Kylie Davis: (00:01)

Welcome to the PropTech Podcast. It's Kylie Davis here, and I'm delighted to be your host as we explore the brave new world where technology and real estate collide. I passionately believe we need to create and grow a sense of community between the innovators and real estate agents, and sharing our stories is a great way to do that especially today. The aim of each episode is to introduce listeners to a PropTech innovator who is pushing the boundaries of what's possible. And to explore the issues and challenges raised by the tech, and how they can create amazing property experiences.

Kylie Davis: (00:37)

And this week is one for the commercial agents out there, with an interview with Scott Willson from Forbury. Now Forbury is a commercial property valuation platform that allows commercial agents to confidently capture, calculate, and support the logic behind complicated commercial property valuations. Now, Scott's a mathematician with an honours degree in operations research, who has worked as an investment analyst and business consultant before joining Forbury as a co-founder about seven years ago.

Kylie Davis: (01:11)

Forbury is based in New Zealand but regards itself as an Australian PropTech because all of its clients are all Australian big six real estate agencies and property owners. So maybe that's like a reverse "Crowded House" Russell Crowe thing, I don't know. Property valuations are the life source of the commercial property industry, but valuation logic is a closely guarded secret, a bit of a black box with every real estate agent having their own secret source. Now, in this interview, Scott and I discuss the issues around the absence of a commonly understood valuation model, but how Forbury allows transparency for agencies without revealing any of their IP. Are you intrigued? So, Scott Willson, welcome to the PropTech Podcast.

Scott Willson: (01:55)

Thanks for having me, Kylie.

Kylie Davis: (01:56)

Fantastic to have you on the show. So, I can't wait to hear about Forbury, tell us what's the Forbury elevator pitch?

Scott Willson: (02:06)

Oh yeah, this has certainly been something I've continued to refine and work on over the years. So I'll see if I can give it in 30 seconds or less and you can tell me if the elevator's maybe reached the bottom or top.

Kylie Davis: (02:17)

Yeah, it depends what floor we are on, right?

Scott Willson: (02:21)

So Forbury for those of you that are listening that don't know, we're a commercial real estate valuation software or PropTech, as you might describe us. And we have been built and validated for the real estate big six over the last two decades. So the seven was the Jones Lang LaSalle, the Collie's of the world, is really where we cut our teeth in building solutions for them. And we've done that where we've seen a really sophisticated set of requirements for software like ours. So we've been able to work with people in this industry to understand that.

Scott Willson: (02:52)

Forbury software, it's used for acquisitions modelling, external valuation instructions, and asset management in institutional markets, including Australia, Singapore, China, UK, and others. Annually, our user base is increasing by around 60% year-on-year. We're processing around about a quarter of a million office industrial and retail valuations from around about 10,000 properties each year. And like everything, that number has grown considerably. We've actually just had a record month finishing in November.

Kylie Davis: (03:22)

Fantastic.

Scott Willson: (03:23)

That's about the... I'll leave it there.

Kylie Davis: (03:28)

Ding. We're now on level 117. Look, I was really excited to get you on the show, because like it's been such a strange year, and the commercial sector especially has been particularly affected. I understand how residential buildings are valued, but I'm really curious about how different it is in the commercial space. So, how've commercial buildings traditionally been valued? And what is it that Forbury kind of does that's different?

Scott Willson: (03:59)

Yeah, that's a good question. I will answer that question to those parts, the methodology that's used for commercial real estate it's quite a bit different than residential where you're relying on comparable transactions quite heavily for residential. And there's so much more volume to rely on. That's kind of the approach, whereas in commercial real estate, you're trying to understand the size of the financial asset that underpins the physical property asset. And the approach that's commonly employed across the world for this is discounted cash flows. So trying to establish and project what cash flows you can expect to derive from sitting tenants, replacement tenants. What the cost structure will be or capital profile you need to capture within that?

