Analytics tool tells developers how much to sell units for
It can also determine the best price to bid for the land.
In pricing or buying real estate, developers often make decisions based on the combination of data they can access through agencies such as Urban Development Authority (URA) and a great deal of gut instinct, Savills Southeast Asia CEO Christopher Marriott said. This practice has barred developers from getting the most out of their projects.
To help property developers increase sales, Real Estate Analytics, Savills, and LanciaConsult joined forces to deliver a tool that can provide answers to queries regarding residential development like how much a unit should be sold for, and what price should be bid for a certain piece of land.
The tool, called REA Developer Suite, does not only guide developers in residential pricing, but also the building process. It helps developers identify what type and what sizes of bedrooms should be built.
The developer suite can come up with answers to such questions through the use of real-time data provided by Singapore’s largest real estate agents stored in a platform called SoRealProp.
SoRealProp was established by PropNex, ERA, and Huttons, which together transact around 80% of all deals in Singapore. The platform was then acquired by Real Estate Analytics.
“The data lake is very extensive, it provides us real-time transactions that allow us to create [a] demand curve for any specific project. We can estimate how many people would want to buy a flat price at a specific amount of time,” REA Analytics CEO, Jean-Michel Paul, told Singapore Business Review.
Marriott added that the data being put into the data lake is "the freshest that you can get from the marketplace.”
“Once a deal is inked between the buyer and the seller, or the landlord and the tenant, that data is immediately put into the live database. So it's within 12 to 24 hours of a transaction being executed,” he explained.
Bottomline, Marriott said the suite “takes out a lot of the guesswork” that goes with developing residential projects.
“Developers use the static data that are available from the government currently to analyse the market and a great deal of gut feel being the experts in buying land and developing those properties, and ultimately selling it to the end user,” Marriott said.
“[The developer suite] gives specific data and specific answers on what is the best price to pay for a piece of land. What is the best design of that land once purchased and then finally, what is the best price to sell the developed units? So the real three questions that the developer suite answers,” he said.
Paul said the margins of developers are less than 10% and by providing them answers as to what can optimise their sales through the suite, this margin can go up by 10% to 20%.
The developer suite not only benefits developers, but also banks that are funding these developers, said Marriott.
Jeff Cronkshaw, CEO of LanciaConsult, said their clients find the solution “very interesting.” As a partner of REA, LanciaConsult provides the “go-to-market and engagement with sectors.”
“Our team is working with the clients and helping them understand how best to use these products from a consulting perspective. It’s very much a solution-based conversation with those developers and the finance sectors,” Cronkshaw said.
“We're always seeking to provide the best, most novice, most practical solution for our clients and [the REA Developer Suite] is exactly that. For us, it's great to be able to go into a client meeting or conversation with a partner and bring this partnership and this product to them,” he added.
Looking ahead, Paul said he hopes to make the developer suite available for commercial and mixed-use projects. Currently, the tool is only available for residential developers.
“We've already had requests from the commercial arena, private equity, and investment funds, who have started to ask us whether we can deliver the same sort of service in the industrial and logistics, commercial and retail market, " Marriott added.
Paul said they also plan to expand the service “geographically.”
“This was born in Singapore and tested in Singapore, but we have had demands from several Asian countries already, so this is going to enable exponential growth,” Paul said.