We’ve spent years encouraging the industry to embrace new technologies, look to the future and innovate advances but, as with all good things, perhaps this is best in moderation.
We have watched in earnest as 5G communications have launched with Vodafone, Three, EE and O2 in London over the last few months.
Proponents of 5G argue that 4G will struggle to cope with increasing demands from the growing number of devices that demand internet access. The TV ads told us that 5G will let us use Augmented and Virtual Reality (AR and VR) through our smart phones which will revolutionise our daily lives with “immersive experiences”.
5G is predicted to offer advancements in speed, coverage and reliability, particularly because of “network slicing”. Network slicing allows the network to be split into different segments, and separated for specific purposes; for example allowing Emergency Services to have connectivity unaffected by everything else around them. This system of layers also allows video and other media at concerts, for example, to travel through different channels to the fire alarm system in the building, meaning that the two very different but important pieces of information do not interfere with one another.
Of course, the US is already further ahead and there were a number of suppliers with stands at Realcomm in Nashville this year – digital backbones in new buildings are now commonplace and some are already powered by 5G comms. And in the UK we have already been asked about our views on 5G in the built environment by forward looking property investors.
5G is the latest in a long line of innovative technologies – blockchain, AI, Virtual Reality – that can revolutionise the way we live and work. Individually they are fun to look at and some of the applications are very impressive. But we are probably looking at them through the wrong end of the telescope. What we mean is that we have no idea how to apply these revolutions because we are looking at the property industry as a whole and trying to spot where to apply a solution – rather than, more effectively, spotting areas of business that must improve and then picking a single solution.
The most successful Proptech companies have harnessed technology to solve a problem, rather than focused on the technology first. Indeed, at a panel we organised at the London Realcomm CIO Forum, we talked for nearly an hour about customer experience without once mentioning technology. The best technology is invisible.
The US technology suppliers at Realcomm were candid and told us that the first big implementations of 5G will be in stadiums where there is a need for low level building systems to work alongside the requirement for media and press photograph files. Outside this, 4G will probably suffice for a while.
This might give most of us the chance to perfect the basics such as reporting, workflow, and customer service – for example, rent collection is still at less than 80% on the due date (new Remit REMark report) - before having to embrace immersive customer experiences.
EXPO REAL 2019
Highlights from Andrew Waller, Hans Gerritsen and Katherine Lewis’ experience at this year’s EXPO REAL conference in Munich
Andrew’s Speech on PropTech at the Holland Metropole Stand
Our firm has spanned two innovation eras – the Dotcom era and the PropTech era. My Dutch Partner, Hans Gerritsen, and I span a much greater number of years and I introduced the first spreadsheets into Healey and Baker (now Cushman & Wakefield).
Guess what? 30 years later, we are all still using spreadsheets and many of us aren’t even sharing them properly.
So, here are my 5 tips for making a change.
1. Why isn’t building data analysis central to all property management? The property manager is the central point for all property data – they get the leases, the rents, the maintenance details, the complaints. They keep it in spreadsheets and in their heads. They then struggle to report it. In the survey we are about to publish, we find very few property managers have hired data analysts and very few clients are asking them for better data. It will change, but it isn’t happening fast enough
2. Data is transforming business models. Think about how to make a real difference to your business to your customers:
a. At one UK investor, they have been using retail data from their malls to predict tenant failure up to two years ahead – that gives them time to sell them a lease surrender whilst they still have money.
b. A property company in the US analyses retail mall performance, identifies a target, and lines up better tenants for the mall before buying it. This is all done from data, not gut feel. Once they have changed the tenants and increased the value, they sell it on.
c. One estate agency in the UK will back up their valuation of your house by watching its performance on the market over the first month. If it’s not sold by then, they will give you their valuation, continue the sales process and when sold, they will give you any excess. That costs an extra 1% - a cheap way of bridging.
3. Where do you start? In digital, almost anything could be possible so set what you think is an unachievable goal – WP Carey in the US calls it their Moonshot: The JFK “man on the moon” speech. Their decision to change reporting so that they could track real-time net asset value was achieved despite not being able to report it quarterly when they started. They achieved this because they looked at a step change, not incremental improvements. They also have technology on their side – Moore’s Law says that technology will double in power every 18 months and it has helped people like WP Carey, and Google achieve ambitious goals as the problem gets easier to solve over time.
4. Property managers get in the way. This isn’t just me having a pop at property managers – the entire traditional pyramid of service providers stops the investor getting close to his customers – be they tenants or occupiers or consumers. We are seeing companies as large as Legal & General and Aviva in the UK entirely change the traditional structures so that they can be part of the customer relationship. We also see the big US investors developing all their new services in house so that they have better control. Investors want to be able to access all this new data and quickly implement changes to benefit customers, and the traditional model with several layers of management doesn’t give us this. It also confuses the technology model – property managers have to transfer data to many different systems and complexity is the enemy of agility.
5. The big tech companies are coming (at last). Last time the big tech came after property was when the enterprise systems – JBOPS – built real estate into their systems (badly). But that was trying to replicate the complexities of billing systems which already existed. Microsoft and Google are now capturing building and customer data into their systems – Microsoft had 12 partner firms exhibiting at Realcomm in the US rolling out Azure and Dynamics as solutions at building. These types of systems barely exist in the Real Estate world. And it is this data that will start to drive the value of our real estate – the traditional Real Estate systems are becoming so automated and commoditised that they will not help you differentiate your offer. IF Microsoft puts as much effort into selling Real Estate systems in Europe as they are in the US, we may see a very different relationship with our technology in real estate.
I have a sixth point – learn to enjoy being consciously incompetent. You only realise that you know a lot about IT when you say, “I’m sorry, I don’t know anything about that”. There are many different technologies and thousands of clever people who can do this with you.
And finally, to quote one of my colleagues, your strategy, taking account of all the above should be: “Consolidate, Simplify, Centralise”
Property cycle highlights industry challenges
Velocity’s summary article: velocitymagazine.co.uk/remit-tour-ass…
PlaceTech’s summary article: placetech.net/analysis/upwar…
Over twenty property professionals and staff participated in Remit Consulting’s second annual ReTour event on Friday 19th April - a cycle tour of eight office properties in central London allowing them to experience first-hand the facilities properties offer for cyclists as commuters.
Starting at 4 Pancras Square in Kings Cross the cycle tour included new and remodelled properties in Midtown, The City and Docklands and revealed the challenges to the office sector brought about by the increase in numbers of people cycling to work and the need for innovation and proactive property management.
Remit Consulting’s director Neil Webster said: “The ReTour event provided an opportunity for members of the commercial property sector to experience cycling facilities from the perspective of an occupier. The event allowed those participating to get a real idea of what people who cycle to work have to put up with in the offices our industry designs, builds and manages."
In 2017, Remit Consulting and the British Council of Offices (BCO) published ‘The Market Cycles’, a report that looked at the rise of cycling and its impact on office specification and investment. The report predicted that the existing infrastructure and properties would come under increasing pressure due to the increasing volume of cyclists and that office buildings would begin to compete not only in terms of quantity of the cycle spaces provided but also with regard to quality in the form of drying rooms, locker solutions and shower provision.
“Cycling, and running, to work is on the increase as an alternative to increasingly crowded public transport systems and commuting by bike is being actively encouraged in towns and cities up and down the country. This is important, as getting more people to use bicycles is positive for both health and congestion reasons. Making it easy for staff to cycle to work can also make a difference for businesses in the war for talent and encourages greater engagement within the working community,” said Neil.
“This year’s ReTour confirmed what we predicted in 2017 and highlighted that having good cycling provision in a building can be a differentiator in a competitive market. Argent’s 4 Pancrass Square is a prime example.
“It is also clear that while having poor provision might tick the BREAM/GRESB boxes it can actually waste valuable space in a property and money,” he added.
