Powering digital transformation through proptech

Emerging Trends in Real Estate® 2020

“Proptech will soon not be a novel concept. Technology will be embedded in all aspects of real estate.”

Disruptive forces at play

Interviewees clearly recognize that they need to pick up the pace of digital transformation if they’re going to drive efficiencies and adopt the innovative and customer-driven models that are key to remaining relevant and continuing to grow. Construction technology is a rising issue, as seen in survey results that ranked it the top real estate disruptor for 2020.

And while survey respondents are focusing on specific emerging technologies, like artificial intelligence (AI) and the Internet of Things (IoT), they’re also paying more attention this year to the impact of more general trends, like the rise of more flexible business models and the sharing economy, on real estate. The growth of co-working and co-living concepts featuring modern, technology-enabled and blended spaces only adds to the pressure on real estate players to be more innovative and digitally focused.

Proptech practices and possibilities

The proptech conversation has picked up significantly among interviewees in the past two years, with several pointing to activities already in the works. Some large players are making significant investments in technology companies—in some cases through investment funds or accelerators—and the amount of investment activity is rising quickly.

With customers looking for digitally enabled and mobile-friendly spaces, interviewees are introducing (or at least exploring) new applications across the technology spectrum. Much of the activity cited by interviewees revolves around smart home and smart building applications aimed at energy efficiency, typically by embedding IoT-powered sensors into their systems.

Global proptech investment is projected to reach a record US$6.3 billion across 382 deals in 2019.

Source: CB Insights

We’re also seeing proptech developments in a number of areas, including:

Artificial intelligence/machine learning

AI and machine learning are emerging in a number of areas of real estate. For example, interviewees referred to emerging AI applications that can increase the power of smart building systems to boost energy efficiency, particularly when combined with sophisticated sensors.

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Drones

Some interviewees cited the use of drones in property management and inspections to perform infrared heat analysis on building roofs. One residential developer referred to using drones to wash windows on buildings. Other uses of drones include monitoring construction progress and conformity to plans, virtual site tours and security surveillance.

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Autonomous vehicles

One interviewee is looking at designing a residential development with no garages to account for a future that includes autonomous vehicles. Many real estate players are thinking about what shared models of vehicle ownership will mean for the industry, with several planning developments with the ability to convert parking lots to other uses in mind as new trends take shape.

 

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Robotics

As noted, construction technology is a big focus for the industry, rising to the top of our list of real estate disruptors for 2020 from fourth place in last year’s survey. Many companies are eager to explore automated solutions, like robots, to address labour shortages. While one interviewee said it would likely take at least five years for such solutions to make their mark, products are in the works, including devices worn by workers that help them lift heavy materials and be more productive and robots that can pick up and install drywall.

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3D modelling and printing

Three-dimensional modelling, used to plan, design and construct buildings, is a major area of interest and opportunity. One interviewee noted it allows engineers to catch construction issues faster and find solutions before building has even started. Interviewees also touted the benefits of technologies like 3D printing of some construction materials.

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Virtual reality (VR)

While much of the discussion revolves around using VR in marketing activities on the residential side to reduce reliance on presentation centres, some interviewees pointed to the benefits of integrating it into the planning and construction process. Improved visualization at the early stages can help enhance decision making and reveal potential blind spots during construction.

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How can you move your transformation forward?

Carefully examine the effects of disruption on your growth strategy, operations and workforce. From there, you can develop a plan to get ahead of disruptive change. This includes having staff resources with the necessary skills to navigate disruption and make the most of proptech.

Break down information silos to access data and analytics about your operations and customers across the business. Companies must also address data governance issues so they can be confident they’re using trustworthy and quality data that delivers the insights they need to drive growth and efficiency.

Explore how acquisitions and partnerships can help you access technologies that will fuel your growth.

Recognize that it takes more than proptech solutions to digitally transform your organization. Focus on consumer interactions that can help you better understand the technological trends shaping demand and think about the cultural changes necessary to properly adopt new technologies and create an environment of innovative thinkers.

Contact us

Frank Magliocco

Partner, Real Estate, Assurance, PwC Canada

Tel: +1 416 228 4228

Chris Potter

Partner Real Estate, Tax, PwC Canada

Tel: +1 416 869 2494

Miriam Gurza

MRICS Managing Director, Real Estate, Consulting, PwC Canada

Tel: +1 416 687 8143

Fred Cassano

Partner, Private Company Services, PwC Canada

Tel: +1 905 418 3469

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