Awareness to Adoption in CRE: PropTech - 2

Before Covid, I shared a few posts on the conversations had with my fellow CRE peers which spoke to their?priorities for 2020,?trends for the new decade and the last one being CRE Leadership Perspectives: PropTech. In this post, we note the latest developments on Awareness and Adoption in CRE - PropTech in response to pandemic.

Prelude

PropTech is one small part of a wider digital transformation in the property industry. It considers both the technological and mentality change of the real estate industry, and its consumers to our attitudes, movements and transactions involving both buildings and cities.

The current wave of Prop tech is driven by a range of new technologies available, such as artificial intelligence and big data, which has already disrupted other areas such as finance. The application of these new technologies is furthermore accelerated by social distancing requirements and regional lockdowns arising out of COVID-19 that have introduced changes in the way we are required to deal with real estate.

There are currently many?start-ups trying to target every segment of the property market chain, attempting to disrupt and improve how the current market players (developers, buyers, sellers, renters, investors, and real estate professionals) design, construct, market, discover, transact and operate real estate.?These start-ups have been supported by seed funding and investment from a range of sources, including some specialist real estate technology venture capital funds.

Geographically, PropTech companies in the USA have the major share followed by Europe and Asia slowly catching up as per Deloitte findings. In the first six months of 2019, $12.9 billion was poured into real-estate tech start-ups by venture investors, which surpassed the $12.7 billion record for all of 2017 and further investments accelerating in 2021 over $50 billion. [1]

Digital transformation is critical for business survival.?

36% of firms say that in three years’ time, most of their revenue will come from digital.?

Digital revenues dominate.

3X?the number of firms, compared to 2019 study, expect 75% of their revenue to come from digital.

Wellness and Agility builds resilience.

32% say that accelerating digital efforts – whether by increasing digital revenue streams or advancing digital transformation – is the number one change that will improve their organisation’s resilience in the event of a future crisis.

Application of Prop Tech in Corporate Real Estate

Following are the top trends in Prop Tech that provide an overview of the industry and highlights the projects that can be the prospective game changers for the real estate industry.

Big Data.?Use of big data in real estate has observed an exponential growth in the past few years. It has enabled companies and individuals to take informed decisions with respect to investing, managing and operating based on data. It is being used by the real estate companies to extract and provide information on various aspects such as history of the property, ownership cost, current value, details of the neighbourhood, estimate of mortgage payment and estimated forecast of future valuation of the property to count a few. Big Data Multi-App Platforms with flagship modules dedicated to Commercial Real Estate (CRE) Asset Class are providing real time and data driven insights to asset managers and landlords to manage assets, deals, leases, Tenants over one single platform (web and mobile) across the entire value chain of CRE.

Blockchain.?Blockchain use can potentially revolutionize rental property payments by removing middlemen and reducing transaction cost. It can facilitate cost effectiveness and better decision-making in leasing processes with the use of a shared database, where an entire vertical of stakeholders including owners, tenants and service providers can interact with ownership information, or transaction history in an open and secure way. Real estate assets can be tokenized and made transferable with the use of blockchain. The introduction of smart contracts into real estate ledgers and transactions have the capability to restructure various processes such as transfers of ownership and documents. It enables governments to instantly verify online title deeds for a property in a secure and cost-effective way.

Building Information Modelling (BIM).?Building Information Modelling is a smart 3D model-based process that enables architects, engineers, and construction professionals to plan, design, construct, and manage buildings and infrastructures efficiently and the information can be used throughout the life cycle of the property. This technology transforms a hand drawn sketch of a floor plan to a 3D BIM within seconds.

Construction Technology (ConTech).?Proceeding from an economically necessary view of the entire property life cycle, ConTech has the potential to automatically become the focus of interest. The global construction industry is booming and there is a need for technological advancement with the current explosion in construction cost. 3D concrete printing is driving this change in the Construction industry. These technological advancements will not only make the industry cost-effective but also sustainable.

Drone Technology.?The extraordinary aerial imagery of real estate that we can look at today has only been made possible through the use of drone technology. It can be used for everything starting from high rise office buildings to pre-eminent properties along the coast to sports stadiums to wildlife parks. It has helped agents in selling large estates by providing important information and property overview to the buyers. On the other hand, camera drones and its ground-based substitute, glide-cams, are being used to create indoor virtual tours and videos for both residential and commercial spaces. It enables effortless digital space capture for virtual tours, floor plan and wide-angle photography and improves the experience of property viewing for the buyers.

