What are the big problems emerging across both commercial and residential real estate that urgently need solving, what are their challenges and where are the opportunities?
Our expert panel discusses the intersections of affordability, supply, energy efficiency and infrastructure.
Carolyn Trickett
Thanks. I think I'm not very well known in this forum. For anyone who hasn't met me before, I'm Carolyn Trickett from JLL Spark. That's the venture capital arm of JLL. I've been in that role for a few years, and before that, I was Head of Technology for our property management division for Asia Pacific. So I've lived and breathed the world of JLL for quite a few years now. Let me introduce Antonia. Sounds like you're pretty well known in this forum. An accomplished CEO and solicitor with over 20 years experience in the real estate and property sectors, antonia has been identified as one of the ten most influential people in Queensland real estate and recognized as a female leader in Australian property by Domain.com in its International Women's Day feature in 2017. Further details available on her LinkedIn profile. Wayne, thank you for joining us today at short notice, Wayne's is COO at PT Blink commercially astute strategic business leader with more than 20 years of exec experience gained in a variety of industries, including SaaS platform and marketplace, manufacturing, B to B distribution, direct marketing, project management and consultancy.
Carolyn Trickett
Great. And Suzette got your title a little bit wrong on our material. She is the head of operations at Haven, Australia. Suzette's a dynamic leader with a wealth of experience spanning over 25 years in the fast paced world of commercial real estate and prop tech. Her reputation for innovation and her talent for deeply understanding her customers is evident in her work on retail and commercial developments at Lend Lease, as well as their leadership roles at CBRE, where she played a pivotal part in the creation of Host, the Tenant Experience platform, which has now expanded to over twelve countries. Today, Suzette's collaborating with residential developer the Aberdeen Group to create purpose built rental apartments designed to offer the people who live there a superior experience through the portal integration of connected technology. So, an interesting mix on the stage today and we're here to talk more about problems and how to solve those problems.
Carolyn Trickett
It's been a bit of an eye opening morning for some of us, I think, and we're going to continue that discussion. We just touched briefly on the housing affordability crisis in one of our previous talks. We're going to continue that, but I just want each of our panelists to very briefly introduce themselves again in terms of their role and the problems that they're looking at in their organizations right now. Over to you, Antonio.
Antonia Mercorella
Thank you. So I'm CEO of the REIQ. As you've just heard. We are the peak real estate body in Queensland, representing the real estate community there are some really big problems at the moment that we are facing, not just in Queensland, but I think across Australia and arguably around the globe. We've touched on many of those today. Affordability, I think, is top of mind. In Queensland, we've held some emergency housing summits. I sit on the housing supply expert panel trying to fix some of these really big problems. And again, I think that's replicated across various jurisdictions in the country. So I think that issue is a big one. I know we're going touch on this today. I think the issue of I'm from Queensland, natural disaster capital of Australia, I think that issue is an interesting one. Climate change sustainability, I think, is also one of those really big fundamental problems.
Antonia Mercorella
And again, in many respects, ties into affordability as well. And then, of course, representing the real estate sector. Some of you have already touched on it. Nigel is taking the mickey out of my lot. Yes. Their view is that if you can use AI to write some copy, happy days. Revolutionary. Not a problem that needs to be solved, like be a slight frustration, but certainly not a big fundamental issue. There's far bigger problems than that.
Carolyn Trickett
Suzette, let's move on to you and.
Suzette Lamont
Let'S say the ladies first thing. Sorry, Wayne. Suzette Lamont. I am working now with Justin Brown at the Aberdeen Group and we have a lot of problems because we're part of about 30 developers in Australia at the moment who are trying to forge forward with this new industry that you've probably all heard about called build rent. Now, a lot of you will say, well, that's been around forever, that's just called a nursing home or student accommodation, and I would somewhat agree with you. But one in three Australians rent, and if you're under 25, that's 83%, and if you're under 35, that's 65%. So tons of people rent. Lots of people want a much better experience. And at the moment in the industry, I think if you look at, I guess you call it the property lifecycle, it goes from origination, which is find some land and fund it through to design and build it through, to manage and operate it.
Suzette Lamont
We are all of us at the same point in this at the moment, which is we're at the very beginning and everything seems really hard. It's hard to get stuff through planning, it's hard to find land at the right price in the right location, and therefore it's hard to create a product that is affordable enough. And that could be anything from creating modular building. It's not a thing in Australia at the moment. That would certainly make things easier. But, yeah, there's lots of problems. Caroline, thanks for asking.
Carolyn Trickett
Over to you, Wayne.
Wayne Larsen
Yeah, thank guess there's lots of problems and we're solving for time, I think is the simplest way to put it. Coming back to some of the speakers this morning around sustainability, we would posit that the construction industry, as we see today globally, is inherently unsustainable. We consume far too much labor, we consume far too much capital, consume far too much land, far too much material, too much of a coast to the site and ends up in landfill or ends up injury or ends up in waste. What we're doing, I guess, to solve that in some respect, is creating a platform a bit like Red Balloon. We're going to rebrand the blink balloon. Basically, we're bringing manufacturers to the fore, bring them up the value chain, digitize their product, and create a marketplace for owners and developers to use those products into a new way of building.
