There is hardly an industry that isn’t being affected by the adoption of Smart Technology. In February, we were invited to the UK to present some of the drivers that are enabling the development and adoption of Smart Technology in real estate and the significant growth in take-up by property operators and owners at the London Proptech Show. One of the things we explored at the Show is “why”? Why is smart technology finding such prolific application in real estate?
Smart Technology is already shaping real estate and will continue to do so into the future, as major innovations like 3D printing, Blockchain, the Internet of Things (IoT), Augmented Reality (AR) and Virtual Reality (VR), Artificial Intelligence and even drones find useful applications in everything from building management to customer engagement. There are two main reasons for this, namely the human need to innovate and an increasingly enabling environment (catalysed by COVID-19).
Innovation – or the drive to do things better, if you will – is part of the human psyche. Socrates said that “The secret of change is to focus all of your energy, not on fighting the old, but building on the new.“ From the invention of the wheel to today’s advances in AI and Machine Learning, the human desire to strive for improvement is alive and well.
From an economic perspective, innovation and economic growth go hand-in-hand. William Brody, ex-president of Johns Hopkins University and renowned scientist, radiologist and academic administrator discusses the calculus of innovation, describing it as follows: “… Knowledge drives innovation, innovation drives productivity, productivity drives economic growth.“ And Steve Jobs – widely acknowledged as one of the great innovators of our time – said that to be a leader, you also need to be an innovator.
The realm of smart technology is ideal for thinkers, innovators, leaders and businessmen to develop, fine tune and implement ways to improve their businesses and the lives of people affected by those businesses. In the real estate space, it’s about better experiences for tenants and employees, which lead to customer and employee loyalty, improved efficiencies, cost savings and, ultimately, profits. Whether you use AI to improve your customer service journey, or 3D printing technology to build more sustainably or save on costs in fit-out, smart technology is rapidly entering into the industry with their promise of improvements across the board.
Of course, the second factor – an enabling environment – is critical to successful innovation. In the case of smart technology and its application in various industries, internet connectivity is critical. IoT, AR, VR and AI are dependent on cost effective, reliable and far-reaching internet connectivity to function. In fact, all the smart technologies that are finding application in real estate are enabled by quality cloud services and high-speed, high-volume internet access.
Today, we’re seeing smart technology and digital transformation being discussed at C-Suite and Boardroom level. It’s no longer the purview of a few technically-minded specialists in the IT department. In fact, executive committees and Boards that are not actively looking at ways to transform digitally and leverage smart technology are positioning themselves to go the way of Kodak during the rise of digital photography and the birth of the camera phone. Though Kodak has managed to rebuild itself since it filed for bankruptcy in 2012, real estate players would do well to learn a lesson from this tale of caution and embrace innovation in their businesses.
New, more cost effective technologies have added to engineering efficiencies. Cloud computing and blockchain technology have made massive storage infrastructure and computing power available to any user at a fraction of the historic costs. Open APIs (Application Programming Interfaces) allow for different systems to connect and integrate, leading to greater collaboration, automation, and innovation across all industries and especially for real estate professionals. We’re seeing the Software as a Service (SaaS) model gaining traction, too, allowing real estate developers to reduce Capex requirements and time to market, and mitigate against a lot of the risk involved in digital transformation.
Value creation, cost savings and risk management are not the only drivers behind smart technology adoption in real estate. Tenants are becoming much more demanding, too, as customer service and engagement standards continue to rise and consumers’ tolerance for mediocre service continues to diminish. Digital has become an expected part of the tenant experience.
With so much innovation available to transform businesses, we’re seeing real estate companies begin to appoint innovation managers to help them choose the right technologies and implementation strategies. And we believe the industry is only getting started.
In next month’s article, we will kick off with a look at the impact that 3D printing is having in the construction industry.