The Value of Amenities for Developers, REITs
Amenities are key to high value and differentiation. In all the proptech talk, don’t forget about amenities.
It’s an exciting time in proptech. The industry is fast becoming mainstream in Australia. Confirmation that the Australian industry is switched on to the value of property technology and of investing in startups and new ideas can be seen in the establishment of a number of proptech accelerators such as RealTechX and REACH, continuing industry investment, and the backing of billion dollar companies.
Coming out of the second PropTech Summit, held in Sydney this month, I pause to reflect on the conversations we’ve been having about proptech so far. What I see at forums like these and out in the media is a heavy focus on buying and selling of real estate, smart building IoT, and big data. There’s lots of attention given to apps, sensors, analytics, and virtual reality. Such advancements are incredibly exciting for the industry but it’s also necessary to stay mindful that these are merely a few aspects of proptech. It’s critical to remember the value of amenities.
The Range of Proptech Innovations
There are many stages to consider along the real estate asset lifecycle – project planning; construction; buying, selling, leasing; property management. A wide range of proptech innovations fit into each of these. Dexus distill the real estate asset lifecycle down to just three main phases – developing, transacting, managing. This clear and simplified framework makes it easy to consider where your focus and investments in proptech land.
Under ‘transacting’, innovation in proptech is extensive due to the earlier emergence of fintech. This is where much of the talked about proptech apps sit. An estimated 45 percent of the 265 Australian proptech companies are aimed at solving sales and leasing issues. This is compared to 20 percent aimed at driving innovation in building and developing, and approximately 35 percent aimed at managing property.
Much of the innovation in proptech relevant to the ‘managing’ phase is devoted to either IoT used to drive costs down, dashboards that manage the workplace environment, or tools for community engagement such as Communiti Link and CBRE’s Host. Proptech products like Host facilitate the delivery of services and amenities to its building occupants. They effortlessly bridge the gap between occupants and that provided by the building.
Amenities remain key to market differentiation and value. This is particularly true in markets that have slowed down. Investing in amenities is essential in attracting and retaining occupants. There’s no community to manage and engage if you haven’t attracted them with amenity and value first.
The Challenges of Each Market Sector
The challenge of the commercial market today is to provide a fantastic work experience. This is largely due to the growing number of millennial workers. They bring their expectations of a frictionless, enjoyable work environment. 67 percent of millennial workers surveyed in the 2018 Deloitte Millennial Survey rated ‘workplace’ as more important than salary when choosing an employer.
Choosing an employer has also evolved to choosing a place to work from. John Preece of Hub Australia, providers of co-working spaces, highlighted at the PropTech Summit the need to change our perspectives on co-working spaces. He challenged us to see them, not just as ‘space’ to commune and work in, but as hotels. They should provide the same level of services and amenities that people have come to expect as they meld living and working.
For the residential market, it is now more important than ever to attract good buyers and tenants. Those good buyers come with higher expectations. Residents consider high-value services and efficiencies as essentials for modern living. The need for amenities that achieve all this and also improve operating margins will be increasingly sought after as the Build to Rent sector emerges.
Yes, amenities vary greatly in costs. Investment can start in highly practical amenities such as parcel delivery management and pet-friendly facilities for tens of thousands of dollars. For some it’s gyms and rooftop cinemas up to multimillion dollar end-of-trip facilities. Choosing the right amenity takes consideration of the type of space you’re building and the community you wish to attract.
Technology is Enhancing Our Amenities
The race for building amenities in Australia is intensifying with amenities going ‘digital’. Tech-enabled amenities use technology to greatly enhance and streamline the customer experience, bridging service with the physical asset. When coupled with software and the ability to capture useful data, amenities are made even more powerful and cost-effective, providing productivity gains as well as cost savings.
At the heart of proptech is the facility with which to keep costs down, engage occupants and tenants, and provide 21st century convenience. Amenities are key to achieving these results. Tech-enabled amenities provide this with just a short leap towards technology, often at a very accessible cost.
Director and co-founder, Groundfloor™