Remit Consulting's partner Andrew Waller said: “Two years on from our report, it is clear that both developers and investors are taking the question of cycling facilities far more seriously. Our cycling inspection tour revealed not only a number of great ideas and innovations but also showed what can be achieved in older buildings that were not originally built with the needs of cyclists in mind.
“The ReTour event highlighted that the rise of bicycle commuting is not only a challenge to building design but that it is increasingly becoming a property management issue. It is not only a question of access and security but adapting to the ways in which cycling is changing and the variety of cycle designs. When it comes to bicycle racks, one size does not fit all and the best approach is to provide a range of solutions. Watling House close to St Paul’s Cathedral is a fine example of how this can be done and the building managers have installed five different types of storage solutions.
“The rising popularity of electric bikes is another area that property managers need to pay attention to. Only a few weeks ago the government’s Cycle to Work guidance was updated to include e-bikes and there is likely to be a surge in demand for charging points within office buildings.”
Neil Webster added: “With the UK government looking to double cycling activity over the next five years, it is clear that the property sector needs to play its part by providing, and managing, commercial properties that bring tangible benefits to the health and wellbeing of occupiers and our environment.
“This changing landscape was perhaps best illustrated on ReTour by Brookfield Properties’ 97,000 sq ft development at 100 Bishopsgate which, when completed this year, will provide 900 cycle spaces, but only parking for four cars,” he concluded.
Andrew Waller’s eight take-aways from Realcomm 2019
Remit Consulting’s Andrew Waller recently pulled on his cowboy boots and attended Realcomm 2019 in Nashville, Tennessee. Here are his observations:
When the Global Head of Corporate Development at Brookfield Properties proclaims that we are entering the “Quant Real Estate Era”, you know that it is time to sit up and pay attention. Kevin Danehy was speaking at the 21st Realcomm conference in Nashville, Tennessee where the increasing amount of property data and the need to analyse it was central to every discussion.
At a time when some senior property figures are beginning to question the value of PropTech, Realcomm showcased the value that innovation has brought to US real estate investors and their portfolios around the world. The 2,500 attendees enjoyed three days of discussions involving 150 speakers from across the international real estate market.
1. Why isn’t building data analysis central to all property management?
Having been exposed to a huge number of case studies of data saving significant money across US portfolios, those attending the conference were left questioning why, when the value of the data is now greater than the cost of the device being monitored, building data analysis isn’t central to all property management? As one delegate said: “Just try leaving a broken HVAC unit running for a year and see how much additional cost it adds.”
2. Data is transforming business models
While the quick wins are coming at the building level, the more forward-thinking companies are using data to change their business models, too.
A prime example of this is Florida based Woolbright Development, which is using public data sources to analyse the performance of shopping malls. When they uncover a mall that they think can be improved, they line up potential new tenants that their analysis of data regarding retailers reveals should benefit the investment, before acquiring it. They then use the results of their data analysis to improve the asset before selling it on. The data backed business case makes it easier to take decisions and get consensus from at board level. A further advantage is that the Woolbright team can cover far larger markets than they would with only feet on the ground.
A further example of good practice is the work of Oxford Properties, which now builds a digital infrastructure into every building, saving on the costs of retrofitting and providing an immediate competitive advantage with the high-quality tenants they are seeking to attract.
3. PMs can be a barrier to digital transformation
Most of the stories of innovation and growth that emerged at Realcomm were where the investor has in house resources. With one investor admitting privately that they haven’t yet worked out how to deliver similar digital change through their property managers, it seems that PM’s are sometimes a barrier to innovation for some of the largest investors.
CBRE had a large stand at the exhibition, setting out its vision of the future centred on ‘Hana’ (a flexible workspace product) and ‘Host’ (customer experience). It will be interesting to see how its clientele differs from those at the leading edge who are choosing to build their own.
4. Where should ambitious businesses start their digital transformation?
All the commentators at Reallcomm had different points of view and each company will have its own priorities. For some, it will be security and privacy all the way – nothing will be done that puts the buildings at risk or brings the investor into conflict with tenants and users with privacy concerns. Setting up a data governance framework is a good first step. For others, identifying the objectives of gathering the data is key, asking “what outcomes do you hope to address?”
In the case of WP Carey, the fund management company, it set itself an ambitious target, described as a “JFK ‘man on the moon speech” moment, and it was decided that it needed to be able to report live-time NAV. At the time, the team was struggling to report NAV quarterly but the target had the effect of galvanising the whole real estate investment group behind the initiative and significantly pushed the project along.
5. IT department should guide, not lead, digital transformation
What became apparent from all the case studies is cases is that to be successful, it is imperative that sponsorship is from outside the IT department – although keeping its members integrated into the process saves many mistakes and helps avoid increased costs.
6. The industry is challenged by security, privacy, poor data and HR
The problems faced by the industry were also highlighted at the conference with cyber threats are top of the list. It appears that insurers are still unsure how to tackle these risks.
Privacy is also a big issue with GDPR being used as guidance, even in the US where it doesn’t apply. In Honk Kong investors are talking of setting their own, even stronger, policies so as not to upset their tenants.
The paucity of data was also tackled at Realcomm where it was highlighted that real estate data “has many columns but few rows”. In some cases, however, this has been turned to an advantage because the columns can be combined to solve unique problems.
A further topic of discussion was the Human Resource challenges faced by the real estate industry. Not only is the industry in the US suffering from low unemployment, but the staff needed with data skills are also being mopped up by other industries. The need to make these roles attractive to non-traditional hires was highlighted.
7. Look beyond real estate to see the future.
There were two new pavilions at the Realcomm exhibition with Microsoft Azure providers showing that this big player sees real estate as a major plank in its strategy of being central to all data.
In addition, there was a 5G pavilion that demonstrated how digital backbones are being put into new buildings to facilitate the extremes of large amounts of regular sensor data, coupled with the bandwidth which may be needed for augmented reality and media over wireless. While this will largely be rolled out to stadiums at first, these technologies are already being included in buildings in the US for use by tenants.
8. I am consciously incompetent
Realcomm holds a UK CIO forum each October in London and snippets from these sessions will be presented there – nevertheless, the pace of adoption by these leaders suggests that the conscious incompetence I felt by the end of the three days will be shared by many more as time goes on.
Click here to read Andrew’s article for the Estates Gazette.
Are "Prop-striches" taking their heads out of the data sand?
The industry is waking up to the exciting possibilities that using data, both big and small, can offer. Its quaint, traditional, slow to change tide is turning, and we have a real opportunity to make something of our information for the industry as a whole, before the tech companies beat us to it!
Data is everywhere; from GDPR’s looming first birthday, to footfall data on the high street, and issues logs generated in offices, information is indisputably being generated. Our recent RICS Data Paper, found that there is four times as much data available than there was five years ago. Merely having data though, is not enough. In fact, there is an arrogance to having data with the potential to improve our business and industry and not using it. The idea that gut feel and tradition are better than hard facts does not fly in our changing world. Evidenced by the shift we’re seeing from the property industry of yesteryear, towards a more serious direction; even at MIPIM, there were far fewer rose-fuelled business lunches on the Croissette, and far more data exploitation. One technology company we spoke to had successfully mined the attendance lists and had scheduled seventy meetings over the three days they were there. Even at a networking level, data is leading the charge, and the property industry must take steps to get its nose back in front of the technology companies.
And we’re getting there! After years of preaching the virtues of good clean data, through our 2017 RICS Paper, our PAM and PM Forums, and most recently, our RICS Data Paper, Remit is delighted to see a move towards using it. Money is being spent all over the industry on gathering data, cleaning it and most importantly, using it to our advantage. In Real Estate Finance, MIPIM 2019 saw Cloudscraper Exchange a global integrated and institutional grade real estate trading platform, designed to use data analytics and AI, for buying, selling and mainly financing real estate assets.
