James Dearsley, co-founder of unissu, defines PropTech as “one small part of the wider digital transformation of the property industry. It describes a movement driving a mentality change within the real estate industry and its consumers regarding technology-driven innovation in the data assembly, transaction, and design of buildings and cities.”
The annual Altus Group CRE Innovation Reportclaims the commercial real estate (CRE) industry is nearing a tipping point as PropTech adoption hits a critical mass threshold.
The combination of new market entrants, new technologies and changing demographics have created disruptive models within CRE.
This is having a profound impact on portfolio planning and decision-making. At the same time, this presents new opportunities for organizations who rapidly embrace innovation and PropTech to reduce complexity, increase efficiency and drive performance.
The Altus Group report claims that for the first time in five years a majority of CRE leaders now fully recognize the disruptive impact of PropTech, illustrating the shift to an acknowledgement that many advanced technologies can potentially solve their current challenges.
“CRE continues to rapidly accelerate its digital transformation and despite the growing complexity stemming from the proliferation of data, the industry is clearly shifting from a stage of ‘trial and testing’ to one of practical innovation to solve their current challenges today,” said Bob Courteau, chief executive officer, Altus Group.
He noted that continued automation and significant PropTech consolidation will both have a major impact and deliver considerable opportunities for the industry.
Key data points
- 61% say online marketplace platforms will have a major disruptive impact on the industry
- Platforms will connect a broad network of participants
- Platforms will deliver transactional efficiencies
- Aggregation of data will benefit users
- 63% of CRE firms have used online lending marketplace
- 79% planning to borrow online in the future
Good news and bad news leading to confusion
- 75% of CRE executives say automation will eliminate jobs
- 71% say automation will create new types of jobs
- 67% see jobs shifting to higher value-added tasks
- Major challenge is to anticipate how it shapes the future of the CRE workforce
Trending
| Impediments to firms collecting or utilizing more data to drive decision-making | 2015 | 2020 |
| Issues around the regulatory requirements of collection and management of data | 47% | 59% |
| Lack of internal expertise/capability | 29% | 52% |
| Lack of normalized data formats | 40% | 48% |
| Lack of appetite from the company to invest in the required technology | 36% | 43% |
| Issues around veracity or accuracy of data | 52% | 40% |
| Lack of tools to assist with data capture & analysis | 44% | 37% |
| No impediments to collecting or utilizing more data to drive decision-making | 18% | 3% |
Asked for his opinion on what the data means for Asia’s CRE Industry, Scott Morey, executive director at Altus Group had these to offer:
Which areas of Prop Tech are more mature and thus more likely to be deployed earlier?
Scott Morey: The successful companies are the ones that tend to provide great value to an organization. That value can be defined as something that minimizes risk, improves transparency, drives efficiency or increases revenue.
Many aspects of real estate are not overly transparent compared to other industries from an investment standpoint.
Technologies that can improve transparency has the likelihood of creating value. That includes the types of investment decisions we make, who and how we lease space, the operating performance of a building itself and how large real estate companies run the company.
5G is only going on limited deployment in 2020. So what disruption are you expecting and when?
Scott Morey: The increased data rates and lower latency will better position mission control activities that affect all of us and drive innovation.
For example, in retail the push to create “experiences” is more critical than ever to the success of physical stores. That can occur in two ways.
One is historical activities like payment/checkout can be automated to then allow the store personnel to better engage and support with the consumers.
The other critical point is how technology enables innovations within the store as it relates to inventory, integrations with digital social oriented experiences and creating unique experiences with technology as the basis (i.e., high tech dressing rooms).
Some argue that while some jobs will be eliminated new ones will crop up. What new jobs can we expect that support commercial retail?
Scott Morey: With the pressure over margins in the last decade, retailers have been forced to focus on the most critical tasks such as inventory management and the checkout process. With further pressure on physical stores because of online sales, fulfilment as well as returns for online orders became a priority.
Through the advances in technology and concepts like self-checkout, retailers can return to their roots which is directly engaging with shoppers and creating amazing personal experiences that will improve overall consumer sentiment.
Where do you expect the talent (data skillset and experience) will come from?
Scott Morey: Personalization from a detail standpoint is becoming more important both to creating amazing experiences as well as to ensure individual privacy. Data analytics roles will remain a priority of all real estate companies.
For many organizations, they will need to partner with PropTech companies to implement a value-based cost-effective analytics platform that meets the needs of their organizations.
As the CRE industry accelerates its modernization, it’s now beginning to attract more young talent who are technology and analytics savvy.
Who are some of the biggest companies in the PropTech space?
Scott Morey: There are so many startups, the market has to rely on partners to curate the good from the bad. ARGUS, MRI and Yardi are the main global leaders that have heavily invested to drive innovation and provide value to the market.
