Not a week goes by without a proptech survey, article or conference opining on the opportunities and challenges that technology presents to property investors, developers and occupiers.
Picking out the critical issues from the maelstrom of information that is out there can be challenging, but there are a few consistent themes.
The property industry has until recently been slow to adopt the benefits that technology has to offer. The main reason for this appears to be the difficulty in understanding the true benefits of tech. Boardrooms have been slow to bring tech skills to the board, which has made it harder for the industry to understand the return on the investment that tech can bring. The less risky approach has been to not invest at all. Traditional thinking has continued to produce good results, so why change? There is a sense we are approaching a tipping point where businesses could start to get left behind.
Our recent survey ‘Creating connections’ taught us that while 92% of all participants agreed that technology can help address the key challenges facing the property sector, there is still a long way to go before the benefits of tech will be optimised.
One barrier to the successful implementation of tech in real estate is the mindset within some property companies at board level. Another is the disconnect between the real estate and tech industries in terms of culture and a general understanding of each other’s technical needs.
How does real estate address these as an industry?
The ‘mindset’ challenge is a big one. To define the tangible benefits and make the investment, boardrooms at property companies need to understand what technology can do and what data they already have about their assets and end users that can inform investment strategy. Across the financial, social and environmental agendas, tech becomes part critical thinking.
Much of the focus for tech has been on back-office automation and financial efficiencies. Now, the real estate industry is becoming increasingly people-centric. Real estate today is about owners having active dialogue with occupiers. It is about experience-based service, not only space. Putting occupiers at the heart of investment decisions is helping companies set themselves apart. Investing in ‘end user’ data analysis will help inform design, construction and investment decisions. Successful adopters of tech will bring appropriate tech expertise to their board tables and every stage of their decision making.
The ‘collaboration’ point is also challenging. Tech start-ups are willing to spend time engaging with property businesses in order to fine tune their product but that also requires an investment of time by the property business. Some see that as time they can ill afford, which is why potentially valuable partnerships can be snuffed out too quickly.
Property companies making time for research and development can ensure that, firstly, there is a two-way learning process between property company and tech supplier. Secondly, they can demonstrate the value and potential cost savings of using their data. To lower risk and share rewards, companies are creating quarantined pilot projects or ‘sandboxes’ that enable participants to test a product in a way that has little or no impact on the wider business until it is ready to go live.
It may feel like a big shift to some, but change can be achieved in partnership. Your first steps into proptech may be small, but the potential savings and benefits are huge.
Mike Scott is a partner and head of real estate at law firm Cripps Pemberton Greenish