How NSW Property Leaders Navigate 2023 with Vision and Resilience

Chapter 1

Key Themes

The Discussion at a Glance:

• Participants highlighted the significant challenges posed by cost escalation, cash flow concerns, and fluctuating interest rates. Supply chain disruptions of the last few years have exacerbated these issues.

• Tight labour markets, with unemployment rates at historical lows, make it challenging to hire and retain skilled workers, further impacting project timelines and costs.

• Confidence levels varied by region, with NSW appearing to have slightly more confidence than other states, likely due to strong infrastructure investments and a robust economy.

• Technology adoption is on the rise, with construction management platforms and payment technologies leading the way.

• Businesses in NSW are increasingly investing in technology that improves sustainability, productivity, and efficiency.

• Data analytics is playing a crucial role in decision-making, but there’s a need to link advanced technologies to clear strategies and benchmarks for measuring returns on investment.

• Participants emphasised the need for industry transformation and the adoption of new ideas. However, implementing these changes remains a challenge.

• Engagement with stakeholders responsible for project delivery is essential to drive industry-wide transformation.

• Infrastructure costs and compliance requirements were cited as challenges, especially in Western Sydney, where rising costs are affecting development opportunities.

• A lengthy government approvals process, particularly in NSW compared to other states, is hindering progress and transformation, yet presents massive opportunities.

Chapter 2

Harnessing the Power of Data

Across the property and construction landscape, driving technology innovation and building a global community of ground breakers is essential, according to The Property Council of Australia’s NSW executive director, Katie Stevenson.

“Controlling costs, mitigating risks and identifying opportunities for efficiencies in construction has never been more critical than it is today given the economic challenges that we’re all facing in our businesses,” Stevenson told attendees.

That’s why the conversation around the table underscored the critical importance of embracing and seamlessly incorporating technology, not only for survival but for thriving in an industry on the brink of substantial change.

If anything, the construction and property sector in Australia finds itself at a pivotal crossroads where technology is no longer a choice, but a vital requirement to propel sustainable growth and pave the way for a brighter future.

And data holds the key. Participants agreed data plays a crucial role in informing strategic decisions, optimising resource allocation, and enhancing project efficiency, leading to timely completion, cost-effectiveness, and improved quality of construction projects.

Certainly, data analytics is a significant player in decision-making, but it's important to align advanced technologies with well-defined strategies and performance metrics in order to gauge return on investment effectively, attendees advised.

There’s work to be done on the data strategy front, according to Procore’s APAC industry alliances leader, Jeremie Henry, who cited statistics from Procore’s benchmark report ‘How We Build Now 2023.’

The report reveals only 11% of companies in NSW have a formal data strategy in place. This low percentage raises questions about the industry's readiness to harness the power of data. The roundtable discussion underscored the importance of data-driven decision-making and the potential for data to transform processes and outcomes.

In fact, the adoption of AI and data analytics has emerged as a crucial factor for the industry's future success. Participants highlighted the potential benefits of technology in saving time, improving productivity, and facilitating remote site inspections. The crucial shift toward a data-driven approach cannot be overstated, given its potential transformative influence on operational efficiency and project results.

Chapter 3

Embracing Technology and Innovation

Technology adoption is on the rise, with construction management platforms and payment technologies leading the way.

“Look beneath the headlines - cost escalations, cash flow worries, high interest rates and supply chain issues - and there’s a much more optimistic story to share,” Henry said.

The good news is the industry is looking to embrace construction intelligence and management platforms, along with payment technologies, in the next 12 months in a bid to improve efficiency and generate cost savings. It entails harnessing the sophisticated capabilities and intelligence of construction management platforms to enhance daily productivity with the team and optimise internal and external operations.

The Procore report said businesses in NSW are increasingly investing in technology that improves sustainability, productivity, and efficiency.

National statistics show 47% expect an increase in spend on construction technologies; 51% believe construction management platforms will drive change in 2023; and 51% are planning to implement a data strategy in the next 12 months - driven by owners and developers.

“NSW businesses are slightly more confident than other states,” Henry said, explaining this can largely be attributed to their financial stability and a well-managed supply chain. Concurrently, investments in infrastructure and a robust economy have significantly bolstered businesses operating in risk-prone sectors.

Duncan Challen, Celstino general manager of business development, said the construction industry needs to invest in technology, data strategies, and education to remain competitive and sustainable in the modern era.

“For our organisation, the focal point is transformation, particularly considering the abundant opportunities presented by the current era of extensive technological advancements. To me, it's all about embracing transformation and exploring the boundless possibilities.”

Chapter 4

Cultivating a Cultural Transformation

But resistance to technology adoption tends to be cultural - it's often easy to criticise the technology, rather than changing the way we work and live.

