A new technology platform that allows investors to receive sizeable discounts by grouping together to buy overseas properties, is hoping to reshape the worldwide real estate market.
Auckland-based Du Val PropTech has sold some 40 homes in two new projects in the UK to overseas buyers, including 10 from Hong Kong, since it launched on December 15. It uses a model similar to that of Groupon – the more buyers join up to buy a block of units, the higher the discount the developer is willing to offer.
While discounts vary between projects, the biggest discount an individual buyer has received so far was £300,000, or 19.5 per cent off a flat in London.
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“It is a win-win for both buyers and developers. The developers just offer [a discount equivalent to] what they used to spend on overseas marketing to buyers directly and can secure the volume through one online launch,” said Ashley Osborne, PropTech’s CEO.
Osborne, who used to be with Colliers International serving Hongkongers looking for international properties, pointed out that the biggest burden for developers selling in other markets is having to stage prestigious property exhibitions in luxury hotels.
In Hong Kong, for example, the average cost of such an event would be US$300,000, including the preparation of sales and marketing materials, event set-up, the costs of travel and logistics, hiring the event space and promoting it.
The platform, which uses global property data and an algorithm, offers real-time pricing, data on rental market demand and yield trends, as well as analysis and comparison tools to enable its members to understand all the costs and taxes associated with their investments.
In Hong Kong, property agents can charge up to 18 per cent of the price of a newly launched overseas property in fees. Du Val PropTech earns money by charging developers 2 per cent on each transaction and investors about US$80 per month in membership fees.
The proptech platform aims to roll out two projects each week, one from the UK and one from New Zealand or Australia, starting this year, and hopes to expand its membership base from 2,000 investors to 25,000 by the end of 2021.
Proptech, which uses artificial intelligence, blockchain and big data, has seen a sharp rise in adoption as the coronavirus pandemic has disrupted travel and made it hard to host traditional property exhibitions in hotels and arrange on-site inspections.
“We have seen a significant shift to online [in 2020],” said Ryan Black, head of international residential sales at Knight Frank. “Solutions such as virtual and augmented reality (AR) that can give a 360-degree walk-through in properties in other countries have improved engagement and played a key role when investors and developers cannot move freely.”
Knight Frank booked 40 per cent of its overseas property sales last year during or after on-site exhibitions. Normally the showcase events would contribute 60 per cent.
Agents argue that the rise of proptech – the convergence of property and technology – does not necessarily mean the end of the salesperson’s role.
“It is a tool to make our lives easier. Such solutions and portals can educate more investors with data-driven advice and thus cultivate more interest in overseas properties,” said Black.
“Then when they come to us, we are dealing with buyers with a clearer picture of what they need and that can make the home matching easier. But purchasing a home is not like buying clothes.
“Buyers still need professional advice and actual human contact before signing a deal worth millions or billions. That is where agents step in.”
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