Scott Willson: (04:42)

So it's really about understanding the present value of future cash flows as the primary means and that's all painted as well by an income capitalization approach. So these methodologies are quite a bit different than in residential. How are commercial real estate's typically being valued in Australia, we've got a lot of knowledge as the big firms would build their own proprietary models and often it would be an Excel guru within the team, that has shown a propensity to be really good and really adept at using Microsoft Excel and has gone and built a solution.

Scott Willson: (05:19)

And what we see is a broad spectrum of quality of models that are in play across the market. And for a period of time they work and firms love them, because they can be crafted and customised and quite tightly controlled about how they would expect to use them. But inevitably, people move on from roles, they get taken over by someone who maybe isn't as experienced or more experienced, that tries to take in a different direction. So where Forbury provides a solution there is to come in and basically take over that in house Excel solution that's quite comfortable, that people are comfortable with. We continue to let our customers control their solution or their instal of it to a large extent, but we help them out with the training, we take over their development risk that goes with maintaining models.

Kylie Davis: (06:06)

Right, and I guess it makes sense that it started out in Excel, because I mean, net present value all of those kind of concepts that highly sort of accounting CFO-ish kind of parts of the business, I imagined in evaluating the assets. And so they're the best tool that an accounting team would typically use, right?

Scott Willson: (06:28)

Oh, absolutely. And it goes right back to you know, when you come to valuation, you're trying to separate the abstract from the physical, you're trying to understand, what is the financial asset here.

Kylie Davis: (06:37)

Mm-hmm (affirmative). Is it okay that everyone's got their own way of valuing things or is that similar to what goes on in banking with different banks have different risk profiles? I'm just trying to understand how do we get a universal view of what commercial property is like, in Australia or in any country, if everyone's valuing it according to different criteria?

Scott Willson: (07:00)

Yeah, that's a good question. And there are standards, the API in Australia, it ranks globally, they will all publish standards around how to best practise valuation methodologies and techniques, and value, and some cases go on an audit business processes around how these groups conduct valuations. I guess within all of that, the methodology that underpins each market, while it might be different in different parts of the world, there tends to be a lot of... because there is a lot of professionalisation and valuation in Australia, there's a lot of commonly understood principles and methodology. So even though the models that are used might be different, there's a lot of a shared understanding of you on how to complete a commercial real estate valuation. And what we do with a software solution like ours is we help really bring that to bear with a single framework to help our customers really take advantage of all the thought and thinking that's gone into the challenging aspects and the detail so they can consistently derive the same answer from the same inputs.

Kylie Davis: (08:04)

Yeah, and I guess, if you're going to be audited too, you don't want someone who's inherited three generations of Excel, who doesn't really know what's going on under the hood, right?

Scott Willson: (08:13)

It's far too risky, you know. And everyone has got a horror story [crosstalk 00:08:13] and I think that... Well, [crosstalk 00:08:13].

Kylie Davis: (08:13)

I accidentally broke the macro, oh, no.

Scott Willson: (08:25)

We provide our solution in Excel, so that is an interesting dynamic to see here and say that it is a problem because everyone that's listening that has a lot of experience using Excel has probably been... or seen evidence of that. While we provide our solution back into Excel, it's the same core Excel solution, the same UI, the same underpinned engine and logic base that we give to all of our customers that we've grown out over nearly two decades. And there's a whole lot of build here at [inaudible 00:08:55]. So it's not so much that you should be scared of Excel it's more if you're going and starting from scratch and building a typical broad solution that you need to do valuations, for example, you're going to inevitably produce errors. And that's start again approach, we'd build on expertise and all the validation that goes with that product.

Kylie Davis: (09:16)

Yeah. I mean, look Excel is only as good as the people who are driving it really at the end of the day or in the setting up of templates in it, so I get that. So how big of a problem is or issue is valuation in commercial property, like help us get a feel of the size of the sector?

Scott Willson: (09:38)

Yeah, okay. So internationally, I think the last status I saw was that commercial real estate is around about 31 trillion U.S. dollar market in terms of the stock of commercial real estate. And that's enormous any way you cut it, I think Australia and New Zealand combined is less than 3% of that. And the U.S. has an enormous share, even Asia Pacific is still quite small relative to where it is globally. And understanding the value of that stock, which is increasing as interest rates tightened across the world is an increasing challenge and particularly because there's different models, different methodologies apply around the world.

