In 2019, the average adult in the Developed World spent 3 hours a day using mobile internet. This amounts to more than a month in the entire year purely surfing the web! I am no economist, but this figure is only going in one direction. Businesses that do not adapt to their environment tend to slow down and ultimately grind to a halt and the Real Estate industry is not immune to this trend. It is adapt or die time when it comes to integrating PropTech and the coronavirus has merely been the straw that broke the camel's back.
Short Term Impact
Our relationship with space has changed and as such the co-working and co-living spaces, for example, will almost certainly face a bumpy road. Workers and tenants have a new desire for maintaining a safe social distance from each other. Hygiene will likely become part of a wider wellness agenda and PropTech which monitors and demonstrates hygiene ratings and identifies areas which need cleaning could be essential in a co-working/co-living environment.
Nevertheless, with every problem comes an opportunity to provide a solution. Some companies have come to the fore during this crisis to aid digitize the transaction and agreement process such as DocuSign (electronic signatures), Offr (buy and sell property online) and Blend (digital lending platform). Similar technology-driven companies will see increased adaption necessitated by remote working policies. The net effect will be a more flexible, transparent and efficient Real Estate industry.
Similarly, PropTech companies who facilitate cost-savings will most likely flourish. Tenants are seeking rent abatements, borrowers are seeking loan moratoriums and workers are facing wage reductions. Looking after the pennies to ensure the pounds look after themselves has never been more appropriate. US PropTech firm, Toggle, is revolutionising the construction industry through its use of robotic infrastructure in the production of reinforced concrete. Institutional landlords are looking for new methods to improve tenant-experience whilst driving down costs and are experimenting with new tools such as San Fran based PropTech company Amenify. The artificially intelligent concierge service provides tenants with instant assistance in almost all aspects of their lives whilst simultaneously provides property owners with data-driven insights.
Long Term Impact
The world we will live in post-coronavirus will be substantially different. It is difficult to predict the impact this pandemic will have on our society. How will we work? How will we live? How will we entertain ourselves?
However, as World War II empowered women in the workplace, the Real Estate industry will reward those that are brave and resilient. The early adapters of technology will most likely reap the rewards.
As we are currently seeing with environmentally "unfriendly" buildings, incentives may be provided to Property owners to assist with creating smart buildings. Anecdotally, a Landlord client of ours advised us that his building experienced a water outage for 24 hours recently and he received 12 complaints. The same building experienced a broadband outage for 1 hour on a different day and he received 118 complaints! This little episode highlights the reliance that is placed on technology even now in our daily lives.
The foundation of the current crop of Proptech is Blockchain Technology. Blockchain's disruption of financial services will be replicated in Property and will fundamentally change the landscape of the Real Estate industry. Certain intermediaries (including some dinosaur lawyers!) will not embrace the new wave of technology and will struggle as a result. The introduction of smart contracts in Blockchain platforms now permits large assets like Real Estate to be "tokenized" and be traded like cryptocurrencies. By tokenizing real property, assets can then be traded much like stocks on an exchange and transactions can be completed online. Tokenization of Property will make a notoriously illiquid asset such as Property liquid.
I would be "virtually" shown the door in Leman if I failed to mention our affiliated company, LexTech, in this discussion. LexTech is an Irish based technology company that enables businesses to transform their legal, regulation and legal know how. We work closely with LexTech to create products for clients by removing paper, automating processes, intelligent data capture and business intelligence. Leman is an early adapter of technology throughout our firm and we are here to guide you through any queries you may have. Our combined skills with Lextech can offer a niche solution to your commercial problems.
Commercial property developers must adopt digital technology as the demands of tenants change