In addition to this, American financing firm Kabbage, is offering loans to small businesses, by using alternative data, including social history, to inform its lending decision making. Property Managers are able to predict late payers by tracking their payment date history, and reacting when a normally very early payer seems to be butting up against due date, to establish the cause of later payment, and resolve it, before due date is missed.
These ideas are exciting and revolutionary in themselves, but the biggest change will come from a collaborative effort to mine clean and accurate data for use across the industry.
In the Netherlands, there is effort being made to create a data eco-system, across which to share data for the benefit of all. At our recent Associates Meeting, Frank Kerstens, Head of Innovation at ABN Amro, made the point that ‘everyone needs the data, but no single company can afford to do what needs to be done’. Importantly also, would any single company with to fund an initiative which will benefit its competitors as much as itself? A centralized database would be a better solution, with incentivised participation (or penalized lack of it). Centralised databases, such as SBR Nexus in the Netherlands, are offering this vital opportunity to share data, and the UK can certainly learn from this. In our Data Paper, 48% of respondents said that they would like more market data, while 38% said that one of the biggest bars to progress was data sharing problems. In this, Henry Ford’s teamworking quotation springs to mind; ‘if everyone is moving forward together, then success takes care of itself’.
Property sector "at a tipping point" says RICS Report
Remit Consulting’s “The use and value of commercial property data” report published by RICS
The property industry appears to be at a tipping point as it adapts to the realities of a digital world and the exponential growth of the amount of available data concerning real estate, according to a study written by Remit Consulting and published by the Royal Institution of Chartered Surveyors. The report’s authors suggest that it is no longer enough simply to possess data; the value lies in being able to use it.
Based on a survey of property professionals from around the world, ‘The use and value of commercial property data’ report analyses the challenges faced by chartered surveyors and property professionals at a time when huge volumes of data, concerning all aspects of property and property markets, is becoming easily accessible to everyone. The report considers the ownership of data, its security and regulation. It also makes predictions and recommendations for the future of a property world full of accurate, easily available data.
The report’s key findings suggest that:
Those who can analyse data and bring added value to their clients will have an advantage over their competitors
To many in the property sector, the sharing of data remains an alien concept
Market data that has been available for sale has often been considered poor quality
Many valuers do not trust the accuracy of others’ data and are not comfortable relying on it alone
Chartered surveyors and other property professionals are having to use skills beyond the traditional surveying competencies
The value of simply owning, or having access to data, will decline
Andrew Waller of Remit Consulting said: “The property sector has, for too long, relied on relatively closed markets and cosy relationships. We are now seeing data experts from other fields, experienced in analysing data in markets not familiar to them, increasingly looking at property market data. This is giving these ‘outsiders’ an opportunity to look for value within real estate.”
Neil Webster, of Remit Consulting, co-author of the report agrees. “Technology is improving at an exponential rate, which means that information, which is currently unavailable, will rapidly become accessible by anyone.
“The future lies in having real estate information within a database that can be dissected and interpreted, rather than kept in the heads of professionals.”
Remit Consulting’s Rebecca Ewart agrees: “While market information and data has traditionally been retained in the heads of agents and brokers, as it becomes more available, surveyors and property professionals will increasingly access data in real time, allowing them to add value through analysis. The true property expert will be the one who uses data well, rather than the one who just remembers it,” she said.
Paul Bagust, Global Property Standards Director of the RICS said: “In a market where information concerning real estate is growing exponentially is stored in the cloud and is made available instantly on mobile devices, this is a very important and timely report for our members and the industry as a whole.
“What is clear is that, as a profession, we need to attract graduates, and members, with experience and backgrounds in data science. We also need to develop data standards for the property industry that are globally applicable and open-sourced.
“More and more, increasingly accurate, data is becoming available from third-party suppliers and while there is no doubt that owning a dataset of transactions is advantageous, comprehensive property data from a range of different sources will rapidly become available to everyone. That might take two, five or even 15 years. What is certain is that to prosper, chartered surveyors will need to adapt to a market dominated by data.”
Click here to download the report.
Remit Consulting’s “The use and value of commercial property data” report, published by RICS
You might remember last June, Remit was asking our friends, clients and colleagues to complete a survey about the use (and challenges) of data within the commercial property market. We had a tremendous response from across the globe and, following the survey, we also undertook face-to-face interviews with a number of businesses in the market.
The results of the survey and interviews has now been published in a RICS report “The use and value of commercial property data”, and it suggests that the property industry is now at a tipping point.
As we pointed out in our 2017 RICS insight paper “The Impact of Emerging Technologies on the Surveying Profession”, the industry is not currently structured around the wide-scale use of data. This is now changing, and changing rapidly.
As real estate data is becoming more freely available, the value of having an agent or broker who can keep a client up-to-date with the property market reduces. At the same time, non-property data experts from other fields with experience of analysing data and providing value in markets they are not familiar with, a now entering the property world. What is more, the exponential changes in technology combined with increased data availability, is giving these new entrants into the property world an opportunity to bring value to buildings, their owners, occupiers and investors.
As our report highlights, with information in a database rather than in the heads of professionals, the true expert will be one who uses data well rather than just remembers it.
Click here to download the report.
Remit at MIPIM 2019, Cannes, France – 12-15 March 2019
The property industry is on notice - the technology firms are coming for it.
For the last two years we have all entertained the novelty of Proptech and have met new firms, started pilots, and even invested in first and second round funding. Proptech has been a buzzword, but it looks to be becoming an ingrained element of the industry. Industry big dog, JLL proudly proclaims “we are not a property firm; we are a technology firm that works in property".
This year, the tech companies (both Proptech and Fintech) got serious - with their stands still banished to the basement of the bunker, they took their message out to the Croisette. One director from a well funded tech start-up we met was half way through his 70 meetings (yes, 70) in the three days and each company we spoke to had analysed the lists, segmented their target audiences and targeted the individuals that could buy product.
This intense focus wasn’t limited to the daytime either, with a number of parties promoting tech taking place long after the sun had set over the Palais. Remit’s tech lunch hosted entrepreneurs from the UK, Switzerland and the Netherlands - we saw similarities of approach between these fast growing companies conquering the real estate industry at a very high pace.
And they are encouraged by the growing competition - a tech MD told us she loves the fact that there is more than one option in her field - it gives their offer credibility, gets more marketing out there, and helps them differentiate.
Each year MIPIM continues in its way, refining the offer, and relying on its network of contacts. This year as MIPIM 2019 celebrated its 30th edition, was no exception, with delegates from all corners of the industry turning out for seminars, stands, breakfasts, lunches, dinners and drinks.
Andrew Waller's MIPIM blog (included below) about the way that all big fund managers are running pan-European digitisation projects was quoted in the MIPIM News on Wednesday and set the tone for several conversations.
There were 26,500 tickets sold this year and just as many unregistered attendees, mostly standing outside Caffe Roma. Most people's dance cards were overfilled with parties and the weather stayed fine, making networking easy. There were no fewer Brits despite the current uncertainties (unlike Expo Real last October, which hosted a much smaller UK contingent than in previous years). There was still plenty of content in English, and MIPIM is still the place for the property industry to do business. Hans Gerritsen achieved his 25th MIPIM this year and he got the VIP treatment from MIPIM!
What was very clear this year is that most banks are back in business despite Basel regulations - but they have now serious competition from financiers from outside the banking sector - pension funds, insurance companies and PE firms with lending platforms, not only from Europe or the USA, but more and more from Asia and the Middle East.
And here too, technology is becoming more important with e.g. new real estate trading platforms for financing assets (including transaction pre-screening through origination algorithms, etc.).
Money abounds and confidence is at record highs. This always worries us, but for once we are less worried about the size of cake - we are looking at who might be about to eat it.
