5 Proptech Predictions for New Zealand

When we look at the emerging property technology in the region, Australia has long been under the watchful eye of the United Kingdom and American investors. Mostly pinned on the regulated nature of the Australian property market (considered to be best practice abroad) but also because of the buying power the Pound and USD have over the Australian dollar.

The past three years have seen more acquisitions and investments in New Zealand PropTech companies by those based outside of the Asia Pacific region than I can remember in my 25 years within the industry. And to be honest, it's about time.

Led by MRI's acquisition of Property Suite, Palace, and Whoisonlocation, the REACH program also saw value in investments in PropTech start-up List Assist and Property Management tech company Tapi. Both companies have dominated in their forays into the USA and Australia respectively.

So what can we expect from PropTech for New Zealand in 2024?

Prediction 1) We are likely to see more innovative solutions out of New Zealand over the next few years and I am excited by the possibilities that brings to this community.

We are already seeing more NZ-based PropTechs in the incubator phase. "Incubator phase" is a term used to describe a proptech at its early concept level. More than likely the product has yet to be proven as commercially viable and the customer count for these companies is likely to be low or limited to a couple of offices. By way of example in 2022, PropTech applicants for the REACH accelerator program from New Zealand totalled 4. This year 12 New Zealand companies applied for the 2024 program. There are two main reasons for this type of growth. The first is the speed with which concepts are now able to be delivered. This can be attributed to a 30% faster ability to code from a development perspective, which in turn removes a lot of delays in putting a concept together. The second is most likely to be a halo effect from the success New Zealand Property Technology companies have been having abroad. List Assist took out the prestigious crowd favourite at the coveted iOI summit in Miami. The first time a New Zealand company has even made it to the finals, let alone was voted as the people's choice. Then there is Wellington-based Tapi, who have all but decimated market share in Australian property management and are now riding on the back of a second successful funding raise.

Prediction 2)  Instability and a drop in profits for Enterprise Software equals less mergers and acquisitions

Across the Tasman, four major property technology companies are vying for market share and this will undoubtedly send ripple effects across the greater industry. The main news centres around the already dominant REA Group's proposed acquisition of Dynamic Methods and the industry-wide ramifications should that purchase proceed. Dynamic Methods is the platform used by most of the Real Estate Institutes for forms. It houses the most transactional data within the Australian industry. The transaction, currently under scrutiny from the Australian Competition and Consumer Commission would certainly be sounding alarms at MRI Software, Domain and CoreLogic because of the potential stranglehold handed to the REA Group around the various transaction points that would now be visible to the already no.1 consumer-facing portal. And even if the transaction is halted for whatever reason, I am tipping unrest amongst the big four through 2024. There may be silver linings in the short term. For example, most New Zealanders I speak to are heavily fatigued by enterprise companies acquiring their favoured software providers. We are unlikely to see much in the way of mergers and acquisitions through 2024 as profit margins are squeezed. 

Prediction 3) Generative AI fatigue is a real thing, choose application over gimmick.

2023 will be known as a year heavily dominated by the possibilities of generative AI. Social media gurus, with no claim to an understanding of technology, became overnight experts in the subject matter. Real Estate agents who didn't know what a blog was, began pumping out generated content, and almost everyone posted a picture of themselves as a superhero at some point (guilty ). But what I am seeing now is almost a negative reaction within a group of people whenever the topic of Gen AI is raised. I counted nearly 200 PropTechs last year who released some kind of Chat GPT plug-in to their consumer-facing portals in the areas of; chatbots, customer service, and knowledge base. Early reports suggest little, to no uplift within their businesses as a result of the innovation. So why do it? Well consumers love shiny new things and sometimes those shiny new things prevent attrition away from businesses, and right now, "loss prevention" appears to have been more what the swathe of generative AI introductions to consumers appears to have been more about. But that doesn't mean that generative AI is not a transformative force within the property community, let alone the broader world around us. No, far from it, Gen AI is here to stay. 2024 will be the year that technology companies begin to understand how to factor Gen AI into real-life application scenarios for their consumers. 

Prediction 4) The ethical implications of Generative AI in Real Estate come home to roost

The "Elephant in the Room" is the fact we as a community have rushed head-long at this new form of technology without considering the wider ramifications of doing so. Of course, some concepts should be common knowledge for Real Estate Agents. For example; if you are using a robot to write a listing description, you should still read through it before posting it online. Sounds simple, and whilst I do not know of legal action for "false and misleading advertising" (yet) I have read some very peculiar listing descriptions, with some more obvious "fails" including the prompt in the online description. There is more at stake here though. Yesterday I was pitched by an unnamed Generative AI image editor for Real Estate (more and more of these are appearing). This particular generator had completely removed fairly dominant power lines from the front of a home, taken several power outlets and a sink out of an image under a "kitchen declutter" edit, and, placed a setting sun for a beautiful twilight in a position that was not west. Some of these complaints are only misdemeanours, but I can see that the last one causing a fairly hectic issue. When I look at the gamut of services now being offered by Gen AI, I think a greater conversation needs to be had about the ethical implications of simply trusting agents to do the best they can in this space. My prediction is that we will see more issues arise in 2024 from the open-slather use of Generative AI.

Prediction 5) A return to emphasis on the humans behind the technology.

In case you haven't figured it out yet, attendance at conferences and events directly correlates to the disposable income agents and their principals have at any given time. The end of 2023 brought a much-needed reality check to nearly every conference I attended in the back half of 2023. However, investors are set to slowly return to the market and sales are tipped to increase by about 10% across New Zealand in the first half of 2024, and the knock-on effect will more than likely have agents returning to events to find the latest and greatest new ideas, concepts, and importantly technology. In the PropTech community, we quickly forget the value of providing a service over designing the best technology, when a truly good PropTech is a combination of both. 2023 in the property technology world tended to be fairly impersonal as a result of a downturn in the conference and event circuit and the aforementioned prominent acquisition list. Agents are always going to to gravitate to the technology concepts that are backed by good leaders, with amazing customer service values and a winning culture. When the technology doesn't work, it is the humans to whom the consumer turns to keep his/her business running in the smoothest fashion possible. And if I know New Zealanders, they will always back the authentic tech business over a profit-driven technology business.

About the Author

Peter Schravemade is the Managing Partner for REACH Australia and New Zealand. The REACH program is responsible for the early identification, investment in and acceleration of property technology.