PropTech: The impact of technology on the Real Estate sector

Some examples of changes we can expect to see over the next few years are set out below:

• Increased use of analytics and “big data” software will help investors manage their portfolios more effectively;
• Automated warehousing technologies in the industrial and logistics sector will create greater operational speed and efficiency;
• Smart building technology will generate cost savings and increase environmental efficiencies as well as allow landlords to offer tenants advanced features and services (at higher rents);
• Driverless cars and drones will dramatically increase capabilities in the logistics, retail and construction sectors;
• Many traditional office jobs will become automated through the use of machine learning and robotics, which may have knock-on effects on the demand for office space; and
• Development of smart technology in the residential sector will pave the way for more sophisticated urban regeneration and allow for increasingly connected communities.

All of these changes present exciting opportunities if the industry is prepared to adapt to and embrace the challenges that accompany them.

In this article we are focussing on two key areas where technology is already transforming the Real Estate industry: the occupation of buildings and the digitisation of HM Land Registry.

The role of technology in the occupation of buildings

Experts are predicting that technology will play an increasingly prominent role in how occupiers use and operate their real estate. Over the next few years, we can expect to see a number of sophisticated tools being used to change the way real estate is managed. As the way in which occupiers interact with their space evolves and as technology changes the nature of urban communities, landlords will need to be increasingly flexible to meet ever-changing occupier demands. Requirements for technological features and increased flexibility will become standard. Data collecting sensors which enable building owners and occupiers to monitor anything from building conditions to footfall and a vast array of things in between are becoming much more sophisticated and, perhaps equally important to the market, more affordable. But it’s not just about facilities management: at the other end of the spectrum from those buildings where sensored lighting and air conditioning are considered advanced proudly sits The Edge in Amsterdam, acclaimed to be the greenest, most intelligent building in the world, where the whole infrastructure has been created to allow people to connect both to it and to one another. These sorts of building advancements are surely a prime example of the role which the built environment must play in the development of the “human right to mobile telephony” established by the new Telecoms Code discussed above. 

The digitisation of HM Land Registry

Not only are we seeing changes in the market itself, but key industry bodies are also developing their digital capabilities to increase efficiency. For example, HM Land Registry has publicised its interest in digital transformation (a project known as “Digital Street”). In particular, it is currently considering how the use of blockchain, the ledger system behind the Bitcoin cryptocurrency, and smart contracts in the conveyancing process could improve the service offered. It is hoped that with the use of blockchain, property transactions could be registered almost instantaneously thereby reducing the risk of fraud, speeding up the process and creating overall costs savings. The introduction of new digital land registration services and increased use of interactive tools are ideas that are being taken seriously by HM Land Registry - will this influence other market players to follow suit?

Great opportunities

The Real Estate industry, whilst historically undoubtedly slower than most other industries to adopt advances in technology, is showing itself willing to embrace technological change. Real progress has been made in the last few years. While the question was once “What is PropTech?”, we are now asking “Which technology businesses are likely to gain the most traction?” and “How will PropTech change the way we use, trade and operate Real Estate in the coming years and decades?

We are already seeing disruption to how the industry operates and interested parties should keep a close eye on further developments to avoid falling behind. It is not enough just to be aware of the need to engage with technology; Real Estate professionals will actually have to do it, backed up by a meaningful strategy. Yes, any period of change comes with uncertainty and a risk of failure, but sometimes inertia poses the greater risk. Keeping up with technological developments or, one better, predicting which of the thousands of technologies will prosper most will, we think, be key to future success in the Real Estate market.