Geolocations.?Geolocation technology transforms simple maps into full sets of critical data about real estate and properties. It can not only pinpoint where buyers are in the traditional sales cycle by utilizing predictive analytic technologies but can also pinpoint their physical location. It enables real estate developers to make far more accurate valuations based on economic strategies. Further, geolocation technology plays a very crucial role in real estate marketing and has the capacity to change how properties are marketed and traded. It enables to visualize property data, county maps, topography, flood zone maps, soils and more in order to analyse the value of land. It provides more accurate access to land parcel data that accelerates risk versus reward analysis for land acquisition, land use planning and land development and therefore enables smarter decision making.

Internet of Things (IoT).?In simple terms, IoT can be described as items and structures equipped with sensors that internet applications can read and can translate into usable digital data. IoT can improve both the real estate industry and individuals’ everyday lives by its varied application from predictive maintenance to accelerated decision making to increased energy efficiency to count a few.

Sharing Economy.?The ‘Sharing Economy’, interchangeably used for the term ‘Collaborative Consumption’, represents an economic revolution built around an economic philosophy that space and capital goods are better shared. In the real estate industry, it has its application in nearly all domains including residential, hospitality, retail, storage and office spaces. Estimates suggest that there is a rise in the number of single households, and this has and will increase the demand for shared services, as it provides lower fixed cost for people involved. The sharp increase in the number of co-working spaces in the last few years is also indicative of the increase in the demand for shared services.

Sustainability and GreenTech.?The increasing concern for climate change and sustainable living is not alien to the real estate sector anymore. Efforts are made to incorporate technology that makes living more energy efficient and sustainable. It would provide completely transparent windows, which generate data by sensing the environment and simultaneously convert sunlight into electricity. Also, develops retrofit solutions for large buildings that allow drastic cuts in energy consumption, as well as a significant improvement in internal comfort. The credit goes to innovative IoT hardware and powerful algorithms in the cloud to fine-tune energy usage that allows operational savings.

Virtual Reality (VR) and Augmented Reality (AR).?VR and AR applications in real estate have reduced the inconvenience of property viewing by multi-fold for all involved parties. A potential buyer is able to fully see a property from thousands of miles away or properties that haven’t been constructed yet with the help of VR. On the other hand, AR could also allow an agent to amplify, or more closely describe parts of a home to the probable buyer. From property viewing and walk-through to augmented hoardings and property brochures, AR provides transparency, simplicity and beauty to the marketing and selling of property. It uses augmented reality for indoor navigation and enables 3D positioning, intuitive navigation and location-based AR content.

Facilities Management

In the Corporate Real Estate Cycle, Facilities Management or Asset Management is crucial stage or function once property is ready as it takes care of the corporate assets and services as custodians for long term.

Would like to dwell more in this area as Facilities Management play a major role in enhancing appreciation of assets and yielding continued value. Hence this article covers more insights about efficient management of space and infrastructure.

Management of space and infrastructure with high productivity and profitability has been the key objective in CRE. To achieve this objective, CRE operations should be lean, efficient, agile with enhanced experience. Key challenges in this industry are...

??Increased work force cost resulting in higher operating expenses

??Dearth of required skill among work force

??Skill development program yielding limited outcome due to work force attrition

??Increased demands on cost optimization?

Under this circumstance, it’s imperative for the industry to think big and explore various opportunities to optimize manpower and enhance efficiency in the operations.

Solution

Among various lean management techniques, Automation solutions emerging in Prop Tech are the much-evolved option for industry to ponder more and develop solutions.

Automation include higher production rates and increased productivity, more efficient use of materials, better product quality, improved safety, shorter workweeks for labour, and reduced operation lead times. Worker safety is an important reason for automating an industrial operation. Automated systems often remove workers from the workplace, thus safeguarding them against the hazards of the operating environment.

What is Process Automation?

Process automation?refers to the use of digital technology to perform a?process?or?processes?in order to accomplish a workflow or function. A wide variety of business?processes?and activities can be?automated, or more often, they can be partially?automated?with human intervention at strategic points within workflows.

Challenges in bringing Process Automation

??Change Management

??Cost

Change management can be executed by bringing the awareness on the various benefits of Automation with structured approach and trainings.

Cost, that is investment on Automation can be recovered over the period of time by optimizing the work force through digital technology.

Benefits of Automation

??Enhanced operations efficiency (increased productivity and profitability)

??Robust monitoring system

??Data analytics and decision making

??Benchmarking

??Enterprise agile solutions

??Accurate reporting

??Customer delight

Case study

Digital transformation in an Asset Management Function of a commercial IT park.

Scope is to implement digital technology comprising Internet of Things (IOT), Artificial Intelligence (AI), Machine learning (ML) to integrate Technical services activities in Asset Management (AM) Operations on a robust technology platform called Intelligent Asset Management.

Before we get into Intelligent Asset Management with related Tech solutions domain, lets quickly refresh our understanding about Asset Management Philosophy.