Here are some photos we captured this year, along with Andrew’s MIPIM News article below…
On Wednesday morning it was a real pleasure to attend the Make-a-Racket tennis classic charity tournament. Amongst other really interesting people, we were able to network with the renowned former British number 1, Tim Henman.
Why your asset and property managers will soon be quite different
As soon as fund managers find the property market difficult to place money in, and uncertainty prevails, they start to look for other things to apply their ever-inquisitive minds to.
That’s why, across Europe, all the major fund management groups are currently investing large sums in transformation programmes designed to use the best of new technology, but, more importantly, join up their data into a seamless whole which can be used to extract more value. We’ve seen the proliferation in the last 20 years of data bases and property management systems; this new wave of projects is something different. Fund managers want instant access to their asset data, and they want to be able to rely on their analysis without making assumptions about its cleanliness.
Some of the drivers in these projects come from the equity and bond divisions of the firms which you could argue lend themselves large scale data management and analysis. However, the argument for real estate to keep up with these other markets is driven more by the new availability of large amounts of data from previously untapped sources.
Remit’s own research (REMark Report 2017) tells us that the number of property management accounts has halved in the last few years as financial data becomes more accurate and easily reportable. By contrast, facilities management staff have doubled in numbers in the same period. We have long predicted that the impact of building level services on the value of the investment will define the market in years to come and this increase reflects the staggering increase in regulations and tenant/customer requirements over the past few years.
Additionally, the advent of smart buildings, with ubiquitous sensors, and the advent of 5G telecommunications only a couple of years away from widescale use in Europe, means that the opportunity to capture much larger amounts of useful data about investments is there for the taking.
And, of course, should buildings start to be traded regularly and openly on an exchange like IPSX, the requirement for up-to-date, accurate, data from the assets will be paramount.
There’s an elephant in the room, though. Will we need asset, property and facilities managers if building data is being analysed by machine and routine operations are being carried out automatically? The RICS report, The impact of emerging technology on the surveying profession set out reasons why 89% of current property tasks will be automated.
The global fund managers are looking at this in their projects. There is a huge emphasis on customer experience and many jobs will still require people – for example, front of house, contract negotiations, specifying work to be done and creating value through refurbishments and redevelopment. However, the people undertaking this work will be supported by the analysis of data; this is where the machines will free up time for humans to be better.
The opportunity this presents is to reimagine what each of these roles does and who will do them. We should be finding people for property management who see this as a career in itself – not the traditional view that the job is done as a stepping stone to being an asset manager.
Remit’s regular PAM Forum, held in London, where many of the top property fund asset managers meet quarterly to exchange views recently considered ”The Perfect Property Manager”. Many views were quite traditional and the overall impression was that being a property manager was lower in status than many other property jobs. This is a completely different view from those in technology companies who are now targeting elements of the property manager’s market – they see it as an exciting opportunity for their customer friendly staff to provide an excellent service. It is a career in itself.
The opportunity for asset and property managers is clear. The fund managers will be employing firms which have strong data analysis skills and who can identify and hire customer focused managers. The underlying requirement for property knowledge will be there but it will not be a differentiator.
The winners will be those firms that analyse data as expertly as those in other investment sectors, and can keep their direct customers, the tenant happy and profitable.
Real Estate - a technology battleground?
In a recent article in The Financial Times, columnist Patrick McGee wrote about the threat to the global car industry from new entrants with disruptive technology. His article outlined the need for motor manufacturers to ‘update their entire business model’ in order to face the threat of tech companies taking control of their customers.
The motor industry is not alone in having to face up to such challenges.As technology advances exponentially, new markets and opportunities are opening in various industries and sectors, and those best placed to disrupt the status quo and take advantage of these opportunities are not necessarily the traditional players but those with the relevant technological skills and knowledge. There can be no doubt that this is also true for the Real Estate sector where established businesses and brands are being increasingly challenged by newcomers to the sector armed with disruptive technology.
At Remit Consulting, we have been struck by the number of new entrants into the real estate sector who do not have a property background or any of the industry’s pre-conceptions. An example of this is within the Student Accommodation market, where many traditional property managers have declined or passed on the opportunities presented to them, leaving the sector open to new players, with new methods and new means of calculating fees. As a result, it is now a sector where “10% of service charge” has become almost meaningless.
We have previously highlighted how Artificial Intelligence (AI) is playing an increasingly significant role in this new world, with automation being built into rent collection, help desks and even building design. Generally,this new technology has not originated from within the Real Estate industry, with the majority of it being imported from the tech sector. This infiltration is confirmed by the volume of start-ups entering the Real Estate market direct from Silicon Valley and other innovation hubs around the globe.
How should the Real Estate industry respond to this threat? Should it be investing in technology itself? Should we all become the innovators and disruptors that threaten us? There are no easy answers and any innovation needs to be objective in what is going to be effective for clients and customers. We have recently seen some investment in commercial real estate PropTech solutions by some of the larger players, including JLL investing £4m in digital office broker ”Hubble”; which bridges the gap in business models between people and businesses looking for a new home/office.
There has also been an influx of new business models and approaches focusing solely on Real Estate data. For example, Nested, an online estate agency that offers added value through better use of data. Complacency is not an option. As Patrick McGee reminds us in his FT article, in 2007 General Motors was the world’s largest car maker, sitting on $25bn in cash. Within a year and a half, it was bankrupt.
10 things we learnt in 2018...
We decided to do a quick survey amongst the team to see what interesting things we discovered last year. Here's our top 10...
There’s a helter-skelter ramp for bicycles in the basement of a new office building in Victoria named Verde.
Facial recognition for visitors (even cyclists) at the new TwentyTwo commercial office development on Bishopsgate.
There is now an AI property manager in the world, AI Adam, using machine learning to add value and increase efficiency amongst property management services.
Virtually no traditional UK property management firms are managing Student Accommodation investments.
There are 22 different spellings of Secretary of State for the Environment in entries in the Land Registry.
PropTech, might not be a thing for much longer… For example, there appears to be little correlation between the number of times blockchain gets mentioned at PropTech events and the number of people who actually know what it means.
Nomura has a comprehensive health and screening facility in its offices staffed by doctors where blood tests of employees can be taken and reported in under an hour.
We’re receiving more spam than before the General Data Protection Regulations were introduced in May.
Nobody seems to know the quantum of data being used in the real estate industry - no change from 10 years ago. But yet everyone says it has increased! (Keep an eye out for our RICS Data Paper, due to be published in early 2019).
There is a never-ending supply of buyers willing to take a different view to the traditional commercial real estate investment approach. These investors only see value in the buildings that are at the top end of the market.
Have we reached peak PropTech?
If someone asks you a question you can’t answer, do you immediately ask Google or Siri to find the facts? Technology has become an invisible and integral part of our everyday lives. With on-demand access to virtually anything in the palm of our hands, it is almost as if technology is becoming a sixth sense. Virtual, augmented and mixed reality have pushed technology into a fourth wave, following on from the advances of personal computers, the Internet and mobile.
This is not just a personal issue – it is also reflected in industry; with ongoing changes to organisational culture and the birth of FinTech, ConTech, LegalTech and of course PropTech. But whilst slick buzzwords will always be around, is the real estate industry reaching an end of its honeymoon period with PropTech? The consensus amongst much of the Real Estate industry is that we are coming to peak PropTech. The market seems saturated with ‘solutions’ to problems we weren’t sure that we had, and gimmicks that promise to aid automation, but are facing very low adoption. We are going from “What is Proptech?” to “Why use Proptech?”.
A recent PropTech survey conducted by Trident and the RICS found that 95% of property firms want to adopt PropTech, but only 59% of them have actually done so, possibly suggesting that there is too much around for the appetite. The main reasons for its avoidance also support this argument, including a lack of clarity on the benefits, a deficiency of knowledge and training, and cost. This discrepancy between best intention and reality was also found in our recent survey on client portals, with one respondent citing a 93% difference between clients with portal capabilities and those actually using them.
