Property professionals are upping their technological game in order to adapt to the rapidly changing environment, writes Adam Posner of KPMG. However, not all believe their organisation’s vision or strategy is up to scratch, according to the latest KPMG Global PropTech report.
I have no doubt that the real estate industry clearly recognises the potential opportunities and challenges that technology brings. But real progress appears to be slow. I believe it is time for more substantive strategic action, especially from traditional property organisations, as early movers will gain big advantages.
KPMG’s survey found that almost all respondents (97%) recognised that technology and innovation will impact their business, with 60% thinking this impact will be ‘very significant’, up from 46% in last year’s report. Furthermore, 93% say traditional property organisations need to engage with proptech companies in order to adapt to a rapidly changing landscape.
The question then is what is being done about this?
Arguably, not enough. I was surprised to learn that, despite the recognition of technology’s importance, two thirds of property businesses do not have a digital strategy. Disruption is rife in all industries – with real estate being no exception – therefore agility and leading the pack is key against a backdrop of rapid change.
Real estate has typically lagged behind other industries, at least where digital innovation is concerned. This is perhaps the by-product of the long-standing view of bricks and mortar and the apparent security and solidity it provides. But I think the future holds a much greater spread of financial returns, and real estate decision makers need to consider how technology will impact their properties, their business and the evolving needs of their customers.
I think the challenge is how to adapt to this digital age. The answer for me lies partly in greater collaboration. It’s evident there is a gap which needs to be bridged between the industry’s large incumbents and the new wave of proptech startups. The 2 ‘sides’ need to gain a better understanding of each other’s cultures, challenges, opportunities and priorities.
It is to the benefit of the industry that 57% of survey respondents said they would look to collaborate with an existing proptech supplier, and 30% said they already invest in a proptech start up or plan to. This will help to remove barriers of adoption and ensure that solutions being developed solve real world problems.
It’s not just a case of implementing technology for technology’s sake though. Nor is it a case of finding good technologies and then trying to work them into your business. Organisations need to take a holistic view in developing their strategies, based on their core values and ambitions. They need to understand the very wide array of potential technology options that could help them achieve their ambitions.
A good strategy will encompass developing, and maintaining, a strong understanding of the ever-growing range of options, and proactively creating innovative and collaborative approaches in order to gain a competitive advantage.
Property companies that start embracing technology and innovation without delay will ensure they are winners and not losers in future.
Adam Posner is associate director of KPMG’s North of England property and construction team
The KPMG Global Proptech Report is an annual survey, launched in 2017, monitoring the pace of change in the industry. KPMG conducted an online survey in June and July 2018 of 270 real estate decision makers from 30 countries across three global regions: EMA (60%), Americas (12%) and Asia Pacific (ASPAC) (28%).
The report provides a summary of how real estate professionals can fully utilise proptech:
- Assess where you are now and where you want to be
- Appoint a board member to drive innovation and set up an innovation board or lab
- Re-evaluate your purpose and re-assess your company culture
- Make your data work for you
- Identify who your customers and consumers are
- Become more agile and identify and fill any skill gaps
- Actively engage with proptech, whether that’s speaking with, procuring or partnering with businesses
The report suggested that data and automation are the main areas property professionals expect to generate most change in the industry, with 30% of respondents ranking automation as having the biggest impact on the industry in the short term. For the long term, 32% of respondents cited Artificial Intelligence as being the gamechanger, though KPMG think the industry is underestimating the pace at which Artificial Intelligence technology is developing.