To better understand how the PropTech CRC can be a sector-enabling body – and how the research streams promise real impact in Australia’s residential property markets – let’s turn to a use case.
How will the solutions developed by the PropTech CRC and its partners assist a Community Housing Organisation (CHO) looking to design, fund, and build new homes for essential workers in Australia?
With new technology and data infrastructure the CHO can use the insights generated by PropTech CRC data tools to meet the needs of essential workers with precision. The CHO can rapidly examine a number of factors – such as social dynamics, labour market changes and broader demand trends – to evaluate how the greatest impact can be delivered per dollar spent and provide a compelling case to Government and potential investors.
A major challenge to the construction of new developments are the holding costs associated with the delays that arise from design and planning bottlenecks. With digitised, automated council planning rules and building codes, the CHO uses PropTech CRC developed generative AI tools to rapidly design homes that are council compliant, meet community needs, and that are energy and thermal efficient. These homes are approved in real time, while the exact engineering and material requirements are made available to facilitate efficient construction. In doing so, the design to approval stage is reduced from months to a matter of days, meaning greater transparency, reduced holding costs, and the faster delivery of the housing required by Australia’s essential workers.
Following construction of the new homes, the essential workers move in. If an individual then wishes to move from renting to the purchase of a new home, they can do so through accessing newly-developed models of ownership such as a rent-to-buy scheme. To accumulate the funds required to build up a deposit and then purchase the home, the individual can make use of new residential real estate-linked notes that help them achieve the returns necessary to minimise their saving risk. As part of the rent to buy model, the individual chooses to partner with an investor under a shared equity arrangement. This helps them reduce the size of the loan necessary to purchase the home and their interest repayments over the long term.
New types of financial innovation driven by the PropTech CRC mean that a strong ESG proposition can attract new types of investors and provide additional capital with which to finance new developments. The CHO issues ESG structured financial instruments to decrease the cost of capital and distribute risk more effectively. This incentivises the CHO to install technologies such as solar panels and energy-efficiency monitoring devices, thereby reducing cost-of-living pressures for occupiers. At the same time, institutional investors can become diversified property investors by buying a basket of CHO project assets.