There appears to also be little correlation between the number of times blockchain gets mentioned at PropTech events and the number of people who actually know what it means, which further suggests that PropTech is just a fad.
Are we looking at this the wrong way? Are we being, dare I say it, too binary?
Lots of small problems have been solved so far by PropTech, but there’s still plenty of room for a major industry breakthrough. Much of the conversation around the changing role of the Chartered Surveyor focuses on future state and how it’s ‘due’ to be affected, but, as yet, there is little evidence of it actually being changed. How can expectations be of future progression if we’re at the peak?
Valuations and investment appraisals are already starting to become automated through tools using machine learning and algorithms, such as Dashflow. Efficiency gains are beginning to be seen by many Landlords who are now using VTS to help manage their asset and leasing data. We’ve also seen the rise of online agency portals such as Hubble; a driving force behind a trend that is seeing traditional commercial property agents quickly becoming obsolete, particularly given the growing number of SMEs and subsequent shorter commercial leases.
The relatively low adoption rates of PropTech tools is more of an indicator that people amongst the industry need to catch up with technical capability, as opposed to being evidence that we’ve reached the peak. Until the industry as a whole is able to accept and utilise these advances to their full potential, bigger inefficiencies will remain unsolved.
If technology is beginning to defeat humans in the battle for Real Estate and property professionals can’t quite keep up, then surely PropTech will need to act as the peacemaker. With smart buildings like the Edge in Amsterdam, point-cloud technology for sites and blockchain being used for Land Registry data, it is evident that the fourth wave has had a disruptive impact on the Real Estate sector. Yet, we still have a long way to go before technology can start to feel like a sixth sense amongst property professionals.
Asset Managers on Autopilot
The recent fatal accident involving an Uber self-driving car has, according to some sources, put back the argument in favour of this technology by several years. The fatality has come relatively early in the development of these vehicles; proponents had hoped that more than 100 million miles of safe journeys would have been completed before an accident like this – even Waymo, the Google company that is furthest ahead in testing, has only completed about 5 million miles.
In discussing potential causes of the tragedy, commentators point to the confusion of modern roads and the mixture of humans and automated systems that a computer has to deal with. There is a fear, as with all new technology, that computers are too linear, too binary to deal effectively with the nuances that modern life can throw at an individual.
There is another line of thinking that is worth considering at the same time – people are good at being involved with jobs; they are less good at supervising them. Mica Endsley is the former chief scientist of the US Air Force and author of ‘Designing for Situation Awareness’. She wrote an interesting discussion of the issue for the Financial Times which centred on this problem. In relation to self-driving vehicles, her experience is with autopilots in aviation. She says, “It turns out that the switch from doing something oneself to monitoring another process lowers people’s level of engagement, both decreasing their understanding of what is happening and making them slower to respond to critical events. It is as if the automation turns the driver into a passenger.” We are easily distracted by more interesting activities once we have faith in the computer systems. In fact, she says that the more competent the system, the less likely are we able to intervene to prevent an accident.
Let’s stretch this analogy to the contracts that we deal with every day – for example, the property management contracts that we help clients with have often failed because of a breakdown in trust between the asset managers and the property managers. Both “sides” blame the other – each says the other is unresponsive and unfocused; delays are frequent, and it is often third parties (in this case, the tenant) who become the victim of failures.
When we address the situation in property management contracts, we find that although there are failures from both parties, the asset manager has often abdicated responsibility for managing the contract because the work it contains is less interesting than other asset management work. It seems from the FT article that this is not a failure in management as such, but natural human psychology, and we need to safeguard against this by building in a way of retaining involvement on both sides of the contract. In our experience, giving both parties something to be responsible for increases each party’s reliance on the other, and the reliability of the relationship.
It sounds as if we may have a bumpy ride as computer systems become more competent at dealing with our busy and changeable roads, and as we adapt to trusting the car to drive competently – whilst simultaneously keeping ourselves alert and responsive to impending dangers. Thankfully, keeping all parties alert and focused within property management contracts is much easier.
GDPR in the Netherlands
The the majority of real estate firms in the Netherlands are unaware of the new wide-ranging EU data protection regulations (GDPR). This was the conclusion of a recent round table meeting held in Amsterdam, organised by Remit Consulting together with software company OSRE and Lexence Lawyers. The attendees suggested that the industry can become more GDPR-proof by creating awareness within real estate firms about GDPR and having an insight towards the management of personal data.
GDPR requires all companies to demonstrate that they have control over the personal data they process, starting from May 2018. However, as revealed by the attendees, it appears that many Real Estate organisations have a lot of catching up to do and are not adequately prepared. The average score for a question about whether the sector is GDPR-proof was only 4/10.
The most important bottleneck mentioned by the attendees is that the new privacy law is not directly in line with the interests of real estate companies. The know-your-customer culture in the real estate sector requires personal data (information) to serve customers better, improve business processes and reduce risks. Consequently, as many organisations are lacking the right mind-set and approach, it is difficult to embed the new legislation in organisations because its value is simply not being seen.
It’s becoming clear that to comply with the GDPR, organisations should begin by analysing the sense and nonsense factors behind collecting and recording information. Which data do you collect for what purpose? Who has access to the information? Can you explain this to your clients and is it in line with all aspects of GDPR? Such questions provide companies with necessary insight to their current processes, in addition to raising awareness about the privacy and protection of personal data within the organisation.
Several alternative solutions were also mentioned during the discussion, including:
- Anonymising (pseudo) personal data, so that information is no longer traceable to an individual;
- Encrypting, or encrypting data in so-called tokens, which ensures that personal information is unreadable during a data breach;
- The use of technologies such as block chain, to (for example) encrypt and anonymize data, or verify data without saving it;
- The conclusion of a good (and mandatory) processor agreement with parties that process data;
- Working within one central system, in which the access of various cooperating parties to personal data is recorded.
According to the attendees, data, and more specifically data analytics, will be at the forefront of the real estate sector throughout the coming decade. Yet currently, there is only a small focus on data amongst real estate organisations, which will change over the next few years as the technology market expands and companies become increasingly data driven. Real Estate firms need to be more aware and prepared for these forthcoming changes by transforming themselves into data processing and GDPR experts as soon as possible.
To find out more about GDPR, visit our Compliance page.
The robots aren’t coming to steal our jobs (yet)
You can’t move in the property industry these days without hearing that AI is going to steal all of our jobs. But aside from being a provocative statement to kick-start a networking session, how true is this?
The facilities management industry has been particularly blessed by the technology revolution; platform analytics provide business insight using mapping techniques, sensors, actuators and user interface apps to provide remote and automatic control. Even more futuristically, providers such as GeoSlam offer geospatial 3D mapping hardware and software that can scan buildings up to 20x faster than normal, while EnergyDeck has developed sensors, automated controls, data analytics and benchmarking to help users track and manage energy, environment and resource data.
On the basis of these advances, new services and business models are likely to be emerging in the next few years offering fully traceable building management. With this end to end provisioning, the building will be telling you it needs replacing and not the other way around!
And yet, according to our REMark survey benchmarks, the number of facilities managers in the industry has increased over the last 3-4 years – a far cry from the expected reductions one may have predicted in a sector which is now benefitting from so many brilliant advancements in technology. What is going on?
Historically the FM industry has been a comfortable home for traditional service provision, with a mix of ‘hard’ and ‘soft’ activities. And, until now, innovation has been concentrated on management systems development and data enabling packages to develop a more established view of efficiency opportunities. The focus, however, has now shifted towards building behaviours, reducing operation costs, and, excitingly, enhancement of occupant wellbeing and the value of space.
With the industry becoming more white-collar then, who are the new facilities managers? We anticipate the emergence of a hybrid role connecting Building managers with Asset managers, and combining elements of property management and FM. Indeed, this is already materialising in the Workplace manager position among corporate occupiers.
