Property Connect Part 3: The Property Sales Funnel
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Leesa: Welcome to another edition of Rent Roll Insights and joining me today for the final video in this series is Darren Patterson, CEO and Executive Director of Property Connect, welcome back again.
Darren: Thanks for having me.
Leesa: Thank you. In the last video we learnt a lot around how Property Connect can help the rental space with the LiveOffer platform, so I actually want to shift that focus and talk about sales side. So, can you tell me a little bit about your LiveOffer Auctions and Lending platform?
Darren: Sure, so I think what we’re seeing at the moment is a perfect storm in the Australian property market. Lending is contracting, investment loans are pretty much non-existent. I had a drink with a fairly high net worth last night who had several million dollars in un-securitised property and couldn’t get half a million-dollar loan for an investment property.
So, what we’ve done is gone and put together a deal with a peer-to-peer lending platform that I’ve invested in through my venture capital fund. We’re going to go in create a couple of products on that platform; one is for the construction development finance. I see a lot of developers struggling or in fact all banks have pretty much turned off that and they’re having to go to very high margin, third party providers. So, I think there’s a dramatic gap in the market there. And they’re also building a product to support residential mortgages which will help with the presale and the sells through. So, I call it the property sales funnel, so right at the end of that property sales funnel is LiveOffer Auction.
So, I’m actually working with a couple of the large groups, but also some boutique developers and also some very large developers to get projects on our platform and we’ll start to sell those projects through. We’ll do that in a couple of ways. So LiveOffer will auction independent individual units or houses whatever they are.
The other option is we’ll start to create managed investment schemes and we’ll create property funds. I think the smart developers at the moment realised that we’re moving to this world we’re everyone is going to be renting, or a large proportionate of renters, so they’re building to let which is the multi-family asset classes and that’s what LiveOffer rentals started with in the US. It’s a probably about a third of the market and we see that emerging in Australia.
So, with that, it’s kind of like having a concept digital dashboard, instead of buying shares you might want to buy units in a property fund or you might want to buy individual apartments Sydney, Melbourne, Perth and Brisbane. So, it just gives investors a lot more diversification and again that comes back to the property management side once these things have been built, set up, structured and sold and you’ve got lending and other bits and pieces going on the background, it comes back to then managing the asset right and getting the highest returns.
So, again when I set up BrickX that was kind of what we were doing. We were trying to allow or make it more affordable for people to get into the property ladder for their first property to have access to that asset class so they could buy a fraction of a unit, but still generate the capital return and the yield from the investment.
So, taking that one step larger Property Connect can arrange the financing, but we can give investors exposure to industrial, residential, retail, commercial all through a fund or individually and they can invest in different things, the equity all the debt returns whether they be sort of mezzanine structures to help developers get projects out of the ground. But ultimately, it’s just enabling the property sales funnel and getting sort of liquidity and flow back into the market which is beginning to contract badly.
Then internationally, I’ve actually been out to Dubai and we’ve put an arrangement in place with one of the very large developers there called Damac Properties. Very large developer, the buyers going through the 2020 World Expo, lots of high-end properties and I’d say in terms of investment returns comparable if not better than what you’d find in Sydney or Melbourne. Both the yield and capital appreciation and there’s also a lot of co-branding so there’s golf courses, Trump estates, Tiger Woods, Fendi, Cavalli high-end brands; so quality products. You don’t just buy an investment apartment it’s completely decked out, so you get the candles and soft furnishings as well and they’ll manage it and they’ll guarantee 8% yields for three years on those projects.
We’ve also put an arrangement in place with a mortgage brokerage service so we can help facilitate that. So, again what we’re trying to do there is test, for Australian investors the concept of “fly to buy” or “fly to invest” and that’s a big market segment in Europe and I’m looking to find alternate projects throughout Asia and in North America as well. So, maybe it’s a ski holiday or it’s a beach holiday, but that becomes part of a managed investment scheme where it’s managed and the property management piece is taken care of.
Leesa: Yes, that’s amazing and there’s a lot of really good information, particularly around that Dubai project I know on your website. So, I’ll pop the links below as well so be sure to check that out and you know, some really-really good insights into what Property Connect is doing and talking about disruption as well in the marketplace and what you’re doing in that space also. So, look thank you so much for coming along and joining us for this three-part series and thank you everybody for joining in to Rent Roll Insights. I will see you again soon.