COVER STORY: Digital is remodelling the property industry

The property industry has traditionally been bricks and mortar, paper and pen, however new technologies have emerged disrupting the status quo and injecting new innovations into a long-standing industry.

Bill Ruh, CEO at Lendlease Digital said digital transformation is a series of dominoes and the property industry has been the last domino to fall.

“It is a very distributed environment, lots of players, lots of interactions, and it's a much harder environment to disrupt,” he explained.  

New technologies have begun to reshape and disrupt the property industry, creating efficiencies for homeowners, property managers and tenants.

Ruh said the timing has been right in terms of the emergence of these new platforms.

“The value is starting to get there driven by cloud computing, mobility, and now the use of data to deliver real outcomes, better experiences,” he said.

“It seems to me, the next decade will be for the property market, what the last decade was for the manufacturing industry.”

McKinsey explained how digital tools are slowly becoming the norm for all stakeholders in the property industry.

“Investors and developers have long been the stars of real estate organisations, but today it’s clear that the value created by people with digital talents and capabilities may come to equal that created by ‘traditional’ real estate people,” the authors wrote.

The Covid factor

Andrew Colaguiri, CEO and founder of property management Flk It Over said Covid reinvigorated the property industry as real estate agents had to quickly pivot to digital tools.

He explained, “It did make real estate agents embrace digital change probably five to 10 years faster than it was going to happen. They had no choice, they were stuck at home.”

Colaguiri said as the older players who have traditional, paper-based processes retire, it will make way for more digital innovations.

“They're not looking to change and that attachment to their processes will probably retire with them as the new officers come on that are seeking something a bit more tech-savvy," he said. 

“Their point of difference is their adoption of technology; you'll find that'll be the wave of change.”

New tools for the job

The next phase of the industry’s digital transformation requires improved change management and fundamentally new ways of approaching the business, McKinsey explained.

“It also calls for investments in new types of talent (including developers, engineers, and data scientists) to build, maintain, and enhance the tools that the transformation requires.”

Developers need to ensure that the new technologies they’re building add value to the industry and aren’t replicas of other legacy platforms.

Scott Shepherd, chief product officer at PropertyMe explained how they build bespoke tools that benefit property managers.

He said, “That's where we add the value in the real estate space. The agents do have to use a variety of tools, but we want to try and reduce the number of those tools and increase efficiency.

“The bit that we concentrate on, making maintenance more fluid, making inspections easy to do, lease renewals, arrears automation, that's what we are aiming to do.”

Colaguiri at Flk It Over said in the past 18 months wages have seen a significant increase within the industry so agencies need to do more with less.

He said agents have needed to embrace technology to help them be more efficient.

“They need to make their staff more efficient, which probably means managing more properties without dropping the level of customer service," Colaguiri said. 

“Typically, if you increase the number of properties under management something had to give, whether it is taking longer to get back to repairs and emails take longer to reply to."

Starts with scepticism, ends with innovation

Darren Younger, co-founder and CEO at blockchain-based property platform Bricklet said the industry is just at the beginning of its digital transformation.

He used the example of the fintech industry.

“If you have a look at what fintech did with financial services, which started well before innovators were doing it in property, and the amount of time for those things to happen. It's step by step, in the fintech world,” he said.

“Now, we have instant payments, we have digital banks, we have a lot of cool technology to help us make payments and do certain things that enable the next level [of transformation].”

He said it’s the same in the property world.

“If you look at the whole ecosphere of a property, it's massive. Even just the purchase process, from one end of the spectrum, you're searching for a home, it's right the way through to settlement and then beyond,” Younger explained.

“That doesn’t even count things like construction and building. If you're an investor, you've got property management and then there are many pieces that play into it.”

He added, “It would take 10, 20 years before it's digitalised and everything's working seamlessly.”

Ruh explained that every innovation in an industry starts with scepticism, but then invariably it moves.

He said, “We've seen that the cruise industry wasn't moving very fast, now suddenly it's everywhere. So in an industry when it gets a little momentum it moves, but we haven't yet hit that tipping point yet.”

One of the reasons why the property industry hasn’t become digitised is because Ruh said the technology wasn’t ready.

“If you didn't have mobile technology, you couldn't do it. If you didn't have cheap sensors, you couldn't do it. If you couldn't process the data for insight, you couldn't do it in our industry.

“That is why now's the time is because the technology is caught up to what we want at a price point that's quite attractive,” he added.

Opportunity awaits

This is only the beginning of the property industry’s digital transformation. Ruh at Lendlease Digital said this transformation will impact every facet of the industry.

“Everything from how we develop spaces to how we operate them, technology is going to be at the centre point. The drivers are sustainability, cost and experience," he noted. 

“Automating more of the development process will be important because we are driving towards affordable housing, more sustainable housing.”

Automation cannot be done without having a platform underneath it to guide leaders in making better decisions through that, Ruh said.

“We're going to see more automation of the design of the places we build in the property sector and the tipping point is there,” he added.

Amit Bansal, growth markets lead, AI execution and data-led transformation at Accenture said there are many options to transform across the entire value chain.

He said there is a huge opportunity to automate the finance, HR and IT services.

“Then in the process of construction, if you bring in automation and IoT, and you think about bringing in AI to understand the progress of construction, that will bring huge benefits to the productivity of the industry and reduce waste.”

When it comes to the property industry, from building to real estate Bansal said there are many opportunities for stakeholders to apply technology.

Bansal added, “There’s a lot of opportunity to apply digital and AI across that whole value chain in the industry. We are at the starting point, but you have to start somewhere, otherwise, you're going to be left behind.”