These sentiments were not only expressed at the roundtable, but also echoed by the insights gleaned from the comprehensive Procore report.

Certainly, the intersection of established practices and the integration of innovative technology poses a significant challenge.

Overcoming this resistance necessitates not only adopting new tools, but also fostering a cultural shift towards a tech-enabled, forward-thinking construction landscape.

This transformation is vital for unlocking unparalleled potential, enhancing productivity, and ensuring sustainable growth, said John Carter, Aspen Group’s joint CEO and director.

Navigating cultural transformation can be a hurdle, especially for Aspen’s relatively compact business facing considerable complexity.

“We’re a relatively small business, but we have reasonable complexity because we essentially buy properties that need fixing, so we can see lots of gaps in technology. And we are a small team and a small head office. Therefore, technology needs to be simple to run, because we don't have our own IT department. We’re working towards advancing our technological infrastructure as part of an ongoing improvement journey,” Carter said.

Certainly, embracing the cultural shift that’s reshaping the industry is so important, and so is aligning it with the new ways of working. As technology evolves and younger generations enter the workforce, there's a need for a cultural shift within organisations to embrace new ways of working and ensure that technology complements and enhances existing practices.

For Landcom, the true potential of technology is in revolutionising how people work, enhancing their efficiency and productivity, according to its Director of health, safety and environment, Saumya Menon. This aligns with the ongoing cultural transformation within the property and construction industry.

Chapter 5

Challenges in Implementing Industry Transformation

Several participants emphasised the need for industry transformation and the adoption of new ideas. However, implementing these changes remains a challenge.

Engagement with stakeholders responsible for project delivery is essential to drive industry-wide transformation. Infrastructure costs and compliance costs required to initiate a project were cited as challenges, especially in Western Sydney, where rising costs are affecting development opportunities, according to Celestino’s Challen.

In Western Sydney, although there's abundant potential and promise, realising these opportunities is financially demanding. Utilising analytics and data to showcase to the government that there are cost-effective alternatives for policy implementation is crucial. It might also necessitate a re-evaluation of their planning controls, Challen said.

“From our standpoint, it's about harnessing smart technologies that can generate valuable data to enhance productivity and experiences,” Challen said, explaining it’s an ongoing journey of implementation.

“Moving forward, it's about more than just utilising data and employing sophisticated tools and infrastructure. The real essence lies in deriving meaningful insights through effective data utilisation.”

Yet another substantial impediment to transformative change - and a hindrance to the pace of innovation - revolves around the persistent skills shortage challenge, attendees revealed.

One notable strategy involves fostering a balance between the younger generation's inherent tech-savviness and the established practices of the industry.

This endeavour is essential for not only attracting fresh talent, but for ensuring a seamless integration of cutting-edge technologies and digital fluency into the fabric of the construction landscape. Addressing the skills shortage in this proactive and multifaceted manner is key to propelling innovation and fostering a dynamic, future-ready construction sector.

“Being future-ready and getting better at understanding risk and calculating risk,” is important, according to Adrian McLay, Director of Turner & Townsend, who said part of the company’s global purpose is to help transform the industry towards innovation.

“The biggest challenge for us is implementing that in the industry: Bringing new ideas, and mobilising and engaging with those who are responsible for the delivery of these major projects to adopt those new ideas and make change.”

McLay emphasised that the real catalyst for change lies in leveraging data rather than relying solely on elaborate tools and flashy innovations. He asked, 'How can we maximise efficiency by harnessing the potential of data?'

Chapter 6

Optimism Amid Challenges

Attendees remained optimistic about the property industry's future, seeing potential in expanding operations, acquiring distressed assets, and tackling the housing crisis.

The discussion underscored the necessity for the construction industry to invest in technology, data strategies, and education to stay competitive and sustainable in today's landscape. Adaptability, collaboration, and innovation will be key as the industry navigates rapid changes, shaping the future of property and real estate.

Despite challenges, the construction sector demonstrates resilience and ingenuity, poised to surmount obstacles through collaboration and proactive approaches.

Henry's perspective on crisis-driven innovation was echoed, emphasising the importance of seizing opportunities during challenging times. “Make the most of a crisis,” he said.

David Hopper, Joint Managing Director of Kaipara Property Group, highlighted the market's current challenges as a chance for a significant reset. "The current market is challenging, but we see this as an opportunity. There's a significant reset happening, especially in capital markets and property valuations. I believe that for those astute groups able to identify value and secure advantageous deals, there's a strong opportunity to position themselves well for the upcoming wave."

These insights emphasise the critical role of storytelling within the property and construction sector, offering a chance to narrate the industry's story and showcase its potential.

“There’s a great opportunity to tell the story of the property industry,” said Aspen’s Carter.

Learn how developers are backing themselves with Procore.