11 May 2017
The industry has so far been underserved by technology, but this is beginning to change.
This was the theme of last week’s Future: PropTech conference; rather than responding to evolutionary change as and when the adoption of technology is no longer an option, we are beginning to see technology being used to form revolutionary ideas that are benefitting the market and adding real value.
Below are three areas of the market that were identified by industry leaders at the conference as ripe for transformation:
Three areas of transformation:
1. How the industry is run
Collaboration is key. The strategic value of sharing data was something that was mentioned on numerous occasions and will fundamentally change the way the industry is run. Ryan Masiello from VTS argued that not only does sharing data allow the industry to move faster and add customer value, but it also allows us to be more ambitious; rather than firms reinventing the wheel to create solutions to problems that already exist, sharing data means that the industry can focus on more complex customer problems and innovative ideas. As such, it is likely that we will see more mergers and acquisitions in future like that of VTS & Hightower.
We’ll also see more and more companies employing data scientists; CBRE is the first example of a major broker agency employing a Chief Technology Officer (CTO) for example. This is, at least in part, due to the fact that investment in technology is on the rise; according to industry leaders at the conference, well-funded, well-capitalised start-ups with great ideas will become the new normal.
2. Service and the client experience
It was suggested that in the past, its been difficult for tenants to find and operate spaces. Long leases and the fact that rent as a mechanism only tends to go up, has meant that service hasn’t necessarily been at the top of the priority list. This is however beginning to change with the emergence of companies like WeWork and Appear Here encompassing the idea of ‘space as a service’.
One argument goes that people nowadays tend to go to the office not because they have to, but for face-to-face meetings and human interaction. If this is true, then it follows that the level of service they experience when at the office needs to be good both for satisfaction levels and general wellbeing.
The difficulty however, is that the definition of service is continually changing and means different things to different people. An analogy was made with gym goers; for some, a 24/7 gym where machines can be used at any time of the day is the kind of service that they expect and would like to see. For others, they want to be able to talk to a receptionist as they go in, have state of the art equipment and additional extras like that of towels and a coffee shop on site.
In other words, there is no one model that fits all; the key is for companies to be agile. Enrico Sanna from Fora argued that similar to the way there is a segmented market for gym users, a service-led property market will segment itself based on the differing needs of its clients.
3. How buildings are built and operated
The property sector was cited as the third biggest contributor to greenhouse gases. New methods of construction will change this.
“We are already seeing 3D printing reducing construction time from three to five years to three to five months, with a much reduced footprint on the environment.”
Modularisation is also becoming more prevalent; industry leaders at the conference emphasised the need to change perceptions around this. Modularisation is not new, it has existed in other industries (take clothing for example) for years. The message that modularisation is not the same as prefabricated homes needs to be pushed.
BIM was also mentioned as making a real difference within the industry; however, it was clear that there was a belief in the room that adoption of BIM Level 3 is a long way off. It was suggested that this in part, is because currently BIM is only being used on projects of a certain value; lower down the supply chain there remains a gap in understanding the benefits of BIM and therefore a gap in adoption.
The need for data standards was something that came up again and again along with the need to be able to share data between stakeholders so that the industry is able to reap the real rewards of data and technology.
What does this mean for professionals?
A question that came up time and time again is what this means for the role of a professional; will everyone be out of a job in future? The answer to this was a resounding ‘no’. What will change however, is the nature of a professionals’ job role.
The role of an agent was used as an example in one of the sessions; rather than being phased out by technology, it was suggested that the role will evolve due to technological innovation. For example, technology will allow agents of the future to carry out their jobs more effectively, meaning that the role is likely to focus much more on adding value through giving advice to clients.
It was argued that almost every job is at risk of some form of automation:
“We will see steady automation for the next couple of years with an upward trajectory. Fast forward five or ten years and it'll be very exciting.”
This did however come with a warning that there is likely to be at least one big failure within the PropTech space by this time next year, but this won't affect the general upward trend. ‘FinTech’ in the financial industry didn’t happen overnight and without failures; the use of technology in the property industry will likely follow suit.
One key message to take away was the increased need for R&D within the industry as a whole, in order to mitigate the risk that comes with emerging technologies.
What can we expect to see much more of in the near future? The following were just some things mentioned:
- Machine learning – we are already seeing this more and more, in songs that are recommended to us based on other songs we have listened to, driverless cars in Arizona and image recognition on our photos. This will continue to improve and we can expect to see much more natural conversation in speech recognition with things like Alexa and Siri in the near future.
- Mixed reality – Duncan Watts from Google argued that mixed reality, like Magic Leap, will change the world as much as the smart phone already has.
- 3D printing in construction – this was mentioned as a viable alternative to traditional construction methods.
- Blockchain – the planning process is another area that was mentioned as ripe for change. Blockchain will allow the planning process to become much more efficient.
- ‘Big data’ – it’s a buzz word that is used a lot, but what can be agreed on is that we currently have more data than we know what to do with; what we can expect in future, according to leading experts from Datscha, is for data to be treated in a structured way that enhances the customer experience. The value is after all, not in the data itself, but what you do with it.
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