How can you build on digital adoption during COVID-19?
“Technology has accelerated by a decade.”
After years of talking about how Canada’s real estate industry was on the cusp of adopting property technology (proptech), digitization has truly accelerated during the COVID-19 pandemic. But the conversation has shifted.
While part of what had been fuelling investments and new funds to accelerate proptech was a fear of missing out on this emerging trend, the tone of the discussion in 2020 reflects a more cautious approach: according to CB Insights, funding is projected to fall slightly to US$8.4 billion in 2020 after years of rapid growth. With companies paying close attention to costs, the focus now is on necessity rather than finding the next unicorn.
From videoconferencing and collaboration tools to cloud technologies, real estate companies have embraced solutions that have helped them continue operations remotely during the pandemic. Solutions to ensure business continuity have also been critical on the landlord and tenant engagement side, with proptech tools that support safe reopenings of offices and retail properties seeing high demand in 2020 and likely into 2021.
While virtual tours for selling and showing properties have been around for some time, they’ve evolved quickly during the pandemic to become more interactive and include different formats, like voice-activated devices that guide prospective buyers through a home.
In the office and retail sectors, tenant engagement apps have played a growing role in helping employees and customers navigate the return to physical spaces, particularly when it comes to giving them useful health and safety information.
At a time of increased pressure on the business, real estate companies are looking for solutions to manage their costs, particularly those that don’t get passed onto tenants. From tools to monitor buildings remotely to project management software that streamlines operations on a single platform, interviewees told us how the pandemic has sped up their search for efficiencies through proptech.
Once again, construction technology was at the top of the list of real estate disruptors in our survey this year. Many interviewees believe modular construction solutions that address labour shortages have reached the point where they make more sense from a cost perspective and are seeing greater adoption as a result. Construction companies are also showing more interest in digital twin technologies.
Not all of the tools embraced in recent months would fall into the category of emerging technologies typically associated with proptech, but the shift to more practical and immediate solutions in no way detracts from the benefits of digitization. Now that the industry as a whole has seen the tangible benefits, there’s a clear opportunity to embrace the next wave of digitization. But making the most of this opportunity will require a holistic approach that looks beyond the technology itself to adopt other elements of digital transformation. What are some of those other elements?
With digitization giving real estate companies access to more data than ever, they have a powerful new tool to help them make important business decisions.
Take site selection or asset/portfolio optimization. New tools can combine a company’s own data with third-party sources to gain insights into new strategies for existing properties or portfolios or identify additional markets or locations for investment opportunities. Data analytics and predictive modelling can help with the determination of optimal asset allocation for mixed-use developments at a high level, as well as provide more detailed insights into the composition of unit mixes for a property.
Interviewees clearly see the benefits of investing in data analytics, but to truly accelerate their capabilities, real estate companies will need to focus on the fundamentals first. In a world where data is multiplying at an accelerating rate, building trust with customers, partners, regulators and the public is critical. This will require real estate companies to focus on the secure and ethical use of data by getting it more organized and putting strong governance systems in place to deal with rising privacy concerns.
Effectively managing cybersecurity risk will also be key to building trust in the more digital and data-focused world real estate companies are moving towards. Proptech tools, smart homes and buildings and other technology investments have significant benefits, but they’re also creating new vulnerabilities. Ransomware continues to be the biggest problem for most organizations as threat actors attempt to take control of critical systems. And with so many companies moving to remote working, the risks have only increased.
To respond to cybersecurity threats, real estate companies should look at the following measures:
Besides these measures, it’s important for organizations to focus on ensuring sufficient resources to address cybersecurity, especially when cybersecurity talent continues to be scarce. And because cybersecurity is everyone’s responsibility, it’s also important to take an integrated approach by uniting your lines of defence. This will help you advance innovation with speed and confidence.
A holistic approach to digitization will also require Canadian real estate companies to focus on ensuring they have the right people and processes in place to make the most of their technology investments. We’ve seen some companies introduce promising technologies like automation and project management tools only to find their employees struggling to use them effectively.
This will require real estate companies to invest in their employees’ skills. But as our 2020 CEO Survey indicated, real estate companies have some way to go on upskilling, particularly when it comes to figuring out which skills they need to develop: global real estate CEOs participating in our survey cited this as their top challenge around upskilling.
But upskilling isn’t just about training; it’s also about adapting to the future of work. After their sudden shift to remote working, real estate companies will need to help employees succeed in a virtual workplace. As PwC’s recent Canadian workforce of the future survey showed, communication is a significant employee concern: 45% listed connectivity with their team as a top challenge in a remote working environment. Addressing this will require further investment in virtual collaboration tools and in the skills of your leaders, who will increasingly be called on to not only model good virtual habits but also to improve communication and feedback and develop new ways of thinking, working and problem solving.