Two years ago this month, the renowned real estate academic Andrew Baum, in a report for Oxford University’s Said Business School on proptech, pointed to a clash of generations and cultures between the real estate industry and the tech pioneers.
He concluded: “From one side, we heard that none of these start-ups know what they are doing and that young entrepreneurs misguidedly regard real estate as a sure thing. From the other, we heard that real estate people are not good at strategy and are determined to protect inefficient fee-earning practices.”
I am lucky that I straddle both the real estate and the tech generations. I was raised in a household where industrial real estate was a major component of my upbringing as my father worked in the sector. I can also hardly remember a time before computers and the internet and am passionate about tech and its benefits. That link between the two worlds may have been the reason I was asked by the Investment Property Forum to chair its new Tech Futures Group, which is running a series of seminars this year focusing on the inter-relationship between property and tech.
Two years on from Baum’s report, there is, undoubtedly, wider acceptance that tech will have a big impact on the real estate industry; albeit a large dose of scepticism still abounds about the need for many of the tech solutions that are being offered. I believe the word ‘disruption’ is the bone of contention – tech people believe their solutions will disrupt real estate, while real estate people believe it may affect, but probably won’t disrupt, their industry.
This whole issue of disruption was at the heart of the IPF’s first tech seminar, which discussed the effects on the built environment of the advancement in automotive tech, 3D printing and AI. When you hear that Dubai wants 25% of its new buildings to be made using 3D printers by 2025, you get excited about the potential for 3D printing in terms of lowering costs and increasing the speed of delivery of buildings.
But I’m conscious of not getting carried away. Many of the solutions offered by tech have, so far, not changed the dynamics of the property market or solved our age-old cycles of demand and supply.
To my mind, the one indisputable thing is the importance of data and the need to control it within your organisation. For me, data will be more important over the next five years for any real estate business than any of the up-and-coming technologies that are still in their infancy. It should be at the heart of every decision that we make on a day-to-day basis, which is rarely the case in real estate at present. Gut instinct will always have a place, but it isn’t the way to run a sustainable business.
In order to realise this future, our industry will need to attract, adapt, employ and retain the new skill sets required to extract value from data. This is a big challenge for incumbent businesses and individuals alike, as adapting to this kind of change is not going to be easy.
Julian Carey is executive property director of Stenprop