Scott Willson: (10:18)

The size of the problem relates in a few ways to where the problem is, I think that the institutionalisation of commercial real estate is a theme that we see a lot of this is increasingly professional management of periphery CBD assets or assets that would otherwise be family on that have been bought by a professional fund manager. So increasingly the asset pool that's coming out of professional management is increasing, and the groups that are looking to acquire and really broaden their base of assets under management need a solution that they can rely on, that's accurate, that's got integrity, and validated and that familiar with to get the speed and confidence benefits of underwriting at scale with confidence. So the problem there as I see it is as a combination of how you establish trust in that dynamic, how you deliver a reliable, quick, fast solution, and how you're consistently valuing those asset polls across the market.

Kylie Davis: (11:22)

Right. So one of the things that Forbury, obviously does is if I'm a commercial real estate agent, and I'm helping a client make a decision as to whether they want to buy a property, it's going to help me understand quickly whether that property fits within my portfolio of risk and whether it's going to get me the return that I want, right?

Scott Willson: (11:48)

Absolutely. You might even be the recipient of share, in which case, you're opening up a populated model, you've got the agent or whoever's prepared its assumptions around growth or market rent, you go and overlay your own views, and in 10 minutes, you kind of have almost a board, paper ready investment committee template, a view on what their asset is worth. And if that meets your internally defined investment hurdles, you know whether to proceed or not.

Kylie Davis: (12:16)

Awesome. Okay, cool. So there's two questions, I want to ask you, if every commercial building around the country was using something like Forbury, how would that change Or how would that influence commercial real estate in Australia?

Scott Willson: (12:39)

It would...

Kylie Davis: (12:39)

Would we notice it?

Scott Willson: (12:42)

Would you notice it? Would you notice it? I think that...

Kylie Davis: (12:46)

Must be a lot really happy real estate agents and landlords out there, going that was easy.

Scott Willson: (12:51)

Yeah. And there's a lot of time that's looked up, which is really around, I guess, addressing some underline and consistencies in the data because a lot of groups that are in the space, use different management systems, and some will even have basic Excel sheet processes for what they otherwise need a technical solution for, that producing the information that needs to be used and evaluation of various formats. And some of them have data quality or data accuracy issues within, you know, who is the tenant in the space or is the space vacant or at least... So there's a real, just not disparity, there's a real difference in the way the information is presented, and what mechanism it's presented in what system it's come out of, and also how up to date that information is.

Scott Willson: (13:43)

So when you start putting all that into consistent format. So if it was all valued on Forbury, for example, what that would mean is you've got a really consistent base of the information that's used to value these assets and that starts to open up real efficiency benefits for all the participants in that market. It means that the information... the preparation of valuation becomes much faster, much more reliable and consistent because it's all using the same approach. And it means that the participants in the market can actually continue attention to the value add aspects to that around, you know, how we redeveloping this asset, where are the opportunities to replace tenants at a higher rent, where are the opportunities to cut costs. Those sorts of efforts around hay can actually start to put management attention to improving the value become the focus rather than the preparation of the valuation itself.

Kylie Davis: (14:36)

Yeah, okay. So we would see commercial real estate teams and land on teams being able to focus on the asset and improving the asset rather than the maintenance of the mechanics that go into just owning stuff.

Scott Willson: (14:53)

I think so and it comes down to the mandate because if a group is acquisitive, they're not really looking to grow their assets under management, they're not looking to take advantage of that low interest rate trend and the institutionalisation of property, it might mean that they can grow their asset under management base faster, because they can underwrite at greater speed at greater confidence and move through, what is the amount of capital to deploy in that space much faster.

Kylie Davis: (15:20)

So Scott, if I had all of my property portfolio, and I was using Forbury, and I've just come through COVID, what sort of things would Forbury be helping me understand, right now about differences with vacancies all around that COVID period?

