The changing role of…residential developers

The ways in which people are choosing to live are constantly changing. Alongside the housing supply shortage and increasing pressure from conscious consumers, residential developers are having to turn to new methods of construction and technologies to prevent being left behind.

PlaceTech spoke to:

• Jitin Mitra, independent management consultant and property developer
• Michael Bristow, CEO of CrowdProperty, peer-to-peer lender for development finance
• Rosanna Lawn, acquisition and development manager at YOO Living, residential design company
• James Sidlow, senior development manager at Renaker Build, developer and contractor

What are the new skills that residential developers will have to learn?

Michael Bristow, CrowdProperty: The developer is having to think harder about what their customers want

CrowdProperty: It’s not good enough anymore to build some flats or houses and just sell them onto the market. Developers are having to think harder about the end customer. Many resi developers are building to hold and building out property management capabilities, which is good if they do that efficiently and at scale. If they’re exiting, then what’s the right exit market? Is it flats, houses, serviced accommodation, coliving, affordable? The developer is having to think harder about what their customers want, how they begin to build that into the design as early as possible, and the processes to do it. What can modular construction bring in terms of speed of development and de-risking? It’s not the silver bullet, but it’s something that developers need to be adopting and learning from.

YOO Living: We are now witnessing a huge embrace of various different types of technology, from data-driven software to Artificial Intelligence and construction methods, which are dictating how a residential developer approaches the whole process. There is much more pressure on ensuring that you are up to speed with the new technologies, not only impacting our market in terms of real estate, but our consumers market as well. When we talk about design it no longer just includes the interiors of the building and the physical space, it incorporates the fusion of the interiors with technology infrastructure, and how they can support one another. Developers are now being forced to look at how we can use sustainable technologies more actively than before, as we begin building for a more conscious consumer.

Renaker Build: We have to keep up with the latest innovations and be aware of what others are doing. The world is moving quicker than ever and keeping up with it is a full-time job. Innovations in how we can construct buildings is a huge one, and a big thing for us at the moment is looking at how we can be innovative on the management of our buildings, when we come to the setting up of various operational platforms and processes. People want their buildings to work how their bank or gym app works, everything is seamless and at the touch of a button.

Mitra: I believe in the coming years the whole property development value chain will change as solutions are emerging, allowing developers and other parties to add more value in places and capture other parts of the chain. It’s unclear whether developers will continue to be as hands-on in processes, or use more specialised, outsourced tech solutions to better inform, plan and manage developments. They will however need to better understand what the solutions are, so not to be left behind by those who have done so and created a competitive advantage.

Are there examples of tech already impacting the role?

Rosanna Lawn, YOO Living: Tech and how it is executed is becoming increasingly sophisticated, aiding due diligence

CrowdProperty: For the process of finding a site that’s good, tech has enormous implications for making better decisions through the use of data and analytics. The developers who are adopting data and analytics better, quicker and earlier are going to end up with better projects. Lenders are looking for that, we’re looking for that. LandInsight and REalyse are just two examples developers can use to implement data into their decisions.

Mitra: There are four key areas in which tech is already beginning to impact the role:

• Data driven tools can help determine what the best use of land is, as Gyana already is doing for commercial property
• Generative design tools such as Spacemaker.ai, and other tools by design software market leaders Autodesk, will help architects design buildings, maximising amenities and space, whilst staying within planning constraints. Furthermore, software providers such as GBuilder are creating tools which can help developers customise homes for their buyers, bringing in incremental revenue and an improved ability to sell off plan
• Project management. Tools like nPlan, which help create and optimise work schedules by learning from thousands of previous projects, will help efficiency in delivery
• Offsite construction. Outsourcing more construction to factories such as those run by Ilke Homes will help increase productivity and de-risk developers

Renaker Build: The way we analyse data and people’s living habits is a huge trend at the moment, and the information we have on where people shop, their journeys, dwell time, and how much they spend, is really useful. Looking at patterns of behaviour, from data collected through various sources such as phones, is helping us to adapt our buildings to suit, as we see how people are moving around and what’s being used.

YOO Living: Tech and how it is executed is becoming increasingly sophisticated, which aids initial due diligence and the overall risk of a project for developers. This adds clarity to the bidding process and ensures there is further security of the acquisition and the completion of the project, allowing developers a more transparent view of what could be offered whilst still ensuring the development remains viable. Companies such as Placense use data to understand consumer trends, to assist with ensuring that what is being delivered by developers is correct for the market.

