Real estate is embracing the tech revolution

COMMENT Property is in the midst of a transformation powered by new technology. While the industry has made great progress in accepting technology as an enabler to deliver different outcomes, grasping the pace of change and shifting from a reactive mindset to a structured approach to new innovations is just beginning. Many of the discussions happening are about tech and mega-trends. Global research and advisory firm Gartner defines a technology trend as, “one with substantial disruptive potential that is beginning to break out of an emerging state into broader impact and use, or which are rapidly growing trends with a high degree of volatility reaching tipping points over the next five years”. We can see this in the industry’s increased interest in new technologies. Both investors and occupiers are looking harder at ways in which they can deliver advantage across their portfolios, their buildings and their people. And at the heart of this transformation is the clear evolution in occupier, investor and, increasingly, end user requirements, which is driving the demand for change. Looking at the array of technologies developing through the context of the CBRE Proptech Challenge, our EG partnership in the Tech Academy, and our clients’ insights, CBRE Research has identified mega-trends that are making a big impact on stakeholder needs within real estate. These include: Data, analytics and robotic process automation Artificial intelligence and machine learning The internet of things and smart buildings Augmented and virtual reality. What we are beginning to see is how these wider tech trends can meet the challenges caused by continuous industry change while combining investor and occupier needs around; Efficiency: How can I improve the bottom line? Visibility: How do I uncover opportunity? Flexibility: How do I provide flexibility for myself and my team? Experience: How do I deliver enhanced experiences through technology? Productivity: How do I boost the productivity of my business and employees? Top tech trends The demand for change and implementing the right technologies can be seen in the results of the CBRE EMEA Occupier Survey 2019, where a high percentage of corporate occupiers plan to increase investment in real estate technology within the next three years. What is interesting is that employee engagement is the key driver of this strategy and there is an expectation that the availability of technology in delivering this outcome will come from smart building technology. This drive to improve the efficiency of buildings while delivering an enhanced user and occupier experience is also reflected in the impact technological innovations are expected to have across the wider industry, with respondents to KPMG’s Global PropTech Survey 2018 recognising the potential benefits of data, process automation and artificial intelligence. This in turn reflects the direction of travel of CBRE’s occupier survey, which lists artificial intelligence and machine learning, the internet of things and robotic process automation as the three technologies expected to have the greatest impact on company operations. But how is this reflected in new solutions and technologies appearing in the market? At CBRE, we have been engaged with two programmes over the past six months: the CBRE Proptech Challenge and the EG Tech Academy. Both provide an insight into trends and new technologies. What we saw from the finalists of the CBRE Proptech Challenge were new businesses delivering solutions that incorporated: IoT to improve location analytics of office space across portfolios and buildings AI software analytics to track real-world behaviour of people AI and computer vision techniques to track people and behavioural movement Big data and machine learning to automate analysis and reporting tasks Machine learning to solve real estate problems based on big data and sophisticated modelling Cloud-based platforms to integrate, synchronise and manage complex sales channels. Similar technologies are also being deployed from new businesses submitting solutions through the EG Tech Academy: Use of neuroscientific and urban data, together with AI, to understand the building-to-human relationship to improve people performance Data collection and visualisation for energy management of buildings Greater location and data analytics Cloud-based data capture. Maturing outlook What we are seeing is a maturity of understanding across the technology landscape for real estate. As the sector recognises the value that technology can bring, there is less suspicion and more awareness of specific technologies. We are beginning to see this in survey results which point to a focus on data, analytics and robotic process automation, artificial intelligence and machine learning, and the implementation of more IoT and smart buildings. These technologies demonstrate a shift towards people-related objectives, with technology seen as the means to improve employee engagement, as well as to attract and develop talent. Nick Wright is senior director strategic consulting – investors at CBRE