Scott Willson: (15:40)

Yep. So we have a portfolio consolidation tool that allows a person in that scenario to aggregate and consolidate all the valuation and cash flow information. So to see if you've got a valuation prepared on all of your assets at 31, December, for example, you can bring together in one report and see what the portfolio looks like from a cash flow and valuation perspective. We've also bought to market this year a comparison tool that allows our customers to get into the down and dirty of each property itself, and run scenarios and sensitivities at those property models to understand, okay, COVID impact is affecting retail tenants and the subway on the ground floor here might have to terminate it's lease in February, even though it's expected to run out to 2025. So you can start modelling up scenarios like that at speed and utilising the cloud based infrastructure that supports Forbury. Start to really understand the valuation and investment return impacts of those types of... since there isn't changes on each property model itself as well.

Kylie Davis: (16:43)

Okay, awesome. Cool. So how big are you guys now, how big is Forbury?

Scott Willson: (16:49)

Yes, so like I said, earlier, we were processing around about quarter of a million valuations per year, across office industrial retail, we've brought to market developed solution as well, which will allow our customers to really understand Greenfield development investments and in time the re-purposing of asset that might be getting expanded or has used type changed. So we now have three core products the science of market, commercial, retail and develop, we have I think, around about 100 customers, like I said, across Australia, New Zealand, Singapore, Japan, we are also growing into China in the UK at the moment, I got off a call just before this one with our head of the UK, and based in London, and we have a same size now above 20.

Scott Willson: (17:35)

So that's growing from I think was around about 12 or 13, when we finished last year, so it's a bigger team, we have scaled up and brought a lot of expertise into the business. In fact, that's one of the really big bones of COVID for us is the amount of, I guess, really talented and highly competent, professional expertise we've been able to bring into the business through recruitment activity over the course of 2020.

Kylie Davis: (18:03)

Awesome. So tell me a little bit about your background, how did you become a startup founder?

Scott Willson: (18:10)

Yeah, okay.

Kylie Davis: (18:11)

How did you get into this crazy PropTech universe?

Scott Willson: (18:16)

So my background is I studied something which you might describe as applied mathematics. I have previously worked as a consultant in the public sector space. I worked in an insurance strategy role in the UK for a while. And my role prior to Forbury was how I actually met Steve, who's the other founder of Forbury. And the two of us and a few other people ran the corporate finance team of a resources company that had coal investments, and a number of other venture capital type of investments in and around coal deposits in New Zealand. So that's how we met, we were in a corporate finance team together. And in 2013, Steve, who had been leading the opportunity up to that point, had identified the niche spot which Forbury now occupies, and he said to me, do you want to lead this business, do you want to get it started? We've got a couple of groups that are interested in our approach. But this really needs someone to put full-time effort and dedication towards it for a period of time to see if it can fly.

Scott Willson: (19:19)

So I started doing this in 2014. Now off the back of, I guess what were a couple of MVP products back then. We were very much in startup phase, although the dynamic that was a little bit different from us is that through Steve's decade of experience, building valuation models prior to the origination of Forbury, we had elements of a network to tap into, and also a bit of knowhow about the product, and how the product needed to work to solve these particular pain points were talking about. So that was a little bit different than what other start-ups get that typically looking to prove that on their way through. And that's what we did, we licenced the software.

Scott Willson: (19:58)

We worked with our initial customer sets to really understand how it needed to work for them. And really took the learnings from that to apply more broadly to the products, and as the customer base grew, and as we continued to learn more and more about all the different nuances and requirements of the solution like ours, we were able to wrap that into the core product, and distribute that back out to the group of customers. So they continue to benefit from the additional functionality we're building and issuing across our network. And so now it's at the point we're well through that market and product validation exercise, and now looking to expand into new markets.

Kylie Davis: (20:38)

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Kylie Davis: (21:17)

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Scott Willson: (21:52)

It's not. No.

Kylie Davis: (21:53)

No. As I said that I had this kind of, ah, I can't remember Steve's surname, if it's not Forbury.