What will be the benefits of going digital?

Jitin Mitra: Developers can differentiate themselves and capture margin by being smarter about design, planning and implementation

Renaker Build: Being able to report faults and issues in buildings digitally rather than face-to-face, is allowing us to save time and effort. Extracting BIM data, that you use in construction, into the management of the building to identify issues in the property is one way to enable that. It’d be good to see more analytics around the planning process, to provide developers with layered analysis of particular sites to allow us to take developments forward with confidence.

Mitra: The main benefit of using these tech solutions is to capture more of the value chain as other elements of the development become accessible, for example construction being outsourced to a factory. Developers can differentiate themselves and capture more margin by being smarter about design, planning and implementation.

CrowdProperty: Going digital can provide a better understanding of whether the right project is in the right place, and lead to building more profitable projects. If you adopt things like BIM processes, better construction data and data sharing across projects, everything will be more coordinated. Fewer changes will be needed, and there will be reduced delay as a result which is crucially important for developers.

YOO Living: Using tech to provide more detail on the viability of projects will reduce costs over time. The wrong analysis of a project can be costly for the developer and therefore technology that reduces this can only ever provide value for money.

When do you expect to see the tipping point for adoption?

YOO Living: The tipping point is now; we are experiencing it daily.

CrowdProperty: It’s happening now, progressive developers are adopting tech and standing out. These early models and adopters are making headlines, and the more headlines they make the more other developers will see that what they’re doing is right. We are seeing developers using better data, and BIM technologies to develop and manage contractors and service providers.

Renaker Build: I think we’re starting to see flexibility factored into building designs to allow for technology innovation. That might be advances in areas such as infrastructure or connectivity, and ensuring that the building allows for these advancements and not just providing one service that ticks the box.

Who will be the winners + losers?

Mitra: The winners will be those who can integrate these solutions best with their current activities, they will have to get into it soon though to start building their experience and finding out what does and doesn’t work.

CrowdProperty: The winners will be the early adopters, the ones building leading capabilities early so by the time someone catches up with them, they’ve done multiple projects and have become experts. At the moment, we’re not building enough houses, so this is a situation where there can be winners without losers. If the winners do more houses and the relative losers almost do the same, the country is in a better state and we will have a better housing supply. It’s not a zero-sum game because we need more houses.

YOO Living: It is a well-known fact that the property industry has been slow to embrace technology into its processes and strategy, however we are becoming much more open to adoption and collaboration. We are no longer discussing ‘those who will be left behind’ if they do not adapt, we are now discussing ‘those being left behind’. Unless companies begin to radically embrace technology their overall shelf life is short. Efficiencies, decreased risk profiling and desirability of product for consumers will drive the disappearance of these companies from the industry as they fail to keep up.

What does a residential developer’s daily routine look like in 2040?

James Sidlow, Renaker Build: Students that are coming out of university are going to have a very different outlook on what a home should look like, compared to how I do or someone 20 years older than them does

CrowdProperty: Property needs human beings; humans create designs that work for others and will always be at the heart of the sector. Some lower-level decisions will be outsourced, for example if a developer builds to hold, property management as a whole will be more tech-led and automated. The smart developers, between now and 2040, will work out the areas that either don’t require humans or will require less human brain. The SME developer is going to become more important to housing supply, as smaller parcels of land are becoming more vital. As tech is adopted by larger developers, they will set standards for SMEs.

YOO Living: In 2040, technology systems will be in place to manage a lot more of the admin and leg work. This will provide opportunity for developers to think creatively and come up with dynamic ideas and approaches to what they’re delivering. Our ability as humans to think dynamically is our value. Computers, however well programmed, can only approach a problem with a lateral ‘thought’ process. There will be less input for a much higher output in terms of human contribution. Data to inform developments will be easily accessible which will save valuable time and money that can be much better put into developing the final product itself.

Renaker Build: Innovation is changing how people choose to live. Students that are coming out of university now are going to have a very different outlook of what a home should look like, compared to what I do or someone 20 years older than them. With every generation that goes by, they’re becoming more transient. Being in the right environment and social structure is becoming more of a focus, rather than the four walls they live inside. I can only see that progressing much further over the next 20 years. Ten years ago, no one knew what PRS was, we’re only now starting to see PRS schemes go live. We don’t have enough data yet to see how well that residential class is going to perform. There’s going to be more like that, that will change the face of residential – whether that’s a coliving, shared living, or micro living type of offer.