What is PropTech?

Introducing PropTech

PropTech (Property Technology) is the name given to technological innovations that are developed for and implemented within the property industry.

At the same time, PropTech refers to the industry, or movement, that the innovation comes out of;  The PropTech Industry.

In any discussion about PropTech, one must focus on both the outcome, PropTech, and the cause, the Digital Transformation of the built environment. One will not exist without the other.

The PropTech Industry has been driving huge change and deep discussion over the last few years, bringing together an audience of like minded people to better advance the best practices of the property industry.

But PropTech is just one aspect of the Digital Transformation, the global adoption of technology, a force with a far larger agenda than simply property.

The Digital Transformation is affecting every industry on the planet; as such, it affects the vast majority of individuals too. The role that the PropTech community is playing, and must continue to do so, is to represent the property industry’s interests during this period of Digital Transformation

To do so, it must succeed in educating the wider property industry as to the importance of facing their digital future, whilst simultaneously protecting the industry and its customers from any potential harmful disruption coming from the world of tech, only allowing the best and most genuinely helpful innovations to enter the market.

In the context of a fire, PropTech is the accelerant needed to spark the flames, but the Digital Transformation is the embers that keep it burning through the night.

Asked to define PropTech at a recent conference I came up with a small statement which, after much consideration with a fellow panelist Professor Andrew Baum, author of the PropTech 3.0 report, we decided on the following:

Defining PropTech

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PropTech is one small part of the wider digital transformation of the property industry. It describes a movement driving a mentality change with the real estate industry and its consumers regarding technology-driven innovation in the data assembly, transaction, and design of buildings. – Baum & Dearsley, 2017.

Because the term ‘PropTech’ is so wide reaching; a movement, a gathering, and a noun, it’s important to analyse this definition closely to offer a truly comprehensive answer to; what is PropTech?

PropTech is one part of Digital Transformation

PropTech is not the only industry contributing to the digital modernisation of the property industry. Rather, it is just one small part of the Digital Transformation which is literally and simply defined as “the change associated with the application of digital technology[1]”.

As such, if property professionals want to remain knowledgeable about the current and future state of the industry and the innovations that are going to disrupt the traditional way of doing things, they must take in a much broader picture than just PropTech.

Professionals must, for example, be aware of innovation and progress happening in robotics, virtual reality, artificial intelligence, autonomous vehicles, and the Internet of Things (IoT). All of these industries, plus many more, will, without question, have an affect on the property industry.

It is only by understanding both these more futuristic notions of the property market and those, more immediate aspects of technological change; mobile website optimisation and CRM systems being two examples, that you can truly understand Digital Transformation.

The Digital Transformation is a process of change, one which is neither simple nor quick. It’s a process that often occurs over a  5-10 year period and drives change in many core pillars of an organisation’s structure.

The three most common targets for change are mentality, culture, and operating systems. Arguably, it is the mentality of industry professionals that is most in need of immediate disruption; at the same time, it is also the most difficult change to implement.

PropTech is a Mentality Change

Vitally important to understanding what PropTech is, is to see it not only as a technological movement, but as an entire mentality change.

The advancement of the property industry, in this age of the digital revolution, requires not only industry professionals but also the general public to change the way they think about property’s best practices.

Consumers are now used to digitised businesses. On the whole, they are comfortable with online processes and procedures, often shunning traditional, more stunted systems in favour of fluent and efficient technological ones.

As proof of this, one only needs to glance at the world of payment services. The rise of, and acceptance of, chip and pin, and contactless, has been incredibly fast. Consumers want ease and fluidity, but they also want trust. Whilst, for the finance and banking industries, this move must have required a huge mentality change, they did a good job of acting quickly and ensuring that consumer trust for new methods was won quickly and smoothly.

Whilst the act of buying or letting properties is far more complex than, for example, tapping a card to buy coffee,  the process of reaching the final act is slow and laborious. The property industry needs to make make the process as seamless and secure as possible. This is what the modern consumer demands.

Property is often considered an industry stuck in time. Best practices have long been the same; why change it now? has often been the attitude.  However, not only does this attitude cause problems for new startups in the sector, constantly butting heads with archaic mentalities, but it also results in inefficiencies running throughout the sector.

Another issues that this leaves the property industry with is, how does one attract the best technological talent to a sector that is seen as so old fashioned? Where systems are built on old platforms and Excel spreadsheets still dominate?

PropTech is about Innovation; both Endogenous and Exogenous

As stated by Professor Baum in PropTech 3.0[2], PropTech is is both endogenous and exogenous.

  • Endogenous

Endogenous technology is that which comes from within the property industry. For the most part, the technology that we have seen in property so far has been endogenous.

