What’s next for tech in real estate after nearly two years of upheaval and innovation? PlaceTech asked experts from across the industry for their expectations.
Across the board, respondents said that (unsurprisingly) real estate and tech will become ever more closely intertwined. For many, 2022 will be a continuation of broad trends we’ve seen since the start of the pandemic around tech adoption and new ways of working and living.
But we can also expect changes we haven’t experienced before and progress in areas that have so far resisted change.
Here is what the industry expects from 2022:
Residential: new online markets and digital planning
Milan Zahradnik, CEO of Propster, expects an uptick in proptech that will help developers market houses online: “2021 has seen a slowdown in off plan sales in the UK’s new homes market, certainly for larger apartment led projects due to a mix of Covid, Brexit and, particularly in London and Manchester, a dramatic decline in Chinese investors.
“Developers will therefore be looking for new ways to sell off plan to both domestic buyers and those looking to buy here that can’t travel.”
Meanwhile, the surge of home renovations throughout the pandemic have clogged up the planning system in the UK, Jonny Britton, co-founder of LandTech says. “There is already an emerging field of ‘plantech’ which is ready and prepared to shoulder some of the burden.
“I suspect we will see the field of plantech to continue growing in 2022 in order to assist the planning system to get back on track to increased demand for new builds to meet local housing targets.”
Office management: rise of operating systems
Zac Goodman, CEO of London property management business TSP, is surprised by low levels of tech adoption in UK property this year. “2022 I suspect will be different,” he says. “It will bring a barrage of sustainable, leasable and smart modular office furniture.
“Look out for proptech offerings that sense building data and then use it to adapt controls for air conditioning and heating in particular. Energy prices will really hit the commercial sector, and in January as our winter bills come in, many will be looking for more intelligent ways to save.”
Indoor air quality (IAQ) will continue to be a high priority in 2022, says James Hallworth, senior associate, building technology at Workman. “While there is a wide range of occupier-facing apps on the market, it’s only when a building benefits from intelligent operating systems that rigorous operational data can be delivered to occupiers,” he says.
As a result, 2022 will be the year that ramps up, leading to centrally controlled systems that bring about cost efficiencies and ESG benefits, Hallworth predicts.
Community will also play a bigger role in what offices offer. Eliane Lugassy, co-founder and CEO of tenant experience software Witco, says this is a reflection of the growth of hybrid working: “Companies and landlords will be more inclined to make sure there is a sense of community – because we don’t have it at home.”
She says there is a clear shift in priorities happening among her clients. Witco users are able to pick and choose features relevant to their needs, and the community features are becoming increasingly popular.
But the sector is operationally still very much in a place of discovery. Gabrielle McMillan, CEO of Equiem, makes two predictions on what this means. First, there will be more ‘placemaking’ in the office, with landlords considering more strategically what users want to achieve while they are there and providing spaces for those needs.
Second, landlords can expect occupiers to take several different approaches to their physical office presence: “The state of Covid will dictate office budgets,” MacMillan says. “A portion of the market will take advantage of the market conditions and try to secure deals, expecting the pandemic to be more under control by 2023. Another portion will commit to shorter more flexible leases, or simply extend their current ones until there is more certainty.”
IAQ “will become paramount”, says Dan Drogman, CEO of Smart Spaces, echoing several other experts. Delivering safer, healthier building environments will be necessary in driving demand back to the office.
Drogman expects digital twins to play a big role in that: “We expect more asset owners will look to adopt digital twins, allowing them to monitor and control a number of live metrics, such as air flow and energy use, to gain a better understanding of how their buildings are used and to give them the tools to increase the sustainability and efficiency of assets under management.”
For Andrew Ackerman, senior adviser to Second Century Ventures and venture partner at Dreamit Urbantech, 2022 will be “the year that virtual staging gets smart.” Visualising what a space – its layout, furniture and finishes – looks like is still largely a manual process, but not for long, he says.
“Technology has progressed to the point where this can be automated. Prospects can answer a few questions as if talking to an AI interior decorator that can then automatically furnish the space to their specific needs and style on the fly. Or the landlord or developer can generate five, 10, or more virtual stagings, each tailored to the different renter or buyer personas, all for the same or lower cost.”
Sustainability: turn worries into opportunities
A spokesman for PropTech1 Ventures says: “The year 2022 will be characterised more by players who perceive [ESG regulations] as an opportunity rather than a threat. Thinking economically (i.e. entrepreneurially) means adapting and seizing opportunities that arise from new developments. We see an increasing willingness to do just that in the industry now.
In the same way that office landlords have started to adopt tech to measure and control energy performance in real time, retail landlord will face greater demands to do the same.
David Fuller-Watts, managing director at Mallcomm, says: “Our tenant engagement platform is starting to be used to enable landlords and tenants to share energy performance data in real-time, to inform decision-making.
“For shopping centres and retail parks this is particularly important as the today’s conscientious consumer will choose to visit places that are sustainable and can demonstrate clear progress on carbon emissions. We think real-time energy performance reporting will become an important aspect of retail property management in the coming year.
Real estate’s fintech revolution
While landlords have adopted proptech for their assets, they have “resisted innovation” when it comes to leasing, says Majed Chaaraoui, CEO of Insurami: “Post-Covid, this is no longer an option. Like it or not, landlords have to embrace business model innovation.
“This puts real estate on a collision course with fintech, with new solutions at the point of transaction enabling both landlords and tenants to share risk more effectively.”
Fintech more broadly will make its way into real estate this coming year, JLL’s venture fund believes.
Raj Singh, managing partner at JLL Spark Global Ventures, says: “Until recently, the fintech revolution that has re-shaped banking, e-commerce and retail, among other industries, has largely passed us by.
“Now, however, a number of startups are bringing loan origination, crowdfunding, factoring, fractionalisation and advanced UI/UX to bear on the large and high-value assets that our industry is built on.”
A new era for proptech
Echoing MacMillan’s view of the office market, Maciej Kranz, CTO of Kone, expects flexibility in buildings to be a priority as people’s lives continue to change. Smart infrastructure will provide insights into user needs and habits, he says.
“Overall, adaptability will continue to be important. Almost every aspect of urban life – shops, offices, residential segments – have had to change. When needs change, the equipment in a building needs to change. Elevators can learn and they can provide more intuitive guidance based on data and how people work and behave.”
But Mark Furness, founder and CEO of essensys, sees 2022 as the year when proptech strategies start to bear fruit. He says: “With COVID-19 acting as a further catalyst for change, 2022 should see the industry start moving away from the broad theory of the benefits (and blockers) of digital transformation, and into the era of digital reality.
“Technology will continue to address pain points around efficiency, productivity, decision making, scalability and occupier engagement in the workplace. But it will go beyond that too, becoming the foundation of all good business practices.”