When you think of the property industry, the first thing to come to mind for most is buildings. More specifically, the developers who build them and the real estate agents that sell them. But for every development that goes up, there’s a team of investors funding it. Digital advancement has rocked both this year.
This year, multinational management consulting firm Boston Consulting Group (BCG) called its annual report on asset management ‘The Digital Metamorphosis’. An industry slow to catch onto the digital wave, many asset management firms are now hiring technologists to experiment with new ways to analyse data, bringing analytics and data management into mainstream practice. The message is clear: “if you don’t understand how to treat data with respect, you will get eaten alive” (Luke Ellis, CEO of Man Group tells BCG).
It’s one thing to respect the power of data, it’s another to change the fundamental core of how companies operate, but that’s exactly what digital advancement demands. That change is summed up in one, heavily loaded word: agility. In an inescapable cycle, digital technology gives companies the ability to become ever-more agile, but only when those companies embrace agility in every aspect of their lives.
The new ‘test and learn’ way of managing assets is faster and more successful than the traditional siloed approach of old only because those who use it have the agility to move as fast as digital technology develops.
Think of this in terms of structure. Traditionally, asset management firms operate vertically. You focus on your own silo, your own gains, in your own domain. This set up works, but change is slow because it has to fight its way up through the vertical hierarchy in each and every silo. In a ‘test and learn’ approach, agile teams of people operate horizontally across multiple silos, breaking those domain boundaries down and pioneering new ways of working while improving process. It’s a system that thrives on constant flux, and without agility, it breaks down.
The Digital Metamorphosis is clear for global asset managers, but the implications reach much further into the real estate industry. Because of digital technology, asset managers have instant access to new data sources like satellite feeds and web aggregation tools, as well as being able to tap into machine learning to take the number crunching off their hands. They can see every transaction they’ve ever made and use it to improve constantly. They have access to Automated Valuation Models like Enodo to give them revenue and expense information to analyse any potential real estate investment in a fraction of the time. And they have the natural transparency for brokers and borrowers alike that comes with the sheer amount of information available to everyone.
Property developers don’t escape the need for rapid change, either. Digital tech has changed how we relate to the world in every conceivable way, from being able to choose when we watch a tv show to being able to make major financial decisions without actually needing any human contact. While we’ve seen how this is giving a desire for more human connection in some aspects, the speed of digital, the ‘right now’ mentality that comes with it, that’s become how we operate, and it bleeds into everything, including real estate.
Take site evaluation for example, one of the most time-consuming aspects of property development. Thanks to ArchiStar, property developers like Ray White, LJ Hooker, Raine & Horne, and PRD Nationwide are evaluating hundreds of sites in minutes. Now with the high-resolution aerial imagery of Nearmap, the app taps into property data providers like Corelogic and Cordell to helps developers to find opportunities, size up development sites, understand planning controls, and see the average property prices in the area.
In the future, it will even evaluate sunlight and ventilation, all without the developer needing to visit the site or spend the days and weeks that process used to take.
So you’ve evaluated a site and talked to the community without leaving your desk. But surely you’d need to stretch those legs when it comes to designing the thing, right? Well… maybe not. Construction remains one of the final frontiers for things you actually need to see in person, for now. Thanks to the explosion that is virtual reality finally coming into the real estate world, developers can conceptualise buildings and test out ideas in the (virtual) flesh. Once they’re built, some real estate agents are even using VR to show potential buyers around the property.
While this is breakthrough technology by all accounts, it looks like construction could soon be changed forever by digital tech, too. Just last week, news came of Perth-based company Fastbrick Robotics world-first: building a three-bedroom two-bathroom home. In under three days. With a fully automated robot.
With civil and structural engineers giving the building the all clear for meeting building standards, it looks like the Hadrian X is not far off ready for commercialisation.
“We now have the world’s only fully automated, end-to-end bricklaying solution, with a massive market waiting for it,” chief executive Mike Pivac tells Perth Now.
By 2020, there will be 6.1 billion smartphones in the world. In 2016, mobile internet usage overtook desktop internet for the first time. This isn’t just a digital trend that will last for a few years; smartphones are part of the new, agility-driven way of working.
Australia has one of the highest rates of smartphone ownership – 77% according to Pew Research Centre – so it’s no surprise that it’s Australians who have made the connection between smartphones and property development. New apps like Planningvic, Homesky, and Plantimer.com.au cover everything from planning report for any property, to CRM tailored just for Australian building contractors, to hiring plant equipment. Increasingly, every part of the property development process is becoming faster, more unique, instantaneous, and portable. There’s apps to estimate property development feasibility with some simple figures in seconds (Property Development Feasibility Study), or to tour your unbuilt development in a 360-degree dynamic virtual 3D world (Studio216).
Paradoxically, as digital technology opens the floodgates of data and makes it easier than ever for anyone in the industry to access, it’s the personal, human-to-human experience that becomes more important. Robotics Process Automation and AI can make operations 50% more efficient, but they can also totally redesign processes front-to-back to improve the customer experience, and give insight into clients would likely never come to light otherwise to deliver personalised care.
Because of the burden of data crunching now taken off asset managers and given to bots, straight investment performance is not enough anymore. The humans of the industry need to provide more value-add services for their clients, and they need to embrace the technology that brings that shift about to use it to their best advantage.
Olwyn Alexander, PWC’s Global Asset and Wealth Management Leader: “Every firm must embrace technology, as it impacts all functions and will determine if they win or lose in this fast-changing landscape.”