Scott Willson: (22:02)

It's not Forbury, Steve Forbury. No, the name Forbury I think it comes from when his family settled in New Zealand from the UK, they built a homestead in the south and the homestead was called Forbury.

Kylie Davis: (22:16)

Awesome. Okay.

Scott Willson: (22:17)

Expanded his family and that's where it originally came from.

Kylie Davis: (22:21)

Nice. Very nice. So how hard is it been... because you guys are based in Christchurch, aren't you? But all of your clients are in Australia predominantly?

Scott Willson: (22:32)

Yeah.

Kylie Davis: (22:33)

And overseas.

Scott Willson: (22:38)

There are customers bases, that's a changing profile at the moment, but that's certainly where we got started, and where we grew. And that's based on their professionalisation of commercial real estate and the need for valuation products out of Sydney, Melbourne, Brisbane, as we've been able to get started. But we have our headquarters here in Christchurch, we've got a team based in Sydney, and more recently UK.

Kylie Davis: (22:56)

Okay. So how hard is that for PropTech startups to get cut through in Australia because we hear a lot of... because the commercial end of town is a very big beast and has a very slow sales cycle, what was the secret to your success?

Scott Willson: (23:17)

Oh. Yeah, I think it is tough. Standing back there is this enormous opportunity I think even within Australia, you're talking hundreds of billions of assets under management and commercial real estate. And it's an industry, by and large that struggles to innovate. And I think that's because the stakes are so high. Whether you're a start-up or you're working inside a corporate and looking to introduce change, the problem is that to try anything new when the stakes are so high means that you have to go out on such a limb, and it makes it so hard to suggest change. You take for example, development, when you're potentially considering a new development, you're looking at that opportunity, and much the same way you're competing. They're competing, but it would be looking at it.

Scott Willson: (24:16)

So everyone has the same cost position, the same QS figures, the same build systems, and the same contractors that they'll be using to build that development. Therefore, the land property values get inflated. So to really pay a premium and outbid your rivals means you have to try something a little bit different. And as a result, it just doesn't happen. So you end up in this position, where innovation and that sort of environment becomes quite challenging. I think the area we're sitting in is kind of in this investment space, like I said, we're estimating the financial asset, and the value of that financial asset. What has always been a focus of ours is really proving a win for our customers.

Scott Willson: (24:59)

We have to be confident when we're pitching our software that we believe ourselves, that when we go in and sell a solution, we are delivering something that's better than what they're currently doing. And if that's not been the case, if we haven't been able to prove that or we haven't been able to deliver that one for our customers, we do a lot of soul searching, we look really, really hard at what happened and why, and we keep coming back to it. So it's been something we've maintained a pretty dogmatic focus on in the last seven years to make sure the products that we deliver to the market, get trusted, get used and can actually provide a win for our customers. That's just basic business principles, but applied in a software sense to being able to make sure that we're confident in ourselves that we're delivering a solution that adds value.

Kylie Davis: (25:56)

Yeah, we see at the moment, don't we, that the opportunity that takes off our commercial real estate businesses are often around efficiency, and saving time, and therefore money. But the challenge they come up against is that the cost of the inefficiency is actually baked into the business model already. So people are kind of, oh, but I know how to do it, and I know how much time it's going to take me, and we know how much money we're going to make if we do it that way. So doing it your way might work, but there's often that kind of... but it might not or it might take me a bit of time to learn it. And therefore I'll lose time, and therefore I'll lose efficiency, while I'm in that handover period, which is what often freaks people out.

Scott Willson: (26:48)

Yeah. Oh, absolutely. And we talked a little bit about this a few weeks ago, Kylie.

Kylie Davis: (26:52)

Yeah, we did.

Scott Willson: (26:57)

Thinking back to that, as well as until someone tries it, and gets a success story out of it, and there's so many aspects of PropTech. But if a new methodology is better than the way things have been done before, it's going to command interest from everyone that has that same problem. So it doesn't take much, and I think it comes back to the reasons groups will look to undertake change in the first place, there must be a real problem there. And it might not even be the cost is considered too high, it might just be that the staff involved in dealing with it, and efficiency are just hating life. They are unhappy and that's because they have to do this rework every day. So you're almost thinking there's a whole lot of aspects about why you might try something different, including just the mental wellbeing of your team and people will get them behind that.

