What were the emerging trends and hot topics emerging from the week in Cannes, where technology and innovation were hard to miss?
Tech emerges from underground
Propel Station gave the proptech a massive space at the heart of MIPIM in the Palais – albeit in the basement, or bunker as it’s dubbed. Startups were clear about the implication: that while interest in innovation is clearly growing, there is still a separation between tech and real estate. Despite this, some of the industry’s innovators have started spreading out into the wider conference. Regional stands such as London hosted notable property innovation startups, and the Dutch Futureproof Real Estate Pavilion was hard to miss right on the Croisette – above ground. Could we see even more integration next year? At least tech was in the main show, not a separate proptech event in Paris as in previous years.
Mind the ESG gap
Developers are designing net zero buildings, but there were more questions around what that means in practice. Often it means that the building, under ideal conditions, can be efficient. But what if your occupier simply doesn’t operate it efficiently? The industry needs to figure out how to measure and report operational efficiency across the sector – and the impression was that it has not yet done so consistently. For now there remains an ‘ESG gap’ between what is said and what is done. It’s where tech was a few years ago – ‘our number one priority’, without the evidence and action to back it up beyond the marketing strapline.
Discussions around tech tend to focus on “solutions”: solutions to carbon emissions, or understanding tenant behaviour or automating manual processes… There’s also a growing recognition that those solutions aren’t risk-free. Cyber security threats, for example, are increasingly common – one investor brought up a story about a casino getting hacked through its smart fish tank. Thoughts around other risks were also brought up, especially around data privacy regulations, climate risk and stranded buildings that are less green and no-one will buy. If GDPR requires transparency, are smart building landlords aware of their obligations to tenants or visitors, or the legal risks of not making their data collection clear? How do underwriters gauge risk in buildings not designed for changing climate?
Privacy v sustainability
Another GDPR-related question was the tension between reasonable expectations of privacy and sustainability. Widespread data gathering can help owners and occupiers make their buildings more efficient. However, doing so also means tracking people increasingly closely. Investors with residential portfolios are especially limited in what tech and sensors they can install, making their net zero targets that much harder to achieve. What’s the solution? No obvious answers emerged, but we could see some form of incentives or regulatory change to push both landlords and tenants towards sustainability.
There are some seriously smart software houses such as NavigatorCRE emerging that can save – and make – millions for investors and developers but they face a recurring problem – the investors and developers’ own internal efforts to build their own software has resulted in nothing except wasted time and money and a tech fatigue that puts them off further efforts. Building software in-house, going round and round in circles with no goal no strategy on things that are never launched and never see the light of day and are then mothballed is painful business. The biggest competitor for software vendors is property companies themselves. Typically in-house solutions end up clunky and ugly to use – “it’s engineered not designed, which never works,” as one data analytics provider put it.
The notorious war for talent has an added layer now as property players attempt to inject artificial intelligence and other clever skills into their operations. Institutional investors, for instance, are seeking more deals and efficiencies through predictive data tools and believe AI will help them find the way. Business has talked about partnering with education for decades, with mixed success. Now companies are putting down roots in cities chosen for their excellence in certain disciplines such as the HVAC automation scale-up Brainbox AI in Montreal, Canada where there are specific AI courses turning out quality graduates. This is more than lip service. Expect clusters of real estate tech campuses to emerge around the best universities.
Time was a few years ago property companies were reluctant to let you know what they were doing to innovate – either they didn’t want to share secrets, were worried it would all go wrong and they’d look stupid or in fact they weren’t doing anything and were merely talking the talk at shows like this. Nowadays there is genuinely interesting content from numerous property companies delivering detailed presentations on stage to engaged and actively learning audiences. This week you could hear detailed insight from Nuveen, Prologis, Patrizia, Allianz, JLL and many more. There is depth, sincerity and above all practical detail now as property players confident in what they are doing slowly open the box to share their experiences with the industry.
Is it a bird, is it a plane?
No, it’s the metaverse and blockchain. The latest fad, metaverse, was the subject of a couple of panel debates but no-one off stage was really talking about it unless you brought it up. There’s enough money to be made modernizing the physical world without starting on the virtual estate. Blockchain similarly remains a fringe subject popular with the chancier end of the entrepreneur spectrum.
The inner sell
Selling innovation to property is getting easier but cultural barriers remain. Locating the person with the problem that needs solving with your product is one part of it and then you need to get them to convince the board to buy; and vice versa – a bought-in board convincing the operatives on the ground to use the damn thing they have just subscribed to. “It’s baby steps,” was the neat summary heard several times from persistent and smiling techies determined their optimism – and VC backing – will last long enough to win the battle.
There are phrases you’d maybe never heard until six months ago and now you hear it every week. AI, robotic process automation, machine learning, basically problem solving with tools that traditional companies have not used before puts extra pressure on recruitment managers. One avenue for recruiters is attracting people with ADHD, autism and other neurodiverse characteristics that often go along with high-performing productivity in analytical and technology settings. There is a responsibility for companies to onboard and manage the workplace and meetings, office layout and culture differently of course but that challenge is being embraced – the reward is high, and the time is right for a broader mix of people in the team.