Such technology tends to focus on the streamlining of the property industry’s workflow and best practices. Common examples are property listings (Zoopla, Rightmove), online estate agents (Purplebricks and eMoov), and various software packages that are there to increase efficiencies in already existing processes.

For the next few years, most of property’s innovation will be endogenous. They will be created mainly by property people to help property people.

  • Exogenous

Exogenous technology is that which comes from outside of, but still takes effect on, the property industry and possibly offers the most risk to the industry.

Examples include Virtual Reality, which will completely change the way that properties are marketed and designed, and Artificial Intelligence, which will disrupt the way we understand and interpret our data and how the built environment works from day to day – which parts of the building are wasting energy, which rooms are going unused, and how best to increase potential returns on investments.

Data is said to be the new oil but if you consider the amount of data coming out of our buildings as the mass of sensors takes over. A system will be required to monitor all data, interpret the results and then instigate necessary changes. AI has the possibility to do all this and will be built be people not necessarily positioned in the property sector but whom will hold tremendous power over the sector.

Applications of Exogenous technology are so vast that they warrant an article, or rather articles, of their own.

It is expected that exogenous technology will really start to disrupt the property industry in the longer term, but that won’t make their arrival any less disruptive. In fact, exogenous technology very much sits in the boat of Amara’s law; we overestimate change in the short term but underestimate its impact in the longer term.

PropTech is about buildings and cities

With a combined asset value of $217 trillion[3] the property market and the potential for innovation within it is huge.

It is often considered on a much smaller level i.e. consideration of a single PropTech company impacting a single small aspect of the property process. This is particularly the case on more endogenous technologies.

Looking at a single home or building in isolation is by no means wrong, but the combined impact of all singular assets together is something more exciting; greater than the sum of its parts.

Most of the smaller projects in PropTech are often viewed on a private interest level, singular buildings or developments, for example.  But it’s when we move on from thinking about buildings and start thinking about city-wide transformation that things get really interesting. However,  the globe is currently battling a huge urbanisation challenge.

The proportion of the global population living in cities as opposed to the countryside exceeded the 50% threshold in 2008 and, by the 2030s, it is estimated five of the World’s eight to nine billion people will live in cities, many of them in slums[4]. This means there is a governmental agenda to deal with PropTech on a city level.

This is important for many reasons, but fundamentally it suggests that funding will be made available and that the attitude of looking at technology as a means to aid city development is going to be pivotal. It is at the top of government agenda and therefore PropTech needs to be taking advantage of that and delivering the innovations that will drive the required change.

In conclusion; PropTech is people.

The end goal of PropTech is to best prepare the property industry for the digital future and then maintain its prosperity thereafter.

But, because the property industry is very much a people-first industry, PropTech must do more than simply innovate and disrupt. It must understand its role in the broader picture, it must educate and mediate, it must listen to the needs of professionals and consumers, it must not disrupt for the sake of disruption. It must aid private businesses to run more efficiently, with greater returns, whilst simultaneously working to address and solve current societal issues such as sustainability and affordable housing.

PropTech will, once technology is fully accepted and implemented, become known simply as ‘property’. The two will no longer need different titles because technology will be the norm rather than the new.

To reach that point, and this might be the most important fact of all, PropTech must show to the world that it is not a rival to the property industry, but rather a set of tools designed to help the industry, and those who work within in, perform to the highest possible standard.

PropTech is not the replacement of humans with machines; it is the utilisation of modern technology to enhance the abilities, speed, and efficiency of those who sell, buy, maintain, manage, work within, live within and make their living from property.

And because so much of our world and quality of life revolves around the built environment, PropTech has a responsibility to wield its considerable power thoughtfully and compassionately, for PropTech not only carries the responsibility of strengthening the property industry, but it is also a vital component for making the the world a better, safer, and more prosperous place for all.

[1] “Digital transformation – Wikipedia.” https://en.wikipedia.org/wiki/Digital_transformation. Accessed 14 Nov. 2017.

[2] PropTech 3.0: The future of Real Estate,  Professor Andrew Baum & The University of Oxford https://www.sbs.ox.ac.uk/sites/default/files/Press_Office/Images/proptechreport/PropTech%203%20-%20The%20Future%20of%20Real%20Estate.pdf 

[3] “Savills World Research: How Much Is The World Worth?.” 24 Apr. 2017, http://www.mcguire.com/blog/2017/04/savills-world-worth/. Accessed 15 Nov. 2017.

[4] “World Urbanization Prospects – the United Nations.” https://esa.un.org/unpd/wup/publications/files/wup2014-highlights.pdf. Accessed 15 Nov. 2017.

This article is written by James Dearsley, Founder, PropTech Consult. He is a keynote speaker at PropTech Middle East 2018, being held on 29-30 October 2018, at Sofitel Dubai The Palm Resort & Spa, UAE.

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Bigger, Taller and Smarter. A promising year ahead for Skyscrapers.