Scott Willson: (27:48)

So if you actually go down that track, and start down that track, and get that win and show the team that actually there is a better way, that starts to attract really high quality people to your team, because people want to work with the best tools, they want to be seen as market leading in their own right. So I think whether or not efficiency is baked in and whether there's budget to try something different, I think that's kind of an old way of looking at it. I think increasingly, there is a broader set of objectives that come in. So looking to try PropTech, whether it's through a company, like Forbury or whether it's internally through a change programme that might be laid out of an internal development effort. Increasingly, there's just broader objectives at play, that are governing that.

Kylie Davis: (28:36)

Yeah. Okay. So what's the competitive landscape, who else is out there doing stuff similar to Forbury?

Scott Willson: (28:45)

Yep. It's bit of a niche that we occupy, it's a valuation software for commercial real estate. There's a global incumbent who has a strong position in the U.S. called Agus, who we compete with. But I think four out of five times when we're pitching, it's not coming up it is groups that are using their own spreadsheets. And they have got to the point where now some of the like we were just talking about there might be inefficiency or maybe there's a fear that a deal will fall over because they've got the wrong answer, and don't have confidence in their numbers, or James left two months ago, and he's spent the last three years building this model, and now I haven't gotten someone to take it over with.

Kylie Davis: (29:28)

Now there's this thing that says some error, and I don't know how to fix it.

Scott Willson: (29:32)

Yeah, I opened it up and there are errors everywhere. So we're increasingly, I'd say four out of five times when we pitch Forbury, it's against that backdrop, which is there is an established way of doing it. It's been internally built and while it's worked for a period of time, we can see the shortcomings of it. And we've heard about Forbury in the market. So that's what we kind of see a lot of, so that competitive landscape is a little bit different. There's actually while there are actually competing solutions, they're quite different from our approach and our solution. And what we often come up against is groups that just haven't thought about a software solution in place of how they're currently doing things.

Kylie Davis: (30:12)

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Kylie Davis: (31:03)

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Kylie Davis: (31:22)

So what do you see the next five years holds for the future of real estate, especially in the area that you're playing in?

Scott Willson: (31:34)

Yeah, I mean, there are trends that are well advanced pre-COVID, the institutionalisation of commercial real estate, if anything has been accelerated through an even low interest rate environment. You know that's a generational shift as Western populations around the world continue to grey, there's this almost ad competing of mum and dad investors, and everyone trying to search for yield. And I think that's starting to come through into commercial real estate again at speed and at pace at the moment. So this kind of backdrop of institutionalisation of real estate, professional funds management of what were previously family owned assets, low interest rate environment, and highly competitive, and sought after assets that offer inflation indexed adjustment for people's incomes as they retire and get older, and announced base.

Scott Willson: (32:27)

I think that there's this enthusiasm around data and how it's used. And I think this is something that gets talked about a lot. But I think a lot of groups don't know how to take it forward. I think part of the reason there is that there's a lot of sensitivity about the information that would go into a Forbury model, for example, or that would get used as part of an acquisitions analysis, or as part of an exercise to understand what this type of lease arrangement would look for this tenant. And that's because the information is confidential to a tenant to the owner, and potentially to a bank as well or another intermediary. But it's a very sector specific challenge, which is how do you start to provide a broader and more open dialogue about that data and start thinking about the greater good of where you can start to aggregate on mass that data and provide a shared benefit for it.

Scott Willson: (33:22)

It's not the Forbury model, we are providing a software solution that helps people do what they do more effectively and faster. So we have no ambitions in this space. But we do see a lot of it, we do see a lot of enthusiasm around the opportunity that data can unlock and equally a lot of concern and fear about how data gets used. I think there's a within the next five years, someone's going to provide some solutions around this where someone who's not dealing with a segment of the market is able to open that up and provide a tool that allows the market participants to benefit from the greater good of an open, more shared dialogue about the data and how it's used.

