“Proptech will soon not be a novel concept. Technology will be embedded in all aspects of real estate.”
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.
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.
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.
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.
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.
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.
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.
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.
While many interviewees are saying the next wave of technology investments in real estate could be in the construction sector through technologies like digital twins and the advancement of modular homes, another promising area is the monetization of data that lets organizations connect these systems and tools to create intangible assets.
Real estate companies are using data in a variety of ways. By scraping data sets from online sources, for example, companies can get a clearer picture of housing inventory in specific markets to make better decisions about future investment opportunities.
Even as many companies have data governance on their agendas, the real estate industry faces a number of challenges when it comes to making use of data. As one interviewee pointed out, much of the industry’s data is unstructured, which makes it difficult to link systems to third-party market sources.
Other challenges include privacy issues and an overall lack of trust in the data companies have. Despite these concerns, the industry needs to quickly expand its investments in this area while carefully balancing the privacy issues at play.
Even as many companies have data governance on their agendas, the real estate industry faces a number of challenges when it comes to making use of data.
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.