Tech adoption in real estate and how to facilitate it, from CREtech London 2023

In May I participated, for the 4th time (if we consider Future Proptech in 2019), in CREtech London, a benchmark event for the real estate and proptech European market. It was a great opportunity to reconnect with the ecosystem and participate in insightful talks about the future of real estate.

The truth is that we are now witnessing a shift in real estate, a mindset transition to a new era where there is no future without technology. The industry can no longer expect to do business using the same tactics as in the last decades and although not all companies go through this transition at the same time, these events show us that tech adoption is a real thing. Real estate companies that used to be the part of the early majority now become early adopters and we see an increasing number of first-line innovators.?

For proptech, this can constitute a great opportunity, if we know how to benefit from it and how to overcome what I would even call normal barriers.

There are several clear rules in how tech is adopted by real estate companies. We’re usually looking at 3 stages: piloting, partial deployment and full deployment and there can be obstacles in each of these stages.?

First step: Piloting

For some startups, all these challenges can even lead to important changes in their products and a good example here is the one given by Andy Doyle (Innovation Director, Grosvenor) on the CREtech stage: when working with Demand Logic , they realised that the product could only be implemented on buildings with BMS. This meant that the product could only reach full deployment if the BMS condition was somehow tackled. It was a proud moment for us, the proptech community, to listen to Andy talking about how the two parties (Demand Logic & Grosvenor) overcame this and the solution was implemented in the entire Grosvenor UK portfolio!?

In order to go past the piloting stage, a proptech startup has to be validated by the innovation department in a real estate company. This emphasises the role of the Chief Innovation Officer, who has a very important but challenging job: to find and coherently filter the companies that are fit for piloting.

After that, they have to become the champions and ambassadors of those good solutions and have them adopted by the departments they are addressed to. These departments then have to allocate time, people and budgets to test it.?

Can you see what this means for proptechs? With innovation managers putting their reputation at risk, the filtering of the solutions to be tested becomes very selective.?

Solutions exist though. And they should be embraced as soon as possible, because change is happening without doubt. I liked the example given by James Pellat (Director of Innovation, GPE ) who raised an important question: we’re all customising a car in any way we want, online. Why wouldn’t that happen with your office??

It will happen, there already are startups that facilitate this process: Bright Spaces offers online 3D space planning, Enky | Furniture Solutions & Occo offers furniture on demand, INKI provides devices on demand, you can choose the space you’re working from every day with Hubble (hubbleHQ.com) or Pluria . It’s up to landlords to start using them and this takes us back to blockers and the traditional ways of planning, budgeting, designing, constructing, marketing, leasing, operating and divesting.

Still not convinced?

Let’s go back a couple of years, before the pandemic, when leasing contracts still had a 5-7 years unbreakable rule. This means that in 2025-2026 we will look at many renewals (or not?). What will happen then? How big of an availability will we have? 20%, 30%? 50%? How will real estate companies differentiate themselves in such a market and make more money than they spend? They’ll have to reinvent themselves and technology is key in this process.

Step 2: Partial Deployment

Let’s move on to the next stage of a proptech’s adoption within a real estate company: partial deployment. To get here, the solution has to pass maybe it's hardest test: the pilot has to be used internally and needs to prove initial ROI. This shifts the conversation from having just a good product to having great customer success processes. The pilot has to come with strong benefits in order to scale, otherwise it won’t work and the partnership will stop there.

We also need to consider the 3 main drivers of need in tech:

1. More money
2. Less time spent
3. Awareness / positioning

It is very important to be able, as a tech provider, to be very clear about the benefits your solution brings and, also, to make sure the same benefits make sense in the long run.

Many pilots make a point for number 3: awareness/positioning just by being a new, cool tech and this is definitely a challenge when trying to scale, where point 1 and 2 are way more powerful to have.

Step 3: Full Portfolio Deployment

Last but not least, full deployment. If you get to this stage, as a startup, you meet another big risk: scalability and security. Big companies put a great deal of pressure on startups and their resources when it comes to using their product across their entire portfolio.

Many tech MVPs are looking great and bring a lot of benefits, but still lack scalability and the right processes and technology making them enterprise safe.

This is when development can become more financially sensitive, as this kind of resources and compliance is achievable through high-end processes and top-level developers and system architects.?

I said before that solutions exist to all these challenges and I was happy to hear some experienced professionals talking about them on the CREtech London stage:

• First of all, real estate companies should start looking at these technologies “like an investment, not a cost” (Naqash Tahir, Executive Director - Global CIO Office). This changes the whole narrative from the start.?
• Then, goals have to be properly set from the beginning, on both sides ( Isha Jain , Head of Digital & Technology UK & Ireland at 世邦魏理仕 ). It also helps including people of all expertise levels, not just the higher management in the tech adoption process.??
• Real estate companies should start working together in discovering those proptech solutions that can become a standard. This means that risks are spread among multiple players, even if they are competitors and that we’re looking at a new trend, where education becomes more open ( James Pellatt , Director of Innovation, GPE ).
• “Failure” as a word should be taken out of the process. It’s extremely valuable to learn both what one should and shouldn't do and to get good feedback from each test (Faisal Butt, Founder and CEO, Pi Labs ).

There is a huge language barrier between tech companies and real estate (Craig O’Donnell, Group Innovation Director at Grosvenor Group and Board member at Thrive Homes) and this often leads to complicating things unnecessarily.?

Technology should solve the boring things, it should simplify & enhance, not disrupt (Ella Walter-Pavlou, Innovation Manager, GPE), it should optimise and automate.?

And, very importantly, it should provide its clients with data (Boris Segal, Director, Global Digital Partnerships, CBRE) that they can use to improve their work and achieve better, faster results.?

Sandbox principles can be applied in real estate with a high positive impact. Companies should be more open to using SaaS products instead of custom developed ones and create an efficient testing environment where they are not so scared of failure.?

To sum it up, times have already changed. Stop looking for ways to maintain the status quo that you were used to. It's not here anymore.

There's a new reality we are facing today and it forces us to evolve from an asset-centric industry to a client-centric one.

Technology offers a competitive edge for Innovators and Early Adopters. Then it becomes a Standard. If you only start using it when it becomes the Standard, it means you already lost to the innovators and Early Adopters.

Small proptech companies will become huge overnight, and the best opportunity is now.

Experiment more.

Understand faster what works for you.

Be bold!