Proptech Trends 2023 and Beyond

Next speaker is Josh Gallagher from Little Hinges.

Josh is the CEO of Little Hinges.

Little Hinges is Australia's largest digital inspection platform and one of the world's largest 3D virtual tour creators.

Now operating in over 20 countries with staff around the world, Little Hinges is on a mission to change the way that property is transacted globally.

Josh is gonna tell us more about Protech Trends 2023 and beyond.

Over to you, Josh.

Thank you so much.

Thank you, investment markets, for putting on such a great event.

So yeah, so today, I said I'll do a bit of an overview, I guess, of the trends and key things that is coming through PropTech.

So for those not familiar with PropTech, it just quite simply means property technology or technology that's affecting the way in which we interact and exchange property.

There's a few interesting trends that are happening but really what I'll talk to today is about some of the more mature trends rather than things that are right on the bleeding edge of technology and how it's reshaping the world.

Really, the context of it, although in terms of prop tech is, and this is an important sort of overarching understanding is that real estate is the last trillion dollar asset class to be digitized.

And so, you know, I've just stepped in.

out here, I guess, cash and equities.

Obviously, there's commodities and bonds and all sorts of stuff as well.

But when you think about, I guess, digital access to these massive asset classes, and then the seamless flow of data, property and real estate is still a long way behind.

You can't digitally access most property.

You can't even digitally, I guess, get any of the

the inputs and the data that's involved in running that property or in, you know, in just in time maintenance requests, all that sort of stuff.

And so we'll start talking in a minute about some of the companies and some of the trends that we're seeing come through PropTech that's helping build real estate into a digitized asset class.

There is a couple of things, though, that slow it down.

And from the industry side, obviously, regulation is always something that's going to slow down any sort of progress.

You know, to be fair, every other industry has certain amounts of regulation as well.

And particularly when you think about equities, as an example of a digitized asset class, you know, there's plenty of regulation there.

But there is, you know, there is certain regulations in the property sector, including things like still requiring ink based signatures on contracts.

Some of those sort of things, some of those sort of regulations are certainly holding back an enormous amount of change in the industry.

It's an industry that's highly fragmented as far as, you know, owners of properties, as well as people interacting with properties, you think about, you know, it's an industry that involves

buyers, sellers, landlords, renters, brokers, finance companies, insurance companies.

And so it is very fragmented, which makes, you know, I guess that level of digitization just more challenging and more difficult to get to because it requires a lot more buy in from a lot more people.

And like many of these enormous industries, it also just has legacy systems.

And that definitely makes it challenging for PropTechs coming into the space to be able to integrate and provide a lot of immediate value to the industry because there's months, sometimes years of development just to get either data out of some of the existing systems or to push processes and data back in.

So that's from the industry side from the prop tech side.

So those sort of companies, including ours that that have solutions for the real estate industry.

I guess a lot of the prop techs are balancing a few different forces and that is best practices and processes.

So one of the advantages to building into property is that because real estate is so far behind on their evolution in terms of use of technology, we can look to all sorts of other segments of the market to be able to see what best practice looks like.

and try and bring that into property you take that, you know, as an example, you know, over 20 years ago, was was where retail bricks and mortar retail shifted online and and had websites and stuff.

And for those of you who are around at the time,

you'll remember a lot of the rhetoric at the time of, of bricks and bricks and mortar retail saying, well, we're never going to put our products up online because that'll just mean that no one comes into our, you know, into our shops anymore and never buys our products here.

And, and, you know, obviously you fast forward 20 plus years and you realise that it hasn't been, that wasn't the death knoll for, for bricks and mortar retail.

And then in actual fact, you know, there's a nice symbiotic relationship between the two and that there is an offline online digital transaction that goes beyond just

turning up and buying something.

That's all that sort of education process and I guess we can go and be inspired by everything that happened in that industry 20 years ago and bring it to property.

Consumer expectations, they're driving most of this change because at the moment the process of buying and selling property is horrendous and very often manual and a disjointed process.

