The real estate industry is experiencing a widespread digital transformation and is seeing the tangible benefits of adopting technology. New innovations are appearing all the time and there is no doubt that proptech is at the heart of this digital revolution. It is changing how real estate is developed, managed and traded.
It is estimated that there will be 22 billion devices connected to the internet by 2022 and the roll-out of 5G networks will inevitably fuel the growth of IOT and other technologies. Proptech is growing on a global scale and so it is vital that we identify and analyse any legal and regulatory challenges that arise as a result. Some of these challenges are identified below.
Most emerging technologies rely upon, or create, significant amounts of data. Issues relating to data protection and intellectual property, as well as harnessing data as an asset, are important. For example, legal advice will be required in relation to the origins and ownership of datasets. How the data was obtained, cleaned and how it will be processed to ensure legal and regulatory compliance will need to be considered. Data may need protecting as confidential information/trade secrets. Many legal issues will be specific to the technology. For example, blockchain involves storing data on the ledger irreversibly, which runs counter to the principles of data protection.
Technology is often offered on an ‘as is’ basis without warranties or performance guarantees. It is important to be alert to this and mitigate against the risks at an early stage.
Risk allocation for infrastructure failure and cybersecurity breaches will require careful scrutiny because of the interdependency of elements of the system.
Technology is evolving so rapidly that contracts must be carefully drafted to cater for current and future requirements, particularly if the technology is likely to be business critical.
IoT, automation and AI will increasingly feature in building requirements, and will require new forms of contract. For example, construction contracts may need to address the operating systems within a completed structure as well as the design and build elements.
Developments such as 5G masts provide income-generating opportunities. However, associated legal risks might include health concerns arising from proximity to the masts. Similarly, the use of drones on construction sites and for transport of goods provides opportunities but also raises a number of legal issues, for example, in relation to use of air corridors, rights of way issues and insurance.
Many questions remain, particularly where global participants are involved; for example, choosing the appropriate jurisdiction and governing law, how to deal with liability issues when the technology goes wrong and how the different regulatory authorities will adapt to the challenges of technology. But the future looks bright in terms of the benefits proptech can bring to real estate.
This article was co-authored by Ashurst lawyers; expertise counsel Alison Murrin, counsel Sadia McEvoy and expertise counsel Renee Green.