Asset Management Philosophy

Broadly defined, Asset Management Philosophy refers to any system that monitors and maintains things of value to an entity or group. It may apply to both tangible assets (such as buildings) and to intangible assets (such as human capital, intellectual property, goodwill and/or financial assets). Asset management is a systematic process of developing, operating, maintaining, upgrading, and disposing of assets cost-effectively.

Alternative views of asset management in the engineering environment are the practice of managing assets to achieve the greatest return (particularly useful for productive assets such s plant and equipment), and the process of monitoring and maintaining facilities systems, with the objective of providing the best possible service to users in all dimensions.

Asset Life cycle

Asset life cycle is the span of an asset from design to decommissioning/ disposal passing through the stages of construction, commissioning, operation, maintenance, repair, replacement.

Whole-life cost, or Life-cycle cost (LCC), refers to the total cost of ownership over the life of an asset. Also commonly referred to as “cradle to grave” or “womb to tomb” costs. Costs considered include the financial cost which is relatively simple to calculate and also the environmental and social costs which are more difficult to quantify and assign numerical values. Typical areas of expenditure which are included in calculating the whole-life cost include planning, design, construction and acquisition, operations, maintenance, renewal and rehabilitation, depreciation and cost of finance and replacement or disposal.

Intelligent Asset Management (IAM ) Concept

An intelligent maintenance system (IMS) is a system that utilizes the collected data from the machinery in order to predict and prevent the potential failures in them. The occurrence of failures in the machinery can be costly and even catastrophic. In order to avoid them, there needs to be a system which analyses the behaviour of the machine and provides alarms and instructions for preventive maintenance. Analysing the behaviour of the machines has become possible by means of advanced sensors, data collection systems, data storage/transfer capabilities and data analytic tools developed for such purpose. More information on the related data analytic tools can be found in prognostics. The aggregation of data collection, storage, transformation, analysis and decision making for smart maintenance is called an intelligent maintenance system (IMS).

With the growing complexity of CRE and manufacturing processes , the role of monitoring systems and intelligent maintenance is becoming more crucial. The recent advancements in information technology like IOT, AI, computers and electronics have facilitated the design and implementation of such systems.

Based on the industry’s growing demand in sustainability of the assets, different maintenance practices have been designed and implemented. The maintenance practices generally include condition-based maintenance (CBM), reliability-centered maintenance (RCM), corrective maintenance, scheduled or planned maintenance and predictive maintenance. An intelligent maintenance system enhances the performance of predictive maintenance systems by utilizing the advancements in computerscience, electronics and information technology. The key research elements of intelligent maintenance systems consist of:

?????Transformation of data to information to knowledge and synchronization of the decisions with remote systems;

?????Intelligent embedded prognostics algorithms for assessing the degradation and predicting the performance in future;

?????Technology- software and hardware platforms that make the products capable of thinking, linking, reconfiguring and sustaining in a networked and tether-free environment;

?????Embedded product services and life cycle information for closed-loop product designs

IMS Procedure and Methodology

The methodology for developing intelligent maintenance systems consists of finding the critical assets within a machine or process, instrumentation for collecting the suitable data, pre-processing and analyzing the collected data and extracting indicative features, applying the relevant machine-learning algorithms for health assessment, predicting the performance of the assets, and finally devising the appropriate maintenance action based on the obtained knowledge of the assets.

Approach

As a pilot project, one may consider to implement Automation in a commercial IT park. After successful testing of the operations in one park, same may be implemented in other parks if a real estate landlord has multiple office parks.

Technology That Transforms

At the heart of proposal to the company for complete Asset Management services at one commercial IT Park is the concept of digital transformation. The pace of technology evolution, in general and in the context of real estate asset management, is unprecedented. Driven by various technology innovations – including the smart applications, unified platforms, the emergence of various devices and Internet access speeds and self‐reporting assets enabled by the Internet of Things (IoT).

To truly transform, harnessing the power of this new technology revolution and integrating it seamlessly with service delivery ecosystems, is a given…

This proposition:?to help company to move commercial IT park to the digital era of asset management and property operations through data‐driven automation and technology apps for all engineering functions.

Working of the Transformation Program

Automation Component

The Internet of Things (IoT) is rapidly transforming the way automation has a direct and measurable impact on various practices. It includes how IoT gets harnessed for asset management. We achieve the effect of IoT and automation on asset management through the introduction of smart sensors & modern self‐reporting equipment for data‐driven reporting and control of diverse asset management & property operations. Conceptualizing and implementing automation solutions in real estate operations, using a combination of property management expertise and understanding of the latest technology trends

Self‐Reporting Assets through Automation: At this crucial first step, need to install smart measurement systems including sensors to automate the process of monitoring critical parameters for each asset. It will ensure that real‐time data flows from each asset and is ready for analysis.

