Back in the day, collecting money from multiple parties was often a time-consuming and laborious process. That’s changed, thanks to digital technology. Crowdsourcing platforms like GoFundMe can bring hundreds of thousands of like-minded ‘investors’ together in a matter of hours.
The same type of technology has latterly made its way into the property investment sphere. Savvy start-ups like BRICKX and DomaCom are allowing individuals to take fractional shares in properties, receive commensurate fractions of the rent and divest their holdings at the click of a mouse when they’re ready to exit the market.
The emergence of more digitally-driven investment vehicles such as these could be the key that unlocks the commercial property market, making it accessible to small-time Australian investors for the first time. To date, it’s been the exclusive province of high-flying investors – those with sufficient income or net worth to satisfy stringent sophisticated investor requirements and stump up the six-figure buy-in amount typically demanded by syndicators.
Digital technology certainly has the potential to shake up that status quo. With syndicates and trusts now able to assemble and manage large pools of investors efficiently and economically, it should be possible for everyday Australians to buy into office blocks, shopping centers, and industrial real estate directly.
Australia’s army of baby boomers would be a most receptive target market. With interest rates looking like they’ll languish perilously close to zero for years, the traditional term deposit no longer represents a low-risk way to earn a modest return. Residential property yields, meanwhile, are sliding into two percent territory. Parking one’s retirement savings in high-quality commercial property that can deliver a return of 4-5 percent starts to look like a smart proposition.
Proptech – specialised software and solutions designed for the construction and property sectors – has been a slow burn, in Australia and around the world. But, post-COVID, it’s hotting up fast, as major players in this hitherto conservative space collectively become alive to its potential. Right now, digital technology is putting paid to old models and methods across the sector and ushering in smarter ways of doing things. What’s the bet that commercial property investment will be next?