Image Courtesy : CTBUH

Image Courtesy : CTBUH

Last year was indeed a remarkable year for tall buildings with a total of 73 buildings over 200 meters being constructed worldwide. More interestingly, a record-breaking 53 skyscrapers were built in Asia and the Middle East itself.

The Council of Tall Buildings and Urban Habitat has reviewed 2013 as the second most successful year on record for skyscraper construction, up 318 percent since 2000. Asia currently holds 45 percent of the tallest buildings in hand across the globe, with 37 skyscrapers of over 200 meters spread across 22 different cities, with China leading the list.

Dubai’s skyline also continues to grow, with the 72-storey JW Marriott Marquis Hotel last year becoming the world’s tallest hotel and the 823-m Burj Khalifa (163 floors) retaining the top spot globally.  South Korea is also mentioned in the statistics, with nine skyscrapers completed last year.

Skyscraper construction is booming across the Middle East with nearly 300 buildings over 150m tall expected by 2015, with the majority planned for Dubai and Abu Dhabi, and followed by Saudi Arabia and Bahrain respectively. Being the host country to the World Expo 2020, UAE is currently ranked among the fastest growing real estate markets in the world that will have 192 skyscrapers rising above 150m in height by the end of next year. The host city Dubai would be housing 149 of these towers, and with an estimate of $6.8bn being invested in the run up to Expo2020 we can safely assume heightened construction of hotels and offices.

In order to stand out from the crowd, architects are designing incredibly complex and tall structures. For instance, the iconic structure of Kingdom Tower that is expected to be constructed at a cost of $1.2bn will be at least 173 meters taller than Burj Khalifa. The tower is under construction at present and is reported to be completed by 2017. Such massive developments are making topics like innovative and sustainable products, advanced technology and safety from fire rapidly popular. It is increasingly important that tall buildings connect with the urban fabric, integrating with the existing city/street life, and reflect the nature of the city in which they are built.

One of the reasons skyscrapers are now being built at such speed is because of prefabrication technology and innovation in 3D printers that a lot of the developers are betting their buck on. The notion of prefabrication was brought into the mainstream by China’s Sky City that aimed to be the world’s tallest building developed in only 90 days, however now indefinitely on hold in the midst of legal uncertainties. This doesn’t negate the fact that the same firm has already successfully built a 30 floor high tower hotel in Shanghai in 15 days using modular prefabricated parts. New materials such as self-healing bio concrete and solar polymers are the latest trends in face-lifting stereotype construction to become more sustainable. Prefab architecture is exponentially cheaper, faster and safer than conventional building techniques, and the materials are arguably stronger and better quality.

As the buildings grow up, the logistic demands also tend to increase. People in the 828m high Burj Khalifa tower for instance, currently have to switch elevators to go beyond 500m. The sheer weight of the rope doesn’t allow elevators to travel higher than 500m. New innovative carbon core technology is now being explored in the market that is super-light and may just be one of the most important breakthroughs in vertical transportation.

UAE has also not been far behind when it comes to innovation. For instance, Abu Dhabi’s Al Bahar Towers built in 2012  took cues from the traditional Mashrabiya shading system, using it in a modern way that earned them the 2012 CTBUH Tall Building Innovation Award. The responsive façade created by Aedus design team responds to the movement of the sun reducing solar gain and glare that over all decreases the building’s need for energy-draining air conditioning.

Brainstorming on such innovative yet sustainable products will take place at Smart Skyscrapers Summit 2014, bringing together over 300 experts on 28th – 29th April, 2014 at Sofitel Dubai The Palm Resort and Spa organized by Expotrade Middle East. “With a surge in the number of tall building projects being undertaken in Dubai and across the GCC, it is an important time for the involved stakeholders to share best practice strategies and learn about the new technology available on the market. Smart Skyscrapers Summit is a platform where senior architects, designers, engineers, developers, contractors, policy-makers and those companies providing quality solutions can see presentations from tall buildings experts, learn of the upcoming projects and shake hands with the construction industry ‘who’s who’”, says the organizer.

The 2 day conference will witness big players like Emirates Steel, the only integrated steel manufacturer in the UAE and the Platinum Sponsor of the Summit showcasing its product range and expertise in steel. Gold Sponsors Al Ghurair Construction, Dow Corning, ABB will also be seen discussing their future plans towards creating sustainable buildings in the region, sharing insights on advances in technology as the requirements continue to grow. Other sponsors of the event include Silver Sponsor UL, Lunch Sponsors Delmatic and National Engineering Bureau (NEB), and Lounge Exhibitors Steinel Professional, Omega Elevators and Unibeton Ready Mix.

www.smartskyscrapers.com

Source: CTBUH, Expotrade Global, Venture Onsite

Dept. of Marketing and Communications.