Technology Tools Integration: In parallel to automation, introduce technology applications which are custom‐built for asset management and property operations and help streamline workflows for each maintenance practice.

Common Data Layer: For practical analysis, it is essential that data relayed from various assets gets channelled through a central bus from where it gets aggregated and algorithms developed to draw insights and predictive alerts.

Visibility of Insights: Analysed data, with thresholds defined for alert generation, gains effectiveness once it is seen and gets tracked from all locations, including remote areas. Further, the system will automate alerts to operatives to ensure swift resolution

Experts: Have lean team of subject matter experts on asset management and property operations, who will periodically analyse performance data to provide insights on service effectiveness

Integrated Facilities Management (FM) Tools

Integrated suite of smart FM tools as part of Prop Tech solutions can help introduce unparalleled levels of efficiency into the management of various FM services. Many functions, including asset monitoring, engineering maintenance, security, visitor management and inventory tracking can be easily streamlined and monitored through the introduction of the technology platform. A state-of-the-art Enterprise platform, which can enable the commercial IT park to rapidly move towards creating a truly smart, next generation campus. The primary advantages of implementing the Enterprise platform is an integrated view of FM activity and outcomes across the entire park across services; and the ability to have a shared data pool from which to draw information for enhanced analytics and actionable insights.

The following are the features of the Enterprise platform:

??A middleware platform that acts as the central repository of information and data fed in and shared from diverse sources

??Sources for data include FM technology tools and IoT‐driven self‐reporting assets, equipment, services, and systems to support capabilities such as AMR Billing Automation, Energy Management and Control, Fuel management and cost, Water Management and Cost, Asset Traceability, Compliance, Warranty Tracking

??Database structuring and creation of data points

??Building algorithms for enhanced reporting and single dashboard views

??Comprehensive analytics capabilities that draw upon data points from the output of various technology tools and platforms for cross‐functional interaction

These Technology solutions will focus on raising the impact of technology integration, increasing efficiency of technology interfaces thereby leading to opportunities for higher customer satisfaction and improved financial performance.

The insights provided by the Enterprise Bus will increase reliability, help reduce costs and proactively help identify areas for savings.

With the digital transformation, the IT park operations has been more productive and optimized the work force by around 25 to 30% which resulted in the cost saving of around 28%.

Conclusion

There are several ways in which developments in Prop Tech can benefit the Corporate Real Estate industry. It’s not only a lucrative path for investors, but new tools are helping millions of buyers, sellers and landlords to improve property journeys. So, both, companies and users can profit from Prop Tech. But what are the tangible advantages? Let’s see below.

1. Increased innovation in the real estate market

We’ve heard about the speed at which prop tech is making waves in the industry. But there is much more: Big data can supply information and knowledge necessary to make informed decision, which makes it more practical to buy and sell more properties. Sensors, big data and data analytics enable the real estate market to innovate more. That’s also the main reason why investments in Prop Tech companies increased in recent years.

2. More transparency

New technologies such as big data or blockchains particularly improve transparency. Various tools can help people to track their property transactions at the touch of a button.?Since each party involved will have visibility of every transaction, greater transparency is possible. No surprise that the?Global Real Estate Transparency Index was established as a much-needed metric for measurement of transparency in the sector. It has become the leading industry benchmark for assessing market transparency and continues to guide the sector towards higher standards.

3. Enhanced promotion

Technology can assist with many problems faced by property managers such as sourcing tenants or the promotion of a property. From floorplans and galleries to online tours: The expansion of 3D virtual tools enables real-estate agents to promote an existing property or upcoming development.?Have you heard there are architectural design tools, which transforms a hand drawn sketch of a floor plan to a 3D model within seconds?

4. Improved occupancy

But also, the administrative processes in your property can be digitised. There are a lot of rental platforms or apps in which tenants and landlords can find each other easily and reduce vacancies.?And of course,?a digital access management solution also helps you to allocate individual rooms faster and more flexibly. The space capacities can therefore be utilized more effectively.?An ideal example of a digital platform where you can?view and compare office spaces all around the world.

5. Better communication

Many PropTech companies focus on setting up messaging services to heighten communication between landlords and tenants. A lot of these platforms provide access to documents or forms for claim reporting. So property managers can leave relevant information about the property on a whiteboard, while owners can respond directly to tenants requests.?Less misunderstandings and faster answers are the result.

6. Higher value

All these scenarios can ultimately increase the value of a real estate, which in turn will result in higher rental returns. Just think of it. Buildings with Prop Tech will probably be associated with quality and seen as more valuable than buildings that are not enabled with Prop Tech.

Different Prop tech applications can have a huge impact on real estate. The strength lies in the combinations of them, which offers additional value. Property managers can attract new customers who can directly select from a wide range of compatible locks.

[1] Source - Workday, PwC, Oxford research.?