Wayne Larsen
So trying to turn the construction phase on its head and delivering time to the quantity approach. And that's time valued money, which has a significant impact when it comes to feasibility and affordability.
Carolyn Trickett
Thank you all. Hope that helps set some context about what we're going to discuss today. So how do we find tech to solve these problems? I think in my previous role, I saw a lot of tech evolve over the years, 15 years at JLL, putting that into context, smartphone, the iPhone, had only just been released that previous year. And so there's been a lot of new solutions that have been introduced into our market. And people used to ask me in my role, what kind of tech are you looking for? And I go, I'll only know it when I see it because I know what my problems are. But if I knew how to design it, I wouldn't be in my role. I'd be out creative starting my own prop tech company. So I think the purpose of today's panel is to really help our audience today understand these problems.
Carolyn Trickett
If you had your wish, Antonia, what would be a magic wand solution that would solve some of these problems that you're dealing with in Queensland?
Antonia Mercorella
The first thing that springs to mind is more supply. I think universally it's agreed that more supply is what's desperately required. When we talk about the rental crisis that's facing us and that housing crisis, a lot of that goes back to supply. And on that the challenges. Queensland is the most expensive jurisdiction to construct a property in. It is expensive and really time consuming to build using traditional methods. So I think finding a way to build more faster, so build more properties faster and in a more sustainable way. I think the other really interesting challenge that we have at the moment is that we have an aging population in Australia. And I think at the height of COVID we all saw that this aged care crisis emerged where suddenly we realized that our loved ones are residing in really shitty places where they're not getting really great care.
Antonia Mercorella
And I think I'm going to get on a bit of a soapbox here. I actually think we have a real problem in this country and the way that we treat older people and the lack of respect that we show to people once they get beyond a certain age. So I think more could be done in relation to homes that are appropriate from cradle to grave and that we can age in. And earlier on were talking about granny flats, for example. That could be a way as well of addressing that issue. And maybe we know that the median age of first home buyers has gone up quite significantly. So we've got our kids who just won't go. I've got a couple of them as well. And then, of course, we've got aging parents. So granny flats are potentially part of the solution. So I think there's this real desire for more supply, but we also want it to be affordable and we want it to be sustainable and energy efficient and all of those things.
Antonia Mercorella
So I think technology has a really interesting role to play in that space.
Carolyn Trickett
So how could technology help in that space? Is it like what were talking about earlier today, about identifying properties and knowing what the zoning is? Do you see that as something that can really help?
Antonia Mercorella
Absolutely. I think time and complexity is a major obstacle. The average punter on the street has no idea how to deal with zoning requirements and all of the development rubbish that you have to deal with. I think Queensland got cited as the worst state for that, which I would second. So I think that is an issue. I think the time that it takes to build new properties, but even just using technology don't overestimate governments and politicians. I'm sure you don't, but as someone who spends a lot of time sitting in front of politicians, I am stunned at their lack of awareness about the most basic stuff, including data that is sitting right in front of them. We will recite data that we've got from their departments and they'll be like, that's amazing. Could you send that to me? Sure. So just data alone about again, I loved Jessica's presentation about the importance of data and the assumptions we make.
Antonia Mercorella
So even just something as simple as understanding, like who is living in property, how many underutilized bedrooms do we have in property? What ages are they? What are their preferences? We're building stuff. We see builders and developers building things. Are we actually building for what people want and need or are we making assumptions? So I think all of that stuff is incredibly important and I think data plays a really big role in that.
Carolyn Trickett
Great. And suzette you're kind of living life on the other side of that coin where you're trying to work through the jungle of regulations and compliance requirements. What would your magic wand be?
Suzette Lamont
Time kills deals. Can you somehow make things just quicker? For me, the planning process for most built to rent at the moment takes 18 months. Got another 18 months to two years to produce it, to design and build it. That is money that some developer has put down under their own pocket that is sitting there dead until we know rental income coming in. So, time, anything you can do with time, that'd be great. I think the biggest thing for me, Caroline, is how can you help me sell value? Not price, so that is value in what it's like to live in one.
Carolyn Trickett
Of these amazing communities.
Suzette Lamont
And that could be anything from help me prove that we used a compliant builder and that builder has waterproofed my bathrooms properly so that when they move in, they're not going to have to move out a year later while I re waterproof their bathroom, for instance. Help me understand what they want and give it to them. So, thank you, analytics, that was really great. We're going to meet afterwards. I love what you do. And I was going to say, help me understand insights. And I think you moved very quickly towards that and helped me activate my entire development. And I think what we do in the property industry is we tend to work in silos, but at the moment we're in the prop tech silo. You're actually in property. Technology is enabling property, but then you go into the property industry and we have commercial property, residential property, retail property, and then we have this new thing called built to rent.
