PropTech: technology, climate crisis and tenant demands are changing real estate sector business models

IPUT’s new report, Shaping Our Cities, reviews the evolving structure of, and drivers of change within, the real estate industry. Shaping our Cities was researched and written by a team led by Léan Doody of Arup between July and November 2019. The process included interviews with over 30 professionals including real estate owners, investors, occupiers and other influential organisations within the sector.

Léan Doody, Arup Europe Digital Property and Smart Cities Leader, explains:

Real estate has always shaped cities, and technology has always shaped real estate. However, despite the pace of technological change over the past decade, the real estate industry has been slow to adapt – one study puts real estate behind other industries by as much as five years. That is now changing. We are seeing business models evolve and real estate owners and investors are adapting to capitalise on the potential that technology brings. Our research identifies the changing ways that we are looking at real estate investments; how we are adapting to the changing world of work; and building more sustainable buildings and business models.”

Investment Briefings is hosting its inaugural PropTech, Data & Innovation Summit at Nuveen Real Estate’s London headquarters at 201 Bishopsgate on November 27, 2019 at 08:30. The morning summit will include three presentations and two panel discussions as well as breaks for coffee and networking.

Do not miss the opportunity to learn and network from some of the leading PropTech experts in Europe. Reserve your pace now, by clicking here.

According to IPUt’s PropTech report, the key findings were:

Drivers of Change

The climate crisis has forced all sectors and industries to step up to take action. In order to safeguard investors’ portfolios and buildings against the threats of climate change and future reporting requirements, more operational data is needed to assess these risks. Buildings, therefore, must be equipped to collect operational data.

Beyond the climate crisis, tenants and occupants are demanding more flexible working spaces. The traditional ‘9 to 5’ workspace has changed dramatically. Tenants want spaces that can encourage, inspire and attract a creative and productive workforce, with services and digital solutions that support that.

Better Workplaces

The changing demands of investors and occupants has brought a great opportunity for real estate stakeholders to rethink creative and innovative solutions in order to improve efficiency gains and additional revenue streams. A number of leading organisations are using digital and user experience to create buildings that are more sustainable, resilient and occupier focussed.

Barriers to Change

Real estate is one of the most heavily under-digitised sectors. As the technology community are quick to come up with tech solutions, such as PropTech, there is still a mismatch between the solutions being developed by tech vendors and how they are deployed.

A key reason for this is that value propositions for digital solutions are not aligned with mainstream real estate business models – although the rise of flexible space operators and the need for more operational data will change this. Proprietary technologies, little technology leadership and risk appetite also play a part.

The Implications for Real Estate

As tenants demand more flexible space and support from landlords to deliver new services and investors require more data, new business models will emerge, supported by user experience design.

New approaches to creating smart buildings and the growing number of real estate technology leaders, will create more opportunities to successfully deploy digital solutions to address tenant and investor needs.