Kylie Davis: (34:03)

So you're saying bringing the high end data together to see insights across multiple data grids, without showing any of the personal or proprietary information that can't be shared?

Scott Willson: (34:20)

Yeah, that's right. And this happens a lot in residential.

Kylie Davis: (34:23)

Yeah, well, yeah.

Scott Willson: (34:24)

[crosstalk 00:34:24] groups that were-

Kylie Davis: (34:25)

We're all over it.

Scott Willson: (34:26)

Exactly, right. I think when you sort of give that up to the commercial space, it hasn't really translated yet. There are groups trying, we've been learning more about this space just to try and understand who has what data and how they're looking to either integrate that data into a Forbury solution or if it's their data they're putting into a Forbury solution, how they can leverage that out of a Forbury solution to some other platform we're talking to groups all the time about these opportunities. But to me, that doesn't... and certainly in Australia, at least, it doesn't seem to me that there's someone who's well positioned at this point, to take forward a conversation about how to aggregate, anonymize in the sheer value on that aggregated data pool-

Kylie Davis: (35:10)

Well, there's always been a lot of reluctance in that space at the big end of town, isn't it? Because it's always been seen as the secret source that the different brands brought to their clients was their view of the commercial universe, but what we've seen in the residential space is that when you aggregate it, and anonymize it, and then share it out to everybody, everybody's standards rise, and a common language starts to occur around it. And then, as a real estate brand, you start to focus on service and other elements of your business that make you unique and rather than spending a whole lot of time crunching data.

Scott Willson: (36:00)

Yeah, and there is, I guess, the exponential rise in technology, and particularly around things like machine learning, where for an analyst who has access to broad data sets, they have new tool sets available to make use of it. And this is only going in one direction here. So I think groups that do have scale access tool and those real estate big six are well placed to do this, but think about a scenario where they're combined, they're able to do so much more would be able to really take forward.

Kylie Davis: (36:34)

So what would the impact of that be on the commercial real estate landscape of Australia, if suddenly we had a universal consistent view across all of our commercial assets, what would that empower us to do as a country or community?

Scott Willson: (36:57)

Yeah, I think it starts to provide a lot more symmetry on what data is available, I think is probably the key one. You look at the U.S. where there are groups like Costa, and Comstor and groups like that, that have been able to create business models where they've been able to offer rewards for receiving data from agents from leasing agents, or values or anything like that. Where they've been able to build out these very, very sophisticated pitches of New York City, for example, that show who the tenants are, and what space and what rents they're paying for example. The analytics, all the opportunities that can come from that about what you can start doing with that data opens up so many more doors.

Scott Willson: (37:40)

And I think that there's a real opportunity in the next five years for ad group to if they're able to I guess solve this issue and provide comfort to groups around what they're doing with it, to start to really leverage the technology that's becoming more available to analysts in the space, I don't know the answer. Actually I know the answer, [crosstalk 00:38:03] that's not really honest but I think there's a big opportunity there.

Kylie Davis: (38:06)

I think we're completely theorising here but that's okay because I'm really curious to know about whether that then changes, what our cities look like, and how we work, and live, and playing in them, like what would the impact of that be? What would the impact of it be on our buildings, would it speed up smarter buildings, would it give us greater incentives to be updating... Transparency makes so many interesting things happen it would just be fascinating to kind of think that through, maybe we'll do a PropTech panel on it for the PropTech Association. Shoot over. Okay, cool. Put that down for 2021.

Scott Willson: (38:47)

What it could look like as well.

Kylie Davis: (38:51)

Cool. So what does the future hold Forbury, Scott?

Scott Willson: (38:58)

The future Forbury, so through, I guess, really the support of our customers and continuing to build our solutions that they help us validate we've established a very strong position in Australia, in this niche that we're in, which is providing commercial real estate software that's primarily used for valuations, but also for underwriting. Like I said, at the start, Australia represents less than 3% of global commercial real estate. So we've got this opportunity to leverage our position in Australia into international markets. We're pushing pretty hard at the moment with the UK and we'd love to hear from anyone who's listening to this. If you can connect us with anyone in the UK, who can help us take for the conversation, I'd love to hear from you.