Suzette Lamont
Really, we're all just selling a person's experience in built form. We're not selling bricks and mortar, we're selling the experience. So yesterday a few of us were at a different conference that was all about built rent. And I said to one of my suppliers, who creates an experience platform, oh, I've got this new one that I'm doing in Double Bay and it's got office in it and can you please have that experience now? Go across the office as well as the residential. His answer to me was no, because I don't know how to price it. That should be illegal. If you are in the business of proptech, your job is to help me.
Carolyn Trickett
Solve problems and deliver a product that.
Suzette Lamont
Does that, not to work out how you can better make money out of it. And I think the last thing is help me truly remember and connect with people in real time so that's anything from people that want to sell their property and their block of land that I can develop on people. Who want to help me understand what the design principles should be, people that should help me with the ESG who's renovated their own home here. Every single one of you, or nearly. There are thousands of decisions when doing a property development. And technology should be helping me with all of them. And last but not least, give me something that ties it all together so that I don't have to have an app for that or a program for that or something for that, for all of it, because it's just too confusing for the end user.
Carolyn Trickett
Thank you. Everyone's taking lots of notes. Wayne, you're seeing problems further down the track from what both Antonia and Suzette have been talking about. Once you get through that approval process, it seems like there's still further delays, more time wasted, more money wasted. Give us a bit more insight into that.
Wayne Larsen
Yeah, I mean, Suzette alluded to, I guess, the enablement phase, the construction phase being 18 months, two years plus. That is money every day, every month for the construction site is in the operations somewhere between one and 3% of the cost of the project. So twelve months, 30% of the cost come out of the project. Prelims interest, lost income, that kind of thing. From our perspective, technology should help make better decisions and better outcomes for the end user. So if it's not doing that, then it's probably wasteful. It's probably another bit of digital bling that's getting added on top, and it's another click on the ticket through the process. Saw Ben talk before about the ability to streamline that planning process, use the data that's available, and get very fast decisions around concept and approvals. We're taking it from the next step of going, okay, let's now design, deliver, and operate buildings in a very streamlined way and do it way faster than we've done traditionally, turning the process upside down in some respects, but doing it the way that gives the occupant the end user of the building.
Wayne Larsen
Once again, loving the analytics bit. We view a building as a device in some respects. So how do you put that device in the hands of the end to use it in a way they want to use it and create an environment that is welcoming. It's warm, it's healthy, and it's safe.
Carolyn Trickett
So building actually, the physical side of the building probably leaves a lot to be desired in terms of how fast it can be done and how safely it can be done. We've also, in our pre chat, talked a little about payment processes, how to get the money to the right people in the supply chain. Can you help us understand that a bit more?
Wayne Larsen
Yeah, I guess framing that a little bit and going back to what I said at the outset, is that we've got a sustainability issue, what that transpires is or how that manifests in construction. We've got a compact construct we can't actually build any more than we're building today. So we can plan it faster, we can get it approved faster. We don't have oodles of idle construction capacity sitting around waiting for the projects to be approved. We've got thousands of blocks of land that have got VA approvals ready to go, but can't get across feasibility, or can't get a construction team because they're busy. They're tied up in Saudi Arabia or digging tunnels under Sydney Harbour or rebuilding in Turkey. The global construction space can't produce enough property for the human growth, for the growth of the human population. It's a global phenomenon. And that's probably, in our perspective, the leading edge of next humanitarian crisis, climate change.
Wayne Larsen
We can't house our population. Changing that and changing the way that the construction industry is today is a difficult thing. We've been buildings the same way for 100 years now, and there's a good reason for that. Because coming back to what we talked about before, we do what's safe and what we did yesterday worked for us. So it's safe. And doing something different, that's not safe. It requires thinking and outside the outside of the box thinking in a different process. And one of the constraints on that is how capital flows through the construction industry. That's a property transaction at the end of the day. So banks don't want to release capital until things are fixed to the site, therefore, because it's covered by the Land of Titles Act. So getting payments made for things that are off site is very difficult. What we're doing is productizing those things so that once it's a product, no longer a building material, but a product, you can transfer title.
Wayne Larsen
And once you can transfer title, then you can allocate capital to it. So we can facilitate payments. And we're working through a process with some financing institutions to create methodology of taking ownership and title, leaving the risk where the asset is. But getting payments made to manufacturers off site give them an incentive to produce more because they're getting paid for the value they're adding when they add it.
Carolyn Trickett
I think that whole fintech space has still got quite a way to go in our industry. Easier way to pay for everything would be very nice. I know we battled with that at JLL, trying to get better ways for our tenants to pay their rent than just doing a bank transfer. It was not easy and still isn't. And I think that applies across all of our sectors, that there's got to better solutions out there that we can build than what our banks are currently supplying to us. Anyone out there built one of those yet? I was hoping that we could solve the climate crisis today as well, but I think we've run out of time. We'll leave that for next year's conference. But thanks, all three of you for shining a bit of light on what we're trying to solve with Proptech. And I hope that's given people a few good ideas for their next startup.
Carolyn Trickett
Thanks, everybody.
