DomaCom set for property platform launch


By Krystine Lumanta

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DomaCom is close to launching its property platform, with the firm expected to clear the final regulatory approval hurdle in the next month.

DomaCom chief executive Arthur Naoumidis said the company was on the “home straight” as it expected to receive the final legal paperwork in the next two to four weeks.

“The technology is well underway, all of our legal agreements in terms of our responsible entity being Perpetual and also the partnership with ANZ are complete, and the feedback from advisers has been fantastic,” Naoumidis told financialobserver.

“We should be ready for launch around September, but given the election, we’ll probably launch in October.”

The property platform will offer investors a fractional property investing solution.

DomaCom was currently speaking to several players in the market to partner with, Naoumidis said.

“We are in the throes of getting our first major real estate partner and there are a few wrap platforms that are now speaking with us, but as soon as it’s consummated we will announce that,” he said.

“The wrap partners really depend on which one we end up going with, if any at all, because we’re a managed fund.

“Our launch market is really the independent financial adviser (IFA) and accounting markets, but we’ve had some interest from the wraps too, so if we can get something done before we launch we will, but I think it will probably be after we launch.”

The property platform is currently completing the commercialisation funding round with sophisticated investors.

“That’s in progress and we’re halfway there, but we have enough [funding] to launch and operate so maybe in a year’s time we’ll raise some more money,” Naoumidis said.

“We’re just now waiting on the regulatory approval, which we’re expecting very soon.”

Interest from IFAs was strong as there was currently no way of accessing direct property for that asset allocation need, he said.

“It’s an exciting time and for the first time in their lives, financial planners will be able to advise on direct property asset allocation and charge for it, so that increases their fee basket by 20 per cent,” he said.

“We’re very lucky because our business model really leverages off the Future of Financial Advice because one of the outcomes for all financial planners becoming fee based is that almost invariably they’ll have asset allocation as part of their business model.

“One of the asset classes they need to provide a solution to for their clients is direct property.”

In addition, DomaCom had received a good response from the accounting community due to the limited recourse borrowing arrangements, he said.

“What’s happening effectively is you’re getting a $300,000 super fund leveraging up to buy a $600,000 house, so what’s your exposure to property? Two hundred per cent,” he said.

“If anything goes wrong, there goes your retirement money.

“So a lot of accountants are rightly concerned about that and like what we’re doing because it replaces property syndication with a regulated solution, which is much more scalable.”

He said while the property platform was targeting the SMSF space, he expected different investor types to also use the solution.

In April, DomaCom announced it had signed an implementation agreement with ANZ for its cash and transactional banking services on the platform.

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