Technology is the biggest influencer of change in real estate transactions. But for ideas to develop and grow to sufficient scale and then for them to still be around in 2019 and the year after, it is important to demonstrate a real benefit, for example in meeting an objective or saving a cost.
One area where this is happening is in the use of Artificial Intelligence technologies, and in 2019 we’re expecting to see greater use of AI technologies as the industry becomes increasingly sophisticated. Over the course of 2018, at Mills & Reeve we’ve been developing an AI-aided process in real estate investment purchases to help speed up transactions, including major due diligence projects. For us, this has already demonstrated a 30% time saving, freeing lawyers up to concentrate on other parts of the transaction. This year, as the benefits for client service are increasingly apparent to other firms, it will snowball and ultimately become the norm. Then the challenge will be to continue to innovate and differentiate and not to fall into the trap of standing still.
It will also be interesting to see how the insurance market reacts to the challenge to that industry which comes from the ability to interpret large numbers of documents in a fraction of the time. The practice may continue undertaking targeted due diligence of a sample of a portfolio of properties and then covering unknown risks which may or may not exist in relation to the remaining properties by insurance. However, could we see this corner of the market being disrupted by the use of AI to analyse the lot?
We hope we will see more collaboration in 2019 between property companies, investors and the technology industry. This will require technology companies to convince the other stakeholders to see beyond the hype and identify real value. As well as AI, sustainability is another area where the technology sector can achieve this and we believe that, for example, there will be further investment in products which enable energy efficiency to be analysed in real time and cost savings to be measurable.
And finally, there may be increased use of ‘hackathons’ as a method to develop innovative technology solutions in 2019. A hackathon is a competitive event to develop ideas in response to a particular challenge within a short timeframe (for example, 24 or 48 hours). The real benefit of the process is getting technology experts to discuss with users exactly what they want, drilling down into the heart of the problem before developing a solution in response to that. It’s amazing what can be achieved in the short timeframe by providing the right environment to focus on innovation.
We ran our first hackathon at Mills & Reeve in November 2018, and five teams presented great innovative ideas designed to benefit our clients. One of the things we learnt from this is that hackathons can work for all industries – they’re not just a “techie” thing!
Mike Edge and Paul Knight, partners at Mills & Reeve