The techtonic shift: changing attitudes to tech adoption

The real estate sector is at a tipping point. While a number of leading market reports (including PwC’s 2018 CEO Survey) historically highlight a lag in the adoption of technology in the real estate sector, attitudes are gradually changing. We surveyed hundreds of C-suite executives from across the world looking at sentiment to assess how we can continue to positively progress. There is a growing awareness of the role of technology can play in decision-making. Asset managers and investors are waking up to the need to adapt, and positive steps are being taken – both in terms of strategy and budgetary commitment – to facilitate a shift from gradual acceptance to adoption. Almost half of the asset managers surveyed said that technology can lead to better decision-making, and just under that number believe that it can provide a better return on investment. The allocation of IT budgets to help facilitate the adoption of new technologies is likely to increase over the coming year – there is a 6% jump globally in the number of organisations planning to spend 31-35% of IT budgets on innovative technologies from 2019 to 2020. Artificial intelligence and machine learning (AI and ML) are seen as the greatest enablers to growth by 45% of respondents globally, followed by virtual reality (VR) and the internet of things. This provides a vital insight into how the sector is likely to evolve, as it moves from collation of data to a more sophisticated and precise analysis of it. Worlds apart There are significant geographic variations in terms of the technologies being adopted, as well as attitudes to further adoption. In our Techtonic Shift in Real Estate report, we surveyed respondents from Australia, China, Germany, the UK and the US to gain a true understanding of the global picture. The UK, for example, is almost twice as likely to see VR as an enabler for growth and is also ahead in its adoption of the technology. By contrast, Australia is ripe for greater technology adoption, with 63% of asset managers and investors revealing that keeping abreast of tech innovation is their biggest challenge. While there are clear opportunities for the sector when it comes to adopting technology, uncertainty around data protection laws and growing regulatory intervention globally may be hindering further innovation. The US, China and Australia all cite concerns around legal and regulatory implications as their biggest obstacle to further innovation. The same countries also view cyber security concerns as another obstacle to the adoption of tech, although in China a lack of data to implement new tech is the biggest concern (53%). Strategic shift Actual adoption of new tech in real estate is still relatively low. However, the vast majority of organisations surveyed (80%) say they have already invested or plan to invest in a strategy for managing technological change, indicating that the sector is showing a growing awareness of what is holding it back from further growth. Notable strategic initiatives include a growing resource commitment, changes in remuneration packages and a cultural shift. Early adopters of tech  include the finance and automotive sectors, where disruption in the form of robotics and AI are the new norm and have led to a transformation in the way market players operate. Our survey provides a snapshot of a real estate sector that is in flux as it moves from gradual acceptance of the vital role of technology to business growth and implementation. Disrupt to progress Asset managers and investors are becoming increasingly aware of the opportunities for growth that tech presents. An overwhelming number of our survey participants say it can lead to better decision-making and return on investment, as well as opening up new markets and a greater transparency in transactions. However, taken as a whole we have found that interest and implementation is relatively low, especially when compared with other sectors and industries. There are clearly still challenges and concerns to be surmounted. We highlight five key areas which can be addressed: 1. Understand and adopt The increasing budgetary commitment to a digital agenda is a positive step but Jay Dunning, senior manager and innovation coach at DWF Ventures, says: “Lots of organisations can, at times, suffer from what we call ‘magpie syndrome’, where they see a new piece of technology and instantly look to ways they can implement it.” 2. Cultivate a culture for change Current strategic initiatives to implement a cultural shift are an encouraging sign for an industry that is regarded as being traditional and lacking in innovation. If it is to attract the best tech innovators it will need to adapt further. 3. Collaborate to grow Collaboration and partnerships are vital if further growth is to occur, in particular for those who currently lack the resources for further technological innovation. Bringing in new ideas, expertise and diverse skills will help evolve the business and while there is some understanding, particularly among the C-suite executives we surveyed, more can always be done to continue this growing positive trajectory. 4. Blockchain benefits Although understanding of blockchain technology at this point and time was low amongst those surveyed in the report, we believe the potential benefits with the correct adoption could be vast. DWF proptech expert, Axel von Goldbeck, pointed to great security, reduced operational friction and liquidity as being amongst the biggest benefits. 5. Control cyber threats Cyber security was one of the biggest concerns among the C-suite executives surveyed, and while these fears are understandable given the increasingly sophisticated nature of some cybercrimes, there are a number of simple measures that can be taken to mitigate these. DWF partner and head of cyber security, Ben Johnson, discusses these further within the full report. Reforming regulation There has been a plethora of new regulations in recent years that seek to underpin these evolutions in technology and ensure they are fit for purpose in the modern era, most notably that of the General Data Protection Regulation (GDPR). There are also a number of directives and regulations growing in the areas of AI/ML and blockchain. Businesses must be astute in order to ensure compliance across the board, particularly multi-national businesses.