08 Dec 2017
It's no secret that technological change is redefining the current economic landscape. At our recent Commercial Property Conference, it was suggested that the application of new technology is having a greater impact on the property market than current political changes. The question is, why?
Technological change unlocking investment potential
Technology is changing the way we work, live and use real estate. This combined with factors such as aging populations and increased urbanisation is resulting in a shift in focus from traditional real estate investments towards strategic sectors, such as co-working spaces, multi-family homes, science parks and data centres, supporting the growth potential of the market and increased profit margins.
For example, as artificial intelligence (AI) becomes ever more sophisticated, machines are able to carry out increasingly complex tasks across almost every industry. Machines don’t care whether they’re operating in a building located in the heart of a city or whether they’re placed in a regional office far from the nearest train station or bus stop. As such, we are seeing the rise of the regional back office and those buildings located in the heart of cities are increasingly becoming community spaces for shared housing and co-working.
Alternative assets are becoming mainstream.
Investors are focusing on sectors born out of the disruption that technology is bringing. Retail is an industry well-known for being heavily impacted by technological change. As the online retail trend is forecast to continue, an entirely new asset class is appearing in the shape of industrial warehouses.
Online retail requires far more warehouse space than conventional retail; it is estimated that approximately three in every 10 items purchased online are returned and these products need to be stored somewhere.
A changing workplace
As well as unlocking the potential for new investments, technology is also changing the workplace. The Internet of Things (IoT) for example is not only providing environmental benefits by reducing the energy consumption of buildings by up to 30%, but is also benefitting staff well-being and productivity through providing real time data about commuter traffic and overall building efficiencies.
Furthermore, it’s been predicted that by 2025, 20% of the population in Europe will be 65 and over. Businesses that are able to adapt to this change and adopt an inclusive environment for people of all ages will thrive.
As technology continues to impact the property market, we need to ensure that we are attracting the best talent into the profession. To do this, businesses need to celebrate creativity and innovation within the workplace and ensure the right skills are brought in. Just some of the new skills that are going to be needed within the industry include computer programming, data analytics and cyber security.
The best talent want to work for innovative businesses.
Four future trends:
- It is likely that we will see a decline in the price of renewable energy and as a result, buildings will become semi- independent from the electricity grid as they are increasingly equipped with batteries and solar panels instead.
- Electric vehicles will make up a significant part of the market by 2025 and buildings will have charging points in the same way as we take WiFi for granted.
- As data becomes increasingly available and AI improves, there will be further changes to the retail industry. Advances in facial recognition and natural language chatbots will result in fewer checkouts, automatic payments, smile & pay kiosks and better product recommendation. AI will increasingly be able to accurately forecast future sales, resulting in the need for physical store space decreasing.
- Autonomous vehicles will become increasingly more sophisticated, resulting in the rental premium which currently exists for being next to public transport falling away.
The residing message was that professionals need to be able to adapt to the changing landscape of the property market and be open to the benefits that new technology can bring.
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