwis to get onto the property ladder.
The NZ Housing Foundation Affordable Equity programme is one such scheme, where the Foundation owns 30% of a property and the home owner owns 70% with an option to own more over time. Its Affordable Rental Programme is also a leg-up, with the provision of financial guidance to steer people to become debt-free and therefore closer to saving towards a house deposit.
Streamlined Purchasing Startups
Startups like Flyhomes and Ribbon Home streamline the purchase, and mortgage process and promise to bring the cash advantage to the buyer while providing better terms for sellers and agents. In Ribbon's 'scenario B', potential home buyers have the option to move in, rent temporarily and free up to 180 days to secure a mortgage.
Many of our country's iwi are investigating future-proofing housing for whānau, hapū and iwi with property developments built on iwi-owned land at much-reduced rates handed to the home owner.
Ngāti Whātua Ōrākei's 50 year Whātua Āhurutanga Housing Strategy includes pathways to home ownership as part of its people-first manifesto designed to build communities. In its revolutionary medium-density Kāinga Tuatahi housing project with 30 new homes, Ngāti Whātua Ōrākei is the lender operating a standard mortgagee/mortgagor agreement, with rates and insurance also covered in weekly repayments. The ability to make the scheme affordable is achieved through 150-year leaseholds (which can be sold prior to hapū) on which the property stands.
While this scheme is not technology-led (as far as I know; although does involve technology in aspects of it), it presents a huge opportunity to leverage technology and software to develop the model further in New Zealand for other iwi, property developers, councils and even the government, from lending, applications, data gathering, and more.
Technology in property management
Briefly, new apps are saving property managers time and streamlining efficiency to provide a top notice service to tenants. Great Jones and Mynd are just two apps facilitating traditional rental processes. For example, tenants can easily notify property managers and owners of issues with a property, and app software provides thorough, up-to-date data for property managers and landlords at the touch of a button.
Robots in open homes
Touch-screen enabled robots are proving another great timesaver for property managers, landlords, real estate agents, buyers and renters. Having robots meeting and greeting people viewing a property means that landlords, real estate agents and property managers don't have to be physically at a property to show it. This means appointments can start earlier and finish later, and the dreaded "no-shows" won't cost in wasted time and effort.
This an excellent way of showing vacant or commercial properties by leveraging AI to answer questions that have pre-loaded answers. This saves time for property management companies, and means greater flexibility for consumers. It also opens up the possibility for buyers or renters not having to physically go into the property but still be able to view it at a time that's convenient to them and have their questions answered.
Proptech represents an opportunity for New Zealand to be global leader in uptake of agile software and apps that enhance the real estate experience for everyone. While we might live at the edge of the world, we can invite the whole world in through using proptech well.