Modern facilities management needs individuals who are comfortable with the new technologies, and continuing innovations (because this is just the beginning), who are also excellent at Front of House, because as anyone resistant to the AI revolution will correctly exclaim, ‘but clients want people!’. Few such individuals exist at the moment, so training is needed to cultivate these mythical FM-ers of the future!
So, the robots aren’t coming to steal our jobs (yet), but technologies such as AI and augmented reality are on their way to change the industry. It would be very foolish to cast these technologies as adversaries, especially as strategy can survive anything except contact with the enemy. With this in mind, the future is bright for anyone who can understand data while being charming, helpful and efficient – which sounds like quite a nice job to have!
Who or What is Your Customer?
We hear that WeWork values the data about its occupiers more highly than the “rent” they pay. This follows the model established by the likes of Google who, initially, gave their search engine and email services away for free on the basis that we consent to letting them understand every aspect of our lives.
In proptech, they say that "if you don't pay for a product, you are the product..." This implies that WeWork is planning to change the relationship between Landlord and Tenant far more than we have already seen; does WeWork have “Tenants”, “Customers”, or “Products”?
An increasing number of mainstream corporate landlords also insist, “We shall no longer refer to the people in our buildings as tenants; they are our customers, occupiers, retailers, brands or guests.” This transition is well-intentioned but can be confusing, particularly when building owners also have investors and other forms of customers to consider beside their tenants.
So why do so many property companies insist on abandoning the term? The argument is the negative connotations of ‘tenant’, following the long, bitter history of landlord suppression that conversely led to legislation empowering tenants with onerous rights against landlords.
As a landlord client of ours comments: “We refer to them as customers because the term tenant has a somewhat old fashioned, formal image. Whereas the term customer is more personal and implies that the level of customer service we need to provide is more important.” This implies more of a rebranding exercise, intended to change the perspective on how a tenant should be served.
‘Tenant’ is also a legal term and we mustn’t lose sight of the implications of renaming something referred to in legislation. Lessons can be learned from employment law, in which the terms ‘worker’ and ‘employee’ are often used synonymously in contracts and day to day dealings, but have, in the past, been viewed quite differently by the courts.
Furthermore, the vagueness of the term ‘customer’ can sometimes muddy the waters;. for example, an owner’s customers could include their investors, shoppers or just visitors to a shopping centre. Would a more precise descriptive-word such as ‘lessee’ or ‘renter’ be a more appropriate substitute instead therefore?
If our industry is intent on changing the way that tenants are perceived and managed, surely there are more effective methods of doing this than just introducing a new epithet. Training and improved tenant experience processes would be a great start.
Is it also possible that Landlords will come to value the services their Tenants can provide so highly that we’ll one day see free accommodation in return for their data?
The rise of the robot surveyor
I do not know if you saw it, but back in April Dr Sabine Hauert of the Royal Society wrote an article for the BBC regarding the “Eight ways intelligent machines are already in your life”.
The list includes how AI (Artificial Intelligence) is changing the way we shop, the way in which we communicate and use our mobile phones and how we do our banking, along with other changes in science, education and in healthcare. Doctor Hauert concludes the article by saying: “Over the next 10 years machine learning technologies will increasingly be part of our lives, transforming the way we work and live.”
So what transformations can we expect in the world of real estate? How will jobs in surveying change over the next ten years?
It is a topic that I, and my colleague Bob Thompson, have taken a close look at over the past year or so and our findings are now available in an Insight Report that has been published by the RICS.
As part of our study for the ‘Impact of Emerging Technologies on the Surveying Profession’ report, we identified a set of 43 basic tasks that surveyors undertake as part of their day-to-day activity. Having identified these we looked at their exposure to automation and found that almost half were found to exhibit a high degree of vulnerability, while a further twenty showed a significant degree of vulnerability.
We believe this means that, over the next decade, almost 90% of the core tasks undertaken by surveyors could be impacted by new and emerging technologies.
Our own findings were complemented in the report by a survey of property professionals, who were asked for their own opinions on the likely impact of technology on surveying. This allowed us to conclude that the disruption caused by automation within surveying is most likely to be seen in the specialisations of lease management, valuation and the direct management of property, investment & asset management and facilities management.
These changes will come about as a result of an increase in the consistency and transparency of transactions and an increase in the accuracy of reporting which will be increasingly done in real time, thanks to a massive increase in the deployment of building sensors. In turn, there will be a reduction in the cost of managing buildings and portfolios. We also think that there will be a significant reduction in staffing in certain areas such as valuation.
Surveyors are multi-skilled professionals but with so many tasks being suitable for automation we have to expect far-reaching changes in our profession in the next few years with a change in the skillset of surveyors, who are likely to become either data scientists or client managers.
The changes that AI will bring about will offer both challenges and opportunities for surveyors that embrace the new technologies to bring value to their clients through increased efficiencies and high-level, strategic advice to their clients. The new technologies will allow property to compete with other asset classes on a level playing field.
Those that ignore the changes that are rapidly coming down the road will do so at their own peril.
Download a copy of ‘The Impact of Emerging Technologies on the Surveying Profession’.
Wheel Estate
Cycling is very much in the news at the moment. The Tour de Francehas just concluded in Paris and the Mayor of London has just launched his Transport Strategy. In the former, British cyclists are dominating the headlines.
On the face of it cycling would appear to be a solitary sport about individuals - Cavendish, Sagan, Thomas, Aru, Froome etc. However, it is one of the greatest team sports. One of the most impressive parts of cycling is that members of the team will sacrifice themselves and their whole race to "break" other teams by increasing the pace at key moments and by protecting the Maillot Jaune (Yellow Jersey) until the last few hundred metres - surely this is extreme - and very human thing to do. Behind these and a host of other names, is a big team of people and equipment, all playing their part.
And it's not just confined to sport. The property business is a team game too. Sometimes individuals may take the glory for a deal or for managing a client account but they have many more behind the scenes making things happen. Our experience with property outsourcing is that it's not about the key account manager nor the system but the all-round team, their performance and strength in depth.
The experience of a workplace can be ruined by one link in the chain (like the pun?). At a recent event, ironically on the importance of the workplace, I was instructed that my Brompton bike, despite being folded up to a similar size as other guests bags, was not welcome. ("I'm sorry Neil you can't do that"). That spoilt my day and my experience at that building.
In our supply chain and also in the workplace, we need to welcome our new team member with a growing influence - the robot. Our work published this week as an Insight Paper by the RICS on the future role of the Chartered Surveyor suggests that your team will soon be made up partly of bits and bytes.
So, teamwork, often highlighted, not always celebrated or credited, is as important in cycling as it is in the property business. And talking of teamwork, the Remit team is proud to have been the authors of the recent BCO report on the implications of the growth in cycling on the workplace - The Market Cycles.
But how will the future of teamwork change? Who will be the property Maillot Jaunes? How will we protect them, how will we interface with the robots and what human aspects of the business of property will we lose? And, will the teamwork, esprit de corps and sheer hard work in real estate continue to provide an enjoyable career?
We think it will.
Velo-city conference 2017 - Nijmegen, The Netherlands
By Hans Gerritsen
This year’s international cycling conference was held in my home town Nijmegen in June, so I pushed my way in, after hearing that several other associates of mine would be attending. The conference was hosted by Region Arnhem Nijmegen, which looks after various cities in the Netherlands.
Commuters, students, inhabitants and visitors travel to and from these cities in large numbers each day. In conjunction with the surrounding municipalities, the region can be best described as a smoothly-running ‘daily urban system’, which is becoming increasingly organised on a regional scale. Much effort is currently being devoted to developing new mobility systems, which include traffic and mobility management systems, public transport and the creation of an extensive infrastructure network of fast cycle routes. These fast cycle routes ideally complement the daily urban system: because they offer greater comfort, are free of obstacles and they allow cyclists to travel much greater distances.
