Is property too focused on tech?

COMMENT The real estate industry’s love affair with tech is gathering pace – almost to the point of infatuation. At every stage of the development life cycle, technology promises change to the way we work, from how we find and appraise sites to how we build, sell and manage assets. It may be 20 years after the dot-com boom, but the property sector has caught up: increasingly, there’s an app for everything. Proptech is big business too, attracting investment of more than $10bn (£7.5m) per year – a figure that’s growing rapidly. Let’s face it – in a sector that still clings stubbornly to imperial units of measurement, pin stripes and male-dominated boardrooms, change is needed. And all the more so, given the scale of the challenges we face. We need to get much better at delivering buildings and places that support people’s health and wellbeing. We need to tackle severe inequalities that persist in our society. And we need to do a lot more – and a lot more quickly – to address climate change. Technology has a lot to offer in meeting these challenges. Better engagement Digital engagement platforms, for example, have the potential to transform the dialogue between developers and communities. A wave of new digital engagement tools, including Commonplace and Built-ID, have the potential to improve the way developers engage and offer people an easier way of having influence and control over change in their local areas. In doing so, they promise to help rebuild trust in the sector and to help deliver on the government’s ambitions both to make conversations about planning more inclusive and to bring them into the digital age. Maybe the innovation that’s needed isn’t more technology but a more profound change in direction In the field of public health, innovators such as Centric Lab offer applied insights into the impact of real estate interventions on the wellbeing of end users. These and others are evidence of the positive impacts that tech might offer. However, in spite of these laudable examples, it is hard to escape the feeling that much of the enormous investment in proptech will do little to enhance human happiness or address the climate crisis. A look over some of the most successful new proptech businesses in the residential sector gives an indication of where much of the innovation – and investment – is focused. Bricklane, which, according to Crunchbase, has raised £6m of investment, allows small-time investors the opportunity to invest in residential assets. Ideal Flatmate, which has raised more than £2m, matches potential house sharers. And Houzen, which has raised £1.5m and boasts clients from Grainger to Grosvenor, claims to increase portfolio landlords’ net revenue by up to 30% by, ominously, “accessing customers’ ‘willingness to pay’ data”. Part of the problem No-one is doubting that these platforms are clever; nor that they offer value to their customers. But the fact is that they, and many more like them, thrive in a context where housing is overpriced and in short supply, where landlords have much more power than their tenants, and where housing is viewed as a commodity rather than a social good. They are part of the problem, not the solution to it. This is borne out by analysis of investment in the sector. Professor Andrew Baum of the University of Oxford analysed more than 600 proptech businesses that had applied for funding from Pi Labs in 2017. His conclusion was that the single largest area of activity focused on transactions, accounting for six out of 10 new business ventures. Innovation in the property sector is less concerned with transforming the products – the buildings and places – we deliver than improving the flows of money that underpin them. In the words of Alex Edds, director of innovation at JLL, proptech is about how we experience and extract value from real estate. In other words, it’s not about changing the way we do things, but more about a new way to do what we’ve always done. Let’s not kid ourselves that proptech, taken as a whole, is the disruptive force that the hype suggests. Indeed, perhaps we should recognise that much of this new wave of technology in the sector isn’t disruptive at all – that it actually compounds the power structures, the short-term thinking, the over-commoditisation and the extractive financial approaches that are so engrained. Of course the sector needs to embrace innovation; however, maybe the innovation that’s needed isn’t more technology but a more profound change in direction. And that involves embracing genuinely new approaches, forms of development and financial models, which have at their heart not just profit but also the wellbeing of people and the planet. Jonny Anstead is founding director of TOWN