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Property

Australian tech revolutionizes business practices in property

Contract signing times for rental renewals slashed from 7 days to 4 minutes

Australia's buoyant property market is served by over 260 dedicated tech companies, half of which are less than five years old. (Photo by Fumi Matsumoto)

SYDNEY -- Digital technology for real estate brokering, management and contracts has taken off dramatically in Australia.

The Australian housing industry remains bullish because of a growing population, brisk demand for suburban homes during the COVID-19 pandemic, and historically low interest rates.

The strong market has made property companies curb questionable business practices and compete increasingly using cost-cutting technologies and services.

"The processes in the early 1900s were the same things we were doing in the early 2000s," Andrew Colagiuri, chief executive of FLK It Over told Nikkei Asia. "We were still making a tenant, whether it was for a new lease or a renewal, hop in their car, drive to our office and sign a piece of paper."

Colagiuri used to operate a real estate agency in Sydney but became fed up with cumbersome contract procedures. Those included annual lease renewals that required the physical presence of tenants in his office. Property agents also often had difficulty contacting some clients, such as those in two-income households.

Computerization had already made some limited progress in the property industry. For example, to reduce travel, tenants could print out contracts sent by email, confirm and sign them, and return the scanned pages as attached files.

Colagiuri took the process much further. He developed the FLK It Over platform in 2018 specifically for the property sector. That enabled tenants to read, initial and sign lease contracts using a smartphones, and complete the entire process online.

"When we used to get tenants into the office, it used to be a four to seven day process," said Colagiuri. "With FLK you can just send the lease and have it back in four to seven minutes."

FLK It Over is paid AU$150 to AU$300 ($115 to $231) per month by real estate agents according to the number of properties they handle and other factors.

On average, agents manage 160 to 220 rental properties each, according to Colagiuri. Assuming 75% of lease contracts are renewed, renewals for at least 10 properties will be needed each month.

Listing Loop is another tech innovation from Australia, where properties change hands with high frequency. Registered clients are informed of properties that are unlisted or pending listing on property sites. The seller is charged 0.22% of the value of a property if the sale goes through, so the fee for selling a AU$1 million property is AU$2,200.

"It can take seven to 20 days depending on the agency to get all the marketing collateral ready to market a property, and that may include property brochures, photography, video, signboards, etcetera," said Rhett Dallwitz, chief executive of Listing Loop.

The population of Australia has kept increasing due to the proactive acceptance of immigrants, topping 25 million in 2018, compared to 19 million in 2000, which helped keep the housing market buoyant.

Agents pay for FLK It Over's innovative property contract app for smartphones on a monthly basis according to their business volume. (Photo by Fumi Matsumoto)

According to the Australian Bureau of Statistics, the value of all existing dwellings totaled AU$7.7 trillion as of December, an increase of 76% since 2011 because of constantly rising demand.

Houses attract not only homebuyers but investors as well.

Instarent offers a property management app for people owning homes for investment purposes. Available for some AU$20 per month, the app enables homeowners to check the deposit of rents and lets tenants call for repairs over troubles such as damaged drawer grips in the kitchen or the stoppage of water in the bathroom. It can also be used to arrange schedules with repairers.

A.J. Chand, chief executive of Instarent, launched the app in 2018 because property management conducted by agents for 7-10% of rents was not satisfactory. Having some 9,000 users of the app, the company is considering overseas markets, he said.

The number of property technology companies in Australia topped 260 early in 2020, up more than fivefold from 2013, said Marie-Anne Lampotang, a treasurer of Proptech Association of Australia. More than half of them were founded in the past five years.

A gap in digital literacy between young tenants and homeowners who are more or less aged is one of the problems property tech companies are facing. Explanations and "education" for homeowners were needed before launching the service, said a founder of one property tech business.

But, as Chand said, many people are starting to recognize that familiarity with digital technology and automatization is indispensable because of an increase in work from home and the use of tracking apps amid the COVID-19 crisis, it seems that property tech still has much room for growth.

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