The conference involved a Mayors Session, in which 30 mayors participated, including the Mayors and Deputy Mayors of Paris, Rio de Janeiro, Dublin, Mannheim, Kampala, Oslo, Dusseldorf and Nantes. Other renowned participants included EU commissioner for transport, Violeta Bulc, ITF secretary General José Viegas, and the Luxemburg minister for transport. The main objective of the event was to exchange ideas and experiences on how to create 'Governance for more Cycling'.
More about Velo-City
ECF’s Velo-city is the world’s leading provider of international cycling conferences. It is the largest gathering of cycling professionals in the world, enabling both academics and practitioners to discuss innovations, ideas and best practice strategies for cycling. This year’s event, was hosted in the ‘cycling capital of the world’ - the Netherlands. The theme was ‘the freedom of cycling’, which relates to the physical, economic, social and spiritual freedom of travel and well-being. The conference had a vibrant structure, bringing together cycling professionals from every sector, including academics, politicians, cycling advocates, mayors from many cities, press and media, cycling networks and communities.
More about Scientists for Cycling Network
Launched at the Velo-city Global 2010 conference in Copenhagen, the Scientists for Cycling network was created due to the growing recognition that there is a large number of experts worldwide, in many different academic disciplines, who are able and ready to contribute to ECF’s mission: to improve and to increase cycling. Research, research-plans and scientific-based publications on cycling or cycling-related matters are often not sufficiently connected to (the networks of) other scientists, professionals and volunteers who concentrate on cycling. The Scientists for Cycling network is designed to bridge this gap.
Why the Netherlands? Bicycles! The Netherlands!
Two terms, two images that are inextricably linked with each other! The Dutch really enjoy cycling. Most Dutch people (84%) own at least one bicycle. Of the 17 million inhabitants in the Netherlands, 13.5 million are cyclists, who own 22.3 million bicycles in total! There is no other similarly-affluent country in the world where bicycles are used so intensively! The Dutch cycle mainly because they find the bicycle to be a pleasant and reliable means of transport. The Netherlands is the world's number 1 cycling country for good reason!
Facts and figures
The Dutch choose the bicycle for a quarter of our journeys overall and one third of all journeys up to 7.5 kilometres in length! That equates to more than 4.5 billion journeys by bicycle each year, and a distance of 15 billion kilometres. On average, each inhabitant of the Netherlands completes 300 journeys by bicycle each year, covering a distance of more than 900 kilometres!
Those key facts and figures about cycling in the Netherlands are part of the reason why holding Velo-city 2017 in the Netherlands, and more specifically in the Arnhem-Nijmegen region, was such an attractive and unique opportunity!
"I’m sorry, Dave, I’m afraid I can’t do that..." - by Bob Thompson & Andrew Waller
We’ve moved on. Last year, our discussions with property people about artificial intelligence (AI) often led to comments about unlocking a future dominated by Terminator robots. Peoples’ (entirely rational) fears are summed up by the quote from 2001: A Space Odyssey, when HAL, the ship’s computer tries to kill the crew.
Remit Christmas gifts were Amazon Echos – the device that houses Alexa, Amazon’s AI assistant. James Dearsley, proptech guru, was an early adopter of Alexa, but his wife is not a fan. The day she “met” Alexa, she said sharply “Turn her off!” An insight into how we will view our AI assistants? More worryingly, our team has reported that Amazon has recommended purchases on their next visit to the website, coincidentally similar to items discussed in the same room as Alexa.
Is this acceptable?
Well, AI is set to become a bigger part of all of our lives. Marketing thought leader Seth Godin recently wrote a list of 23 things that a computer can now do better than a human., Amongst these tasks are “Pick a face out of the crowd”, and “figure out the P&L of a large company”. Watson, the IBM supercomputer is currently prescribing drugs more accurately than a human GP and PwC has launched a bot which dispenses advice. Professional services are not safe.
You may say, “ah, but a computer can’t [insert task here]” – that’s missing the point. AI will be adopted despite our fears because it makes our lives easier, and is cheaper than getting someone to do it for us. Moreover, one reason they will be adopted is that they CAN’T currently do the whole job – they pose no immediate threat.
A thought experiment – a number of web sources give an example of a stadium being filled with water exponentially – 1 drop, then 2 drops after a minute, 4 drops a minute later and 8 drops a minute after that… and so on. The stadium is full after only 49 minutes. The point is that after 45 minutes, the stadium is only 7% full. The majority of the flood occurs in the last 4 minutes.
There is good reason to suppose that the rise of the machines will also appear suddenly. We are still some way off, but the future is clear – we will be working side by side with our creations in most of our current jobs – and just as in previous industrial revolutions, many jobs will be “lost”.
We have recently been discussing future roles in the property industry and our paper on this will shortly be published by the RICS – there are good reasons for optimism but the potential for change is real. Early adopters will adapt and benefit from the changes – others may not retain any choice.
Perhaps our real fear may be that we won’t be able to do the things we were trained to do in the last century - I’m sorry Dave; I’m afraid you can’t do that.
Weird Science - by Matthew Blackmore-Squires
Weird Science?
…no, I am not referring to a certain cult film that caused many a teenager to stare at their screens, slack jawed, at the ‘science’ of building a rather over-perfect partner. Rather, the science which is being incorporated into our working environments.
As an occupier, the ‘science’ that has moved into the workplace is increasingly becoming a minefield to navigate; technology and ideas abound such as motion sensors, desk sensors, environmental controls (air quality/ flow, light quality, noise pollution), biophilia, ‘densification’, wellness / wellbeing, BREEAM, WELL Buidling Standard certifications etc. There is increasing demand for a new face in the business team, who might ensure these ideas work, are analysed and the results are acted upon in a collaborative approach. This will allow improvements in the productivity and motivation of the workforce to shine through.
Most of these technologies, have been highlighted in the excellent research paper ‘The Stoddart Review’. (more on that later in our newsletter).
So, who’s going to manage all of that for you? [Enter screen right] Facilities Management (FM)…
FM will maintain your estate, and it’s worth noting that our last REMark survey shows there are twice as many FMs as PMs now in property management. Their focus is not just on occupiers, as Landlords are increasingly looking to FM to add value to their properties and attract tenants.
Yet, FM is largely undefined and, even now, still requires more work to understand the scope of that role. Better definition of the FM role would certainly help clients understand the value they can bring to the table.
[Enter screen left] the ‘Work Scientist’* perhaps as a stereotype wearing a white coat, complete with the pens in the top pocket. This role requires an understanding of how to apply innovation, change and a more ‘geeky’, scientific approach to the workplace.
I would encourage you to look up MITIE’s very interesting video about their work at Redbull Racing (yes, the F1 team) and tell me you disagree!
As with all ‘weird’ things, it takes a leap of faith by the few for the many to have the hazy mist lifted and the prize slowly appear; at least, I think that’s how it happened in the film!
Welcome to 2017, its going to be a bumpy, but fun ride and we hope we get to speak to you at some point in the year!
* acknowledgement to Mark Tyson (formerly of Mitie Group) for this role title.
Christmas Top 10: PropTech
The property industry's favourite topic this year has got to be PropTech; a mashup of "property" and "technology", featuring various technology products and services claiming to radically change how we live, work, buy, sell and build in the future.
So we did a quick survey around the office to see what everyone's favourite PropTech innovations were and why...
1. Alexa
As built into the Amazon Echo, Alexa is the first real example of artificial intelligence in the home that you can talk to. You don’t have to get a phone out of your pocket – you just ask her (it?) for information or to remind you of something in your normal speaking voice. It links to services like Spotify and can even control your heating.
