As proptech continues to revolutionise the commercial real estate industry, automation followed by data and analytics have become the CRE industry’s most sought-after solutions. Augmented and virtual reality technology that allows property visualisation follow close behind.
However according to Deloitte’s 2023 Commercial Real Estate Outlook the majority of CRE companies plan to curtail technology spending to such a degree that they may well miss out on valuable opportunities and future investment. In the Asia Pacific, just over 40 per cent of companies planned to increase tech budgets this year and one third expected cuts. The findings are in marked contrast to last year when only 7 per cent of firms intended slashing their tech budgets and two thirds planned to increase spending on proptech innovations. Reasons given were overall economic disruptions and supply chain uncertainties.
But to business analysts the trend is of concern. Failing to invest in proptech – especially at a time when the Australian proptech industry was having not only great success but growing exponentially – could be short-sighted warned Deloitte China Real Estate Sector Financial Advisory Leader Carl Fang.
"Real estate firms with the flexibility and risk appetite within the current environment can get ahead by exploring how technology can unlock potential in the long term," Mr Fang said.
"Investment in proptech rebounded globally in 2021 and reached a new high of more than US$24 billion. This followed a sharp decline in 2020.” What does augur well however is that nearly half of respondents in the Asia Pacific region at least recognised the benefits of proptech, Mr Fang said. “Regulatory proposals on climate disclosures have also stimulated interest in climate-related property technology," he added.
Deloitte analysts further recommended that real estate firms feeling hesitant about the usefulness of tech should consider the benefits that external service providers and proptechs could provide for their existing operations. “Leveraging a third party to cover back-office functions could allow CRE firms to spend more time enhancing core services,” they said. “Innovative technology partners can also differentiate frontline offerings from competitors. Emerging technologies such as smart contracts and the metaverse which are currently being explored by 80 per cent of respondent firms could be leveraged to further complement and enhance existing services.”
The insights have emerged as new data shows Australian proptech companies now generate more than $1.4 billion of direct economic output and support more than 5700 jobs each year. Of those, 1150 jobs were created in 2022 alone.
In comparison, the industry generated just 700 new jobs between 2017 and 2021 for the Australian economy. By 2021, the proptech industry supported 2170 jobs.
The explosion in proptech has been driven by a rapid acceleration of startups, accelerators, government programs and funding vehicles across the country said Proptech Brisbane founder Isaac Coonan.
“Over 90% of these jobs were created and supported by companies registered in Queensland, New South Wales or Victoria,” Mr Coonan said.
“An interesting observation is that while Queensland produces the highest number of proptech companies each year – followed by New South Wales and Victoria – Victoria is the largest contributor of economic output to the Australian economy.
“This is due in part to the number of larger, established proptech companies such as PEXA being headquartered in Victoria. However, the data suggests that this trend may change, as in 2022 Victoria reported 294 new jobs while Queensland and New South Wales each reported more than 350.”
Just over 60 per cent of Australian proptechs exported their products to one or more global regions with the US topping the list of international fans of our homegrown innovations. The UK is close behind, followed by New Zealand, Greater Europe and the Middles East.
Australian proptech stars
Some of the most popular proptechs to emerge in recent years are Archistar Property Development Software | Property Feasibility Software - archistar.ai, DisplaySweet Presentation app and showroom technology for new developments | DisplaySweet, and Equiem Equiem Tenant Experience Platform For CRE Landlords & Owners (getequiem.com). Archistar launched in 2018 to become one of the brightest lights on the Australian proptech landscape. The property technology platform helps developers pinpoint the suitability a block of land for development and was founded by brothers Dr Benjamin Coorey and Robert Coorey. The pair had worked for years on their concept that combines architecture with software to create a way of assessing a block of land’s development potential as well as automatically generating building and home designs in an instant. A great time-saver, Archistar has the capability to assess the capability of hundreds of approved 3D designs.
DisplaySweet has established itself as Australia’s leading property technology company after launching in 2016. Its groundbreaking tech delivers enhanced property presentations and showroom technology, from movies to renders. For instance, customers can immerse themselves in the view from their yet-to-be-built property or office and made to feel as though they can reach out and touch finishes. Via the tech, they can change colours and materials as they view large-scale 3D floor plans. The DisplaySweet platform has been used by leading CRE companies such as CBRE, Aqualand, Lendlease, Meriton and Mirvac. Equiem is an all-encompassing tenant experience platform for commercial buildings that started in 2011 to make it one of the country’s oldest proptech companies. Its software goes above and beyond in terms of delivering services of value to building owners, the end goal being to make their properties more attractive to tenants and investors alike.