Obviously speed of technology is also I guess one of the forces that's just

almost forcing change and it's where some, you know, like the property industry does get to take a big leap ahead rather than have to go through necessarily all the evolution that other industries have had to go through.

You look at even like AI, for example, and the ability for that to very immediately have an impact on property.

Just looking at some of the specific areas that we're seeing it come through in property management, there's a lot of activity in the process engineering.

So rent collection, maintenance and tenant communication is, you know, it's at the moment at least, a highly demanding part of a real estate business, whether that be at a commercial end or at a residential end.

And so there is a lot of new CRMs coming into the space as well as automation solutions to be able to streamline that.

A great one, for example, one of the example companies down there below, Hutley, a great one down in Victoria that's digitizing basically the entire rental application process and ability to onboard a new tenant.

And then predictive modeling, things like maintenance needs and building operations.

You know, there's so much data that is already stored there, even things in terms of like prior schedules that at the moment just hasn't been actually extracted to go, well, if we knew that the air conditioner, you know, maintenance schedule looks like this and it's coming up to this particular part of its lifespan, we know that we need to do X.

A lot of that doesn't exist in the property management industry at the moment.

And that's coming through.

Smart buildings, so IoT, Internet of Things.

So for those unfamiliar with that, it's basically devices that sit within physical property in order to do all sorts of monitoring, energy usage, people usage, and so on.

So we're seeing a lot of stuff come through there.

And when you look at those bigger projects, you think about, you know,

a 60 storey tower in the CBD somewhere, you know, clearly getting those things right, has very big material impacts on the cost of operating those assets, as well as the yield that are able to be extracted from those assets.

And then real estate investment is another really interesting frontier that is starting to change and evolve.

So one is in the form of crowd funding and so examples below like Fundrise and Realty Mogul allow you to basically, you know,

pool a bunch of investors together into a particular project that suddenly makes, I guess, what would otherwise be reserved for, you know, large capital backed real estate development companies can now be crowdfunded.

And I guess it starts to shift

the dynamic in terms of who can access those sort of returns.

And also who can look, I guess, who is shaping the future in terms of what our buildings and our communities look like.

And then there's fractional ownership.

Both of these ideas have been around for quite a while, but they're really just starting to

know, you're starting to see the numbers come up a bit more, you're starting to see some larger ticketed projects come through.

So fractional ownership is just the idea that that you can fractionalise, I guess it's no different to a company, a share in a company is a fractional ownership of a company.

It's creating that same structure, but for property, and that's including things like on bricklets,

platform, for example, where you actually get your name on, on the documentation about the ownership, so on the deed, so that so there is, you know, it's really starting to come forward.

And I guess as some of that regulation and red tape that's been holding back a lot of these innovations continues to evolve.

Ultimately, though, it's all about the consumers and consumers expectations have come a long way in the last, well, you know, 20 plus years, and probably retail was one of the first movers that has changed consumers into wanting everything immediately, full transparency and wanting a seamless process.

And that's not what the real estate industry is currently delivering.

We believe digital inspections are the next major frontier.

We're starting to see globally, you know, we operate in over 20 countries.

We're starting to see globally the adoption of virtual tours accelerate quite quickly.

And we think that'll soon go through the tipping point where, you know, because we see the consumers

demand it so heavily, you know, a listing on real estate.com, for example, that has a virtual tour has more than 400% engagement than a listing without.

And so when you start thinking about what that means for highly qualified offers and better offers and more people engaging with the property and all that sort of stuff, it's it's easy to see why it's why it's a no brainer.

So from the consumer side, it's got an enormous demand and they're showing that with their usage.

From a industry side, it obviously has the benefits as well.

And by way of introduction for little hinges, that is, you know, as Angelina said at the very outset, we've built, well, one of the world's largest 3D virtual tours companies, certainly Australia's largest by a long shot, larger than our next five competitors combined.

And we're building all those new data sets that are connecting into the ecosystem to help digitise property.

That's my time up.

Thank you so much for tuning in and listening and thanks very much for Investment Markets for having me.

Thanks, Josh.

We certainly learned a lot about property tech and know what's happened in the future.

It's a very interesting space.