- Andrew Waller
2. Splittable
"Shared living made simple...": This residential innovation splits bills and tracks expenses amongst flatmates very easily, via a user-friendly and free iOS, Android and web app. You can pay your housemates back directly through the app, which also conveniently stores past expenses and recorded payments for monitoring purposes.
- Melita Thomas
3. Realla
A fantastic search engine for commercial lettings and investments, which also enables agents to easily produce marketing materials.
- Mark Jones
4. 3D printed buildings
The concept has been around for a while, but Dubai unveiled the world’s first 3D printed building this year and wants 25% of its buildings to be 3D printed by 2030. None of this could be done without the help of a ginormous printer though - this one was 120 feet long, which is a whole 20% bigger than a blue whale!
- Steph Yates
5. Fixflo
Whilst at university, the last thing I wanted to do was contact my landlord to complain about the house falling apart. However, via the tenant portal, I had access to Fixflo; a customised picture-based diagnostic system which helped to identify issues, pinpoint the room on a map of the house and educate me on what my responsibilities were in the situation. This gave me the opportunity to provide every detail, including evidential pictures, which they need to fix the problem without any need to interrrupt my revision.
- Miquela Bezuidenhoudt
6. Appear Here
This PropTech innovation has successfully filled a clear gap in the retail property market by connecting landlords' vacant spaces directly to retailers - all at the click of a button. Their website is very user-friendly and I’ve also heard that they will be expanding into additional support services by helping their clients set up their pop-up stalls or shops; through efficiently finding them support staff and facilities.
- Joel Suissa
7. WikiHouse
Aiming to give people with no formal construction training an easy way to start building their own homes. The plans are simple to construct, free and easily customisable to meet demands. Construction of WikiHouse structures requires no special parts and can be assembled in less than a day by people with no formal training in construction.
- Francis Hardy
8. Nest Smart Thermostat
This Gadget allows you to adjust the temperature at home, both manually and remotely. You can also turn the heating on from your phone in advance of arriving home and the device switches the heating off when it senses that nobody is there. Thanks to this innovative Smart App, I now have much greater control over energy consumption and am hopeful that I might see a 5-10% reduction in costs.
- Neil Webster
9. The DAQRI Smart Helmet
Virtual reality is finally going beyond the gaming world and into the (err...) real world, with improved functional applications. The DAQRI Smart Helmet is clearly aimed at real time front-end design and specifications, with the construction, building and Facilities Management markets at the forefront of its functionality. The primary focus is on the BIM aspects of a property.
- Matthew Blackmore-Squires
10. Tempronics
"Heating and cooling individuals more and buildings less..." Tempronics has turned this concept into reality, with the introduction of their 'Temperfect' office chair. They have embedded hundreds of tiny pumps into the cushions of every Temperfect chair to allow personal control of thermal comfort. This innovation has the potential to significantly reduce heating and cooling costs (both financially and environmentally). Roughly 50% of energy expended by offices is for heating and cooling purposes currently.
- Bob Thompson
Marmite - by Matthew Blackmore-Squires
Has this now been relegated to the second biggest divider of national opinion in recent British history?
As the advert stated; 'You either love it, or hate it'.
Even when asking the question of others, it would normally equate to about a 50/ 50 split either way, and could you persuade the opposing side to swing their opinion? In my experience, not very often, if at all. People are often wary when being asked to change their minds. “Why should I? What’s in it for me?” These are just a couple of the obvious retorts.
So how do you break down barriers and get people thinking differently?
Well, psychologically speaking, changing someone's mind is rather difficult. Let’s reflect on the most recent political event to be written into British history books, Brexit. It’s a similar split to the Marmite argument at roughly 50%. Talking to someone with opposing ideas and beliefs on the subject can raise heated debate and often end in a stand-off. In politics, public statements - in this case referendums - are rarely overruled, which makes the forthcoming political and economic decisions extremely difficult propositions. Good luck Mrs May!
You see, it’s quite simple: our strongly held beliefs form a network of consistent concepts. In order to get someone to reconsider their views, it's important to understand the role of "coherence" in supporting beliefs. Or more simply put, the examples that back up your beliefs and ideas.
To change people’s minds, it is important to undermine the coherence among the things that they do believe, to develop counterarguments to their most significant sources of support and to expose them to more pieces of information that are consistent with new beliefs. Attaining all this information from multiple sources or influencers is also key . After all, the easiest way for people to maintain their current beliefs is to decide that any contrary information is unreliable, or simply ignore it. The Brexit campaign is a good example of this method; It played with people’s beliefs, ideas and emotions.
With all this said, our method is rather simple and although the tasks we are asked to resolve are not as political or perhaps as daunting as the task ahead for Mrs May - the same principles still apply, which boil down to Definitions and Objectives. By clearly defining issues, one is more likely to be able to get to the crux of the issues, identify common ground with the opposing party and find areas where they are in agreement.
Working collaboratively with opposing parties also helps to set clear and achievable objectives for resolving the defined issues. Research suggests that by having a greater level of detail in definitions combined with setting a greater number of actions in order to achieve the objectives, leads to an enhanced perception of success by those looking on from above, within or outside.
Yet, of course some people will never change their minds. After all, taste buds are genetically engineered to simply accept the stuff you love or hate.
P.S. I love it. Especially when spread over hot granary toast with butter!
Inventing Dinosaurs - by Andrew Waller
Our friend, Antony Slumbers’ recent Estates Gazette article on technology let slip the comment: "The iPhone 6 and iPhone 7 are virtually indistinguishable. Therefore, the smartphone has been perfected”.
But has it? I am completely dependent on mine but despite this, I think there is lots wrong with the design.
My smartphone is currently sitting on the desk beside my laptop because it is uncomfortably large sitting in my pocket. It’s too heavy; it’s easily broken; and the battery life is still too short. The memory fills up with data after a year and slows down the phone, and, it fails to connect up properly with other devices (sports) or I need to compromise on what I want to do.
On form and function it therefore fails. So why are Samsung and Apple apparently content to stop making huge leaps of innovation?
If you were to assume that Apple simply went for a land-grab to capture as many fee paying customers as possible, the end goal of a truly useful, portable and inconspicuous piece of design becomes irrelevant; Apple (and Samsung) has achieved the land grab – why not stop there?
We also know that people – customers - hate change, and so further marketing to persuade customers to adopt the Next Big Thing would not add greatly to revenues. Why not stick with what customers like?
And so, dinosaurs are born. The way is therefore clear for someone with the clout of Apple to reinvent things. Again.
However, step-changes come about infrequently and unexpectedly. For example, we are seeing small changes in the real estate market despite some very active PR surrounding Proptech – the generic name for the new band of revolutionary property ideas based on new technology. The recent Proptech 2016 conference in London was very similar to ones back in the dotcom boom in 2000 – new ideas emerged in the years after, but few were revolutionary.
Rather than rely on technology alone to solve our problems, let’s look at some obvious issues.
The “Average time to sell a home falls to record low of 57 days” proclaims the FT on 20th June. Nearly two months? Really? When travel markets, financial markets and the banks can exchange data digitally and instantaneously? If the current Proptech evangelists are to succeed they need to find a compelling reason to change and that simply isn’t happening.
We think the change will come from one of three places, or all three at the same time. Firstly, digital data will eventually find its way into real estate. When this is captured reliably - using technology already available such as BIM, BMS and block chain - due diligence time will shrink, speeding transactions to days if not hours. Next up, flexible use of space on non-lease agreements such as those offered by Regus and WeWork will begin to replace leases as soon as traditional landlords recognise the profits that are being sucked out of their legacy investments. Lease-as-a-Service is real and transformational. Lastly, Machine Learning is being leap-frogged by Deep Learning at a rate that is terrifying – how can a lawyer or broker add value if not only knowledge, but quite significant reasoning is being done by machines. People will be needed - but not for the basics… or even quite complex analysis.
In real estate, we have not yet had our iPhone moment but it may come sooner than most people think.