The real estate industry progresses at a slower pace than most because of how heavily the sector is anchored to the ground by "immovable" real-life buildings (as the French would say: "immobilier").
It can be prohibitively expensive to "retro-fit" existing buildings with modernised technology and design features, and when new developments take place many years can pass between inception of the concept, acquisition of the site, design and construction of a scheme, and the final realisation of the project.
But, despite Prop-Tech's current position on the peripheries, innovation is gradually coming into the mainstream. Here are some examples of the most interesting (to my mind at least) developments in the Prop-Tech industry:
Short Term Prop-Tech Innovation (2 - 5 years)
Crowdfunding - Turning to the crowd, or even the local community, to fund property developments and investments is set to become a recognised and increasingly mainstream source of finance for property owners and developers over the coming years.
The Sharing Economy - Air B&B and Uber have already controversially upended the hotel and private transportation sectors. We can expect to see this approach to "sharing" develop further into the commercial property sector, with companies like Appear Here, for example, facilitating short term lettings of commercial and event space. Short term, flexible working and living could render commercial and residential property a higher risk/return investment than it traditionally has been, as tenants are less willing to sign up to long term leases, or commit themselves to being based in a particular part of the country.
Tech-Enabled Workspaces and Virtual Reality - VR already facilitates tours of new homes and commercial space from remote locations around the world. Soon, VR will evolve to provide reliable, immersive board room experiences for business leaders, who can "convene" within an instant wherever they may be. The use of technology to manage hot-desking and remote working is already significantly reducing the square foot per person required for organisations in the professional services industry. This is part of a wider, long term shift in which property (and making money from property) is becoming less about selling "space", and more about selling "services" - such as connectivity, communications, data harnessing and user experience.
Medium Term Prop-Tech Innovation (5 - 10 years)
Automated Residential Conveyancing - you shouldn't be distracted by the spectacular and expensive failure of the Law Society's online conveyancing portal "Veyo" in 2015. The project has been cited as failing for many reasons, one being that on-line residential conveyancing services are already offering similar products free of charge. With the increasing popularity of secure on-line digital signatures and electronic registration of transactions at the Land Registry, it is only a matter of time until process-driven, lower complexity, bulk residential transactions will be largely (or even fully) automated at very low cost.
3D Printing - you may not know it yet, but a whole terrace of (albeit unprepossessing) houses has been printed in China. Being able to "print" entire houses will no doubt revolutionise architecture and construction methods in the medium to long term. Particularly interesting is the beneficial environmental effects of "printing" rather than mining, quarrying and transporting raw materials.
The Internet of Every(thing) - the networking of physical objects, devices, vehicles, buildings and other items so that those items can collect data - is already very much a thing. But imagine buildings (and whole cities) which sense and harness data from all residents, employees and occupants - so that hospitals, restaurants, your home, your cars, your television and desk can understand and predict your habits and needs. Possibly ominous to the baby boomers, or generation X, but to the emergent millennial, this may not seem quite so oppressive. The relationship between buildings, technology, behavioural economics, data and wider society will become stronger and stronger.
Longer Term Prop-Tech Disruption (10 years +)
Driverless Cars - will reshape how we live in cities, the suburbs and the countryside. Distance from the workplace is already becoming less important as we increasingly log-on remotely, but how we value the location of our homes, businesses, city centres, and offices will be entirely overhauled once driverless cars become mainstream.
Property as a "Service" rather than a "Space" - Douglas Marvin of KPMG predicts that property will, in the long term, become more about the provision of a "service" (i.e. property which is tech-enabled, connected, data-harnessing, useful for work and pleasurable for recreation) rather than simply a "space" to be furnished and filled with stuff. For example, high street outlets, will evolve into a "treasure trove of [digital] insights". A physical store "will be able to recognise customers as they enter through the doors, track and target them with specific advertising and offers, and tailor their in-store experience".
The Emerging "Circular Economy" - propounded in particular by the Ellen MacArthur Foundation, the circular economy aims to move away from the traditional construction and manufacturing methods of "take, waste and make," towards a "circular" economy where products, and buildings are designed with the long term life-cycle and future uses of their component parts in mind. We should keep our eyes open for buildings constructed of 3D printed bricks that can be dis-mantled like Lego and re-assembled whenever and wherever we want.
So whilst it is taking its time, so the commentators say, 2017 looks to be the year that Prop-Tech as a concept moves away from the fringes and into the mainstream discourse of operators in the real estate and construction sectors. Watch this space!
I shall be attending this year's PropTech conference on 11 May 2017 in London, and look forward to reporting back on the latest developments in the emerging sector. Let me know if you will be there as well!
Thank you for reading… if you have any questions or comments, don't hesitate to get in touch.