The report from the Canadian firm Altus, who provide software, data solutions and advisory services to the global commercial real estate firms, gives an overview of the main technology trends impacting the global real estate sector. Notably the report charts an increased take-up of property technology (“PropTech”) and a growth with disintermediating technologies. The report also pinpoints a development whereby greater numbers of commercial real estate companies are investing directly in PropTech companies and startups.
The new report is titled “The Innovation Opportunity in Commercial Real Estate: A Shift in PropTech Adoption and Investment“, and it parallels the digital transformation processes occurring in other sectors of the economy. The report is based on a global survey of 400 property owners with assets under management of at least $250 million. The survey provides an outlook on technology trends impacting across the sector.
The report identifies the trend of disintermediation (an economic term for the reduction in the use of intermediaries between producers and consumers), and how this is accelerating among commercial real estate firms. The impact of this is disrupting the commercial real estate industry through the elimination of middle steps and processes. The motivation for this is to create greater efficiencies. The real-term effects of disintermediation can be seen in the rise of new business models associated with the sharing economy (such as Airbnb), co-working (as with WeWork) and e-commerce (where Amazon and Alibaba are prime examples).
Furthermore, the survey finds that the majority of commercial real estate executives report that these disintermediating business trends are having a significant impact on their investment and portfolio decisions. With this, 73 percent of Canadian executives surveyed said that the sharing economy is having the greatest impact on their portfolio decisions. This is followed by e-commerce at 68 percent and co-working at 52 percent. A strong example of this is with WeWork, which has widened its ambitions and in doing so threatens to upend the traditional leasing model.
With the PropTech developments, this defines the startups offering technologically innovative products or new business models for the real estate markets. Such companies are generally more in tune with the buying or renting patterns of consumers, in terms of accessing digital technologies than are many traditional property firms. PropTech technologies include the use of blockchain.
Other PropTech firms are experimenting with virtual reality to showcase properties; plus connected objects, 3D printing, mobility technology, big data and so on. Other developments are being implemented in conjunction with smart home technology.
Some of the startups developing such technologies are aiming to support real estate professionals, offering tools to enhance their services or their productivity. Whereas other startups are proposing to replace real estate professionals, which is adding to the dynamism of the commercial real estate market.
