Tech is changing the world. The winners in real estate will be those who “embrace the collision of real estate and technology”, said Brendan Wallace, co-founder and managing partner of Fifth Wall, during Paris Real Estate Week this September.
“The winners will be asking the question: how is tech and real estate converging to create new kinds of businesses?” he told the audience. “And many of those businesses will be created by incumbents of the real estate industry today.”
MIPIM World Blog looked to the digital natives of the real estate world – the oldest of whom are now approaching 40. We asked them for their views about the convergence of real estate and technology, and how it is changing the very nature of real estate.
Carlos Alvarez Ramallo – RICS spokesperson on technology (& Industry Manager, Finance & Banking, Google Spain)
Will 2021 be the year when tech converges with real estate?
I truly hope so, but we must be realistic. Technology has always been linked to real estate, so the question is whether technology will bring real breakthroughs to the real estate industry in 2021.
In this regard, I believe that COVID-19 has accelerated the adoption of technology by people and companies on a day-to-day basis, which in turn has created a more favourable breeding ground for greater progress.
For technological disruption to succeed … we need to align three elements around it: people, organisations and regulations – Carlos Alvarez Ramallo, RICS
For technological disruption to succeed, however, and for it to merge with existing operations, we need to align three elements around it: people, organisations and regulations.
Hopefully, 2021 is the year when everything comes together but there is still a lot of room for improvement, full of amazing challenges
Where is technology adding most value?
Technology is not a goal but a great tool for reaching a goal. That goal must be to build a more humane, more efficient and more sustainable society. Technology has to help us do this.
Technology is not a goal but a great tool in order to reach a goal. That goal must be: building a more humane, more efficient and more sustainable society – Alvarez Ramallo
I believe that 5G will revolutionise homes; AI + machine learning + blockchain will greatly improve performance; and changes in urban mobility (use of electric, autonomous and collaborative vehicles) will contribute positively to the change that sustainability needs.
How will tech change the real estate industry?
A change in procedures and the technification of an industry always entails a need for adaptation, perhaps in this case greater than in previous changes; but this is not new, as Darwin explained to us in the 19th century.
The change we are currently experiencing requires that … we learn to work with new key players in company decision-making, such as the chief data officer and the chief innovation officer – Alvarez Ramallo
The change we are currently experiencing requires that we adapt to living and working in a more liquid and ambiguous environment, and that we learn to work with new key players in company decision-making, such as the chief data officer and the chief innovation officer.
The likes of computer scientists, mathematicians and physicists will also be key professional profiles to support existing roles in the ‘new’ real estate industry.
Séverine Chapus, Head of Development for major mixed-use projects, BNP Paribas Real Estate
What has been the effect of lockdown on the convergence of tech and real estate?
The repeated lockdowns of 2020 have led to the digital transformation of the real estate sector, like of all areas of our economy and our lives; it is part of a fundamental trend rather than a conjunctural phenomenon.
Lockdown has shown that remote collaboration can be done efficiently, and it has led the real estate sector to take a step forward in the virtual representation of developments.
While BIM has become widespread in recent years, supporting the design of complex real estate projects, the user interface that allows a real estate asset to be viewed virtually, in the smallest details, is continuing to evolve. These technologies bring greater fluidity to the way real estate assets are marketed.
What are some of the challenges/opportunities in terms of the environment?
In environmental terms, one of the technological challenges remains the management of the lifecycle of real estate assets. This is about tracking and tracing materials to limit the environmental footprint of construction; anticipating the deterioration of materials and facilitating their reuse; optimising consumption (water, energy, etc.); and intensifying the use of available space, thanks to cross-analysis of all available real estate data.
The digital representation of neighbourhoods through CIM offers a more systemic vision of real estate, infrastructures and flows in the built environment – Séverine Chapus, BNP Paribas Real Estate
Proper lifecycle management of the built environment is able to inform decisions on the rehabilitation and even transformation of assets for new uses. In this sense, we can expect a real convergence between environmental benefits, quality of user experience and sustainable value creation.
Another exciting challenge is the digital representation of neighbourhoods through City Information Modelling or CIM. This offers a more systemic vision of real estate, infrastructures and flows in the built environment.
The decisions that shape our cities should not be the result of an algorithm, but the fruit of a political vision of the city and the search for greater social cohesion – Chapus, BNP Paribas Real Estate
CIM holds the promise of an ability to script and to evaluate, for example, the evolution of urban regulations, changes in traffic flows, the climatic impact of greening strategies, etc. to inform decisions.
In the end, the decisions that shape our cities should not, in my opinion, be the result of an algorithm, but the fruit of a political vision of the city and the search for greater social cohesion.
Jeffrey Boerebach, Research & Strategy Manager, Redevco
To what extent are we already feeling the full effects of the tech-real estate convergence?
In 2020 we saw structural changes accelerate at a pace hitherto unimaginable. The contours of the pending shakeout, particularly in the hospitality, retail and office sectors, are already becoming visible but the greatest repercussions will really start to be felt from 2021, hopefully as the world starts to return to the ‘new normal’.
And the effects on retail, in particular?
Retail may be among those real estate sectors experiencing the greatest distress from the convergence of tech and real estate, but we believe that the sector will eventually emerge as one of the strongest, though perhaps in a very different configuration from now.
Retail is constantly reinventing itself and will do so again as the total supply of brick-and-mortar retail shrinks and frees up space for repurposing into residential, offices, hospitality and urban logistics, leading to more attractive, dynamic and sustainable urban environments.
We believe that [retail]will eventually emerge as one of the strongest [sectors], though perhaps in a very different configuration from now – Jeffrey Boerebach, Redevco
How is this convergence changing the nature of the real estate industry?
The traditional vertical approach to real estate is disappearing as the boundaries between sectors become more fluid, and our physical and virtual worlds more blended in increasingly mixed-use environments. People working in the real estate industry need to be multidisciplinary, flexible and creative in this fused digital-physical urban landscape.
The traditional vertical approach to real estate is disappearing as the boundaries between sectors become more fluid, and our physical and virtual worlds more blended – Boerebach, Redevco
What technological innovation are you most excited about?
The development of ‘smart’ retail stores will play an important role in rebuilding retailer business models and in guiding the sector to achieve the highest value from physical store space for consumers and therefore for retailers as well.
The development of smart retail stores will play an important role in rebuilding retailer business models – Boerebach, Redevco
The harnessing of ‘big data’ closer and closer to ‘real time’ will allow us to spot and react to major trends much more quickly.
The pricing and valuation market overlay to this digitalised urban landscape is likely to emerge through blockchain and dispersed ledger technology. This will allow us to break down physical assets into their component digital and fungible [mutually interchangeable]parts to make pricing in real estate more real time.
Join us at MIPIM 2021 to find out more about the new kinds of businesses being created in the real estate industry.
Top Image – Getty Images: Blue Planet Studio