Scott Willson: (39:38)

Equally, we are looking at other markets, including China that are really interesting for different reasons. Where, I guess the professionalisation of real estate hasn't quite matured yet, and there's an opportunity for groups that have a solution to establish a position really early on. And we're always mindful of the opportunity in the U.S. as well. So we've got this really strong position and a lot of confidence, a fantastic team to take forward, the Forbury approach, the products within it. And increasing our strategy is focused around how we leverage them to new markets. With that said, we've also got a really strong focus on our existing customers and what their challenges are. In that valuation space it's increasingly how do I aggregate my data from Forbury? They're cleaning up their data as they're put it into Forbury model.

Scott Willson: (40:23)

So how can we start to leverage and use that information if we're putting it into this consistent format? Equally, how do we use our network of information around lease evidence, and sell evidence, and start mapping it through to Forbury, so that we can start to put a bit more speed and rigour into some of the assumptions we're adopting in evaluation. So we're also mindful of the opportunities here in Australia with our existing client base, based on the strong relationships we have. And the high degree of knowledge we have about some of the pain points that those groups have in their business and how we might be well placed to help them with the solution.

Kylie Davis: (40:59)

Mm-hmm (affirmative). Okay. Well, look, Scott, it sounds awesome. Thank you so much for your time today and for explaining about the commercial real estate valuation world I feel like I know a lot more than I did when I started.

Scott Willson: (41:14)

Yeah, and it is an interesting space, it's a niche, but it's a high value area in Australia and globally. So I'm glad to talk to you about it and hopefully, you learned something.

Kylie Davis: (41:25)

We've got 97% runway Greenfield out there to grow the business. Awesome. All right. Thanks so much for being on the show.

Scott Willson: (41:37)

Thanks, Kylie.

Kylie Davis: (41:39)

So that was Scott Willson from Forbury, which is making it easier and faster for commercial agents to create complex commercial property valuations, and financial forecasts, and to understand better the logic that goes on behind them. Now, while I realised it's a bit geeky, I've always really been curious about why commercial property is so different to residential property valuations, where there's a more centralised and shared and broadly understood backdrop as to what makes up a property value. But I also understand that each bank has their own risk profile in residential. And so therefore, the valuation of a residential property from one to another, is often different based on those risk profiles.

Kylie Davis: (42:20)

So I suppose in a way different commercial agencies providing different valuations is not so unique. But greater transparency around commercial building valuations would surely be hugely beneficial to the commercial property industry. The easier it becomes for people to understand basic valuations, the greater the pool of people and businesses interested in investing in the sector. And what we've seen in residential is that it also sparks a whole range of additional innovation and technology. Now, I know the counter argument to that is that commercial valuations are very difficult because it's hard to compare apples with apples, but transparencies is always good. Now, look this is just my opinion Forbury's technology is very much dedicated to working with specific agencies, and supporting the current secret sauce model.

Kylie Davis: (43:13)

So if you're an agency that needs help with your valuation modelling, they're a great asset to have on your team. Now, if you've enjoyed this episode of the PropTech podcast, I would love you to tell your friends or drop me a line either via email, LinkedIn or Facebook. You can follow the podcast on Spotify, Google podcast, Anchor and Apple iTunes. I would like to thank my audio support Charlie Hollins and the fabulous Jill Escudero and our sponsors Direct Connect making moving easy, Smidge Wines official wines of the PropTech community and HomePrezzo now part of ActivePipe and making marketing automation easier than ever before.

Kylie Davis: (43:52)

Now the PropTech podcast will be taking a short break over Christmas. I think everyone needs a holiday this year and I know I am worn out, but I'll post up some more of the PropTech panels that we did with the PropTech association. So thank you for your support this year, have a wonderful safe Christmas, and I'll see you in the new year. Until then, keep on PropTeching.