A new international report from the Urban Land Institute (ULI) and the law firm Goodwin says proptech is becoming a key driver of competitiveness in the real estate industry, and especially within the last three years it is seeing significant growth in the development, construction and architecture subsectors.
Titled Proptech: Changing the Way Real Estate is Done and released in July, the paper analyzes data from a survey of 200 ULI members who have adopted proptech. Real estate, long a market known for low tech, is fast benefitting from new generations of quickly changing technology, the report noted.
“The rates of adoption of technology within the real estate sector have accelerated tremendously,” said lawyer Minta Kay, chair of Goodwin’s Real Estate Industry Group and co-head of its PropTech Group.
“They have gotten to a point where I think things have tipped, if you will, such that very large institutions who were slow to consider adopting are moving very, very quickly now to adopt. The industry has finally realized, in my view, that this is unavoidable.”
Firms are now exploring the rapid growth of technology and the ways in which they can operate, said Kay, incorporating proptech to maximize returns, improve operations and upgrade services for tenants.
“The train is out of the gate here and it’s moving quickly and excitingly in my opinion.”
Kay explained proptech includes the subsector contech, for construction tech, and that construction is bound to be swept along as the adoption of digital strategies grows within different business segments in companies, including in management and financial streams, design, leasing and tenant relations, wellness and climate change.
“Contech is a very important component of the change that’s happening,” she said. “There are numerous technologies that are speeding construction.”
The survey found data analytics, property management and portfolio management are sectors benefitting the most from recently adopted new technology. Data analytics was second to project management as the biggest focus of the next three years, according to the survey. Space and use design and health and wellness are also prominent.
Asked about recent new technology adoption, project management was first with 52 per cent and construction was second, with 40 per cent having adopted new technology.
Project management, construction and data analytics are sectors where proptech technologies are said to have notable rates of overall positive influence on finances.
One construction company described a cloud-based platform that pulls in and stores documentation of internal systems from on-site cameras as jobs progress, as a permanent record of how the work was done. This allows for off-site review during the construction process and information storage.
Another company noted, “We are manufacturing pods of rooms with dense electrical and plumbing systems. This off-site construction, where costs could fundamentally change, is made possible by digitization of both the design and construction process and the ability for those systems to talk to each other; it’s very tied to technology, but not to a single one.”
The report stated while technology is increasingly interconnected within every organization, the experiences to date, and plans for the future, often differ by business area. Across 11 business areas, 80 per cent of companies noted positive impacts on operations and services, and 70 per cent have experienced positive impacts on both decision-making and finances.
“There’s a very wide range of adoption styles going on right now,” said Kay, describing how one major global real estate development client has just committed itself fully to proptech immersion.
Kay said technology and real estate development have tended to operate in different worlds until now so as they come together, it is creating a huge demand for the legal sector.
“Big investors get very worried, who’s going to own the data, who’s not, where is the privacy going to go, what are the terms of service. There’s a lot of technicalities. Privacy is very important in the proptech space.”
The report observed the pace of proptech adoption is set to increase even more over the next three years.
“Things are changing at warp speed,” said Kay. “And it’s very, very interesting to be a participant in that.”
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