Concern continues to grow amongst developers, agents and property owners about the ever increasing cost of marketing properties for sale.  The online space is dominated by two main players who, between them, have been successful at developing business models to continually drive marketing costs to almost unsustainable levels.  Advertising a property online in Australia is now the most expensive undertaking in the world.  Two young Proptech innovators Jordan Catalano and Tom Hywood are out to change that and they join us to tell us how.
Transcript:
Kevin:  Concern continues to grow amongst developers, agents, and property owners about the ever-increasing cost of marketing properties for sale. The online space is dominated by two main players who, between them, have been very successful at developing business models to continually drive marketing costs to almost unsustainable levels.
Advertising a property online in Australia is now the most expensive undertaking anywhere in the world. New players are entering the field offering alternatives, but to date, none have successfully halted the march of RealEstate.com.au and Domain.com.au as they grab more market share between them and, of course, revenue.
Two young prop tech inventors, Jordan Catalano and Tom Hywood, are out to change all of that in at least one sector –they’re involved in more than just one, but we’ll talk about this one sector of the market particularly – with a site that delivers a cost-effective marketing tool for the house-and-land package market, which is a very strong and emerging market.
We’ll firstly say good morning to Jordan. Good morning, Jordan.
Jordan:  Good morning. How are you?
Kevin:  Well, thank you. And Tom, thank you very much for your time as well.
Tom:  Thanks, Kevin.
Kevin:  Okay. Gentlemen, our audience might not be necessarily familiar with your surnames, but you have very strong, heavy family connections. Both of you, I guess, would have grown up in the media, marketing, and those property genes must be surging through your veins.
Jordan:  Yes, that’s correct. My dad was property editor for a number of years, so Saturdays were usually spent going from auction to auction. Yes, you’re right in saying that.
Kevin:  And Tom, your dad, of course, is very heavily involved in the media as well.
Tom:  Yes, exactly. I probably haven’t got the same property legacy the Catalanos have, but dad has certainly been involved with Fairfax and the newspapers for a long time. I have that media background.
Kevin:  Has that helped shape your vision and your goals for the company? Which I do want to talk about, but I’m just interested to know about your background.
Tom:  Yes, definitely. I’ve spent five years or more working for Jordie’s dad, actually, at The Weekly Review and then Domain.com.au, working in the ad sales department under [2:29 inaudible]. And that certainly shaped my perspective of the ad sales industry, especially in the property space, and definitely helped us create a vision for what we want this site to be and how it needs to be, especially to form the right relationships and enter into what, as you said before, is quite a heavily controlled and saturated market by what has been the two main players up until we got involved.
Kevin:  The website we’re talking about is called HouseAndLandDevelopments.com.au.
Jordan, I’m wondering if you can tell me how it works.
Jordan:  It’s a consumer-facing website that connects property developers and project marketers with those searching for house-and-land developments. For developers and project marketers, we help create awareness and generate leads for them by building campaigns targeting a range of different buyers.
We’re a vertical that caters specifically to the off-the-plan market with apartment developments and house-and-land developments, so we produce content that is relevant to that segment of the market. And [3:45 inaudible], those categories almost remain an afterthought for the major portals because they’re more focused on their bread and butter – being established real estate – so that’s where we carve out our niche.
Kevin:  Who is the site aimed at, Tom? Is it aimed at agents and developers, or is it aimed at the consumer?
Tom:  The site really is aimed at the consumer, putting mostly local buyers in touch with the right house-and-land stock. But from a client perspective, we find ourselves dealing with mainly project marketers, house-and-land developers, and sometimes even home-builders, the likes of Simmons Homes, Metricon, Creation Homes, those guys who are building this house-and-land stock regularly across Victoria.
Kevin:  Working with all those developers, you must be seeing those challenges they’re facing at present. What are they? What sort of challenges are house-and-land package developers facing right now?
Tom:  I’d say probably finance and lending conditions are the biggest challenges facing the category at the moment. This is a problem across all housing categories. The cost of advertising is also extremely expensive. One main publisher has control and basically dictates the pricing. From the conversations we’ve had with clients, that’s the main pain point for them.
There are plenty of developers who are almost being priced out of the market just by advertising costs, like you said earlier. We have exorbitant costs for advertising, so that’s what we’re trying to bring down.
I don’t think some of the rates that are being charged are justifiable, and I think also, developers and project marketers need to future-proof and plan for a downturn in the market. It’s certainly on their mind. And it’s a reality for all agents and developers in this space, so having a portal that’s specifically for that portion of the market is a valuable resource for them.
Kevin:  I mentioned at the start of the interview about other sites and areas that you’re looking at. Can you tell me about the other sectors of the market that you’re looking to enter or maybe that you’ve already entered and are developing?
Tom:  Apartment developments was our first cab off the rank, and that was essentially what House and Land Developments is now, but it was purely in the off-the-plan space and purely apartment-driven. That was launched in 2014, and it’s now grown nationally over the last five years, with Victoria being our biggest market, closely followed by New South Wales.
And then off the success of apartment developments, we were then able to dip our fingers into other pies, one being the house-and-land space, but the second being a business that we’ve called Development ID, which is a network connections business towards third party agents and network agents, who commonly in Victoria are master agents or agents who have exclusive rights over projects are then using these network agents to help them sell more stock to local buyers or even offshore buyers.
And so that’s one of the points of the business, which also has the ability to be a stock allocation and stock management system for those developers and project marketers.
Kevin:  I mentioned at the outset that advertising a property in Australia is the most expensive in the world. Given that that’s the case – I don’t know whether you agree with that, but the stats certainly tell us that – what do you think is the future of online marketing? I know you guys are moving towards making it more affordable. Do you see a time when developers and property owners, through a site like yours, will connect directly with consumers?
Tom:  I think that’s certainly a potential. There’s still going to definitely be a role for agents in the picture, but people are pretty savvy online now. I imagine that once more and more information is available to them, they will be able to make that communication directly, but I don’t see them being completely cut out any time in the near future.
Kevin:  Gentlemen, thank you very much for joining us and for the work that you’re doing. The website again is HouseAndLandDevelopments.com.au, and we’ll make sure there’s a link to that site in the commentary that goes with this as well.
Jordan Catalano and Tom Hywood, thank you very much for your time.
Jordan:  Thank you, Kevin.
Tom:  Thanks, Kevin. Appreciate it.