Tech trends that will impact property and real-estate in 2020?

by Startacus Admin

Arnie Sriskandarajah, MD of European proptech venture capital firm, Round Hill Ventures share their predictions on the Tech trends that will impact property and real-estate in 2020

At around $210 trillion, real estate is the largest asset class in the world. It has historically been a sector slow to adopt new technology and innovate. 2019 attracted over $16 billion of VC investment in the proptech sector through fundraising, acquisitions and initial public offerings, suggesting that this traditional industry is ready to embrace technological innovation.

At a national level, this call has been echoed by the public sector, with the UK Housing Minister Esther McVey announcing plans to release data held by local bodies to help UK proptech thrive.

We expect to continue seeing co-innovation between traditional real estate players and new companies in 2020. We caught up with the leading European proptech venture capital firm, Round Hill Ventures to hear its predictions.

At a wider industry level, the fund’s MD Arnie Sriskandarajah has noted the increased awareness in the need for cross-collaboration between the different players within the real estate ecosystem – corporations, proptech startups and the public sector. He is expecting for the 2020 trends to bring a more collaborative, sustainable built environment, a vision Round Hill Ventures has been a sound driver for the past three years.

Market Pull for proptech solutions that enables RE companies to measure their ESG performance

A few years ago, ESG performance may have been on the periphery of companies’ agendas. Today it is at the very core, giving way to proptech solutions to come in. Earlier this year, 23 of the UK's largest commercial property owners signed British Buildings Partnership's Climate Commitment, thereby agreeing to deliver net zero carbon real estate portfolios by 2050. The ground-breaking initiative illustrates the scope and drive for change from traditional real estate players towards a sustainable built environment. For example we have seen a wide range of new tech solutions addressing the areas of energy consumption.

Software tools such as Demand Logic can help reduce both the carbon emissions and the energy consumption within a property by about 1/3, accounting for an improved ESG score of the entire asset.

Using machine learning, all-in-one ESG data management tool Measurabl, allows commercial real estate operators to power sustainability measurement, tracking and reporting. Real estate companies can set absolute or legally mandated targets to empower data-driven decisions at building levels – helping to identify the necessary actions to be taken in order to successfully achieve long-term goals and get on track.

As much as 70% of a buildings’ emissions are attributable to occupiers activities – the corporate acknowledgement is necessary but the commitment to tackling climate change can only be delivered through close collaboration of all parties involved – landlords, tenants and innovators, enabled by technology; and is what we shall continue to advocate and see develop in 2020. 

Need for social/affordable housing will speed up the adoption of modular housing

The UK population is growing by more than half a million people on a yearly basis, yet only about half the homes required are built to match the demand. Young people today are half as likely to get on the property ladder as 20 years ago, with the average house deposit in England being 72% of an individual’s gross salary. Technology can help solve two fundamental challenges in the property sector – the speed in which new homes are built and the end affordability to the buyer.

Modular housing, or factory constructed homes through high-tech manufacturing processes, are completed up to 50% faster, is one of the tech-enabled solutions, we will see trending even more in 2020.

Using artificial intelligence and generative design, Modulous’s platform reduces the time needed to meet a client’s brief from months to minutes. Featuring a fully integrated supply chain, digitised procurement and logistics, the company is able to deliver its ‘kit of parts’ worldwide, which can later on be assembled in hours. In a similar vein, modular housing startup Modomo challenges the housing crisis that cities face by providing bespoke constructed homes which can also serve as a temporary solution to an occupier and be re-used on a different plot of land.  

The bright vision of modular housing is shared by the public sector – earlier in 2019, Housing Minister Esthery McVey pledged to make the UK “The world’s leader in modular building”. We expect the rise in popularity of modular housing to continue in 2020.

Adoption of technology platforms to improve the operational efficiency of Property Managers thus improving margins

The structural characteristics of the real estate industry have for a long time been a barrier to innovation. In property management, paper-based processes account for low operational efficiency and scalability, resulting in low profit margins. This is where we have noted a continual increase in the number of proptech solutions challenging the status quo. Data analytics can help unlock value from existing assets by finding common patterns within a heterogenous real estate portfolio. It is an area of real estate we only see growing and is why Round Hill Ventures chose the theme of “data-driven innovations” as its next ‘PropTech Connect’ event topic.

Furthermore, by adopting a property management platform such as Plentific, landlords or managers can be seamlessly connected with contractors, thus delivering a faster, more reliable maintenance services to tenants. We will continue seeing automation in the property management space in 2020, with new solutions expected to enable property managers to see and resolve problems remotely, often before tenants even note a concern.

Technology to make house building and planning process more efficient

Proptech can add value throughout the entire housing chain – from the way a suitable plot of land is sourced, through to how it is built upon. AI and machine learning for example can lead to the reduction in critical operation times and costs by almost 25%. One of the factors which slows down the real estate industry relates to its long sales cycles, as referenced in RHV’s pilot ‘PropTech Connect’ event. 

Spacemaker, for example uses artificial intelligence to help users maximise the potential of a building site, improving construction yields and reducing operation times. The solution can be adapted to regulatory guidelines from any local municipality and helps in making the house building and planning process more efficient. Going back to the importance of data, the public sector will have a great impact in the future development of the proptech industry with initiatives such as the plans to release data held by local bodies fostering further co-innovation and facilitating the house building journey. 

The population becomes more comfortable with renting and using their smartphones to manage their homes (rent payments, bills, discretionary spends).

Technology is reshaping the real estate industry both internally and externally. The mentality of the end user has also undergone a dramatic change towards a culture of convenience and on-demand services. At an arm’s length is borderline too far, as a growing number of people manage their life, including house amenities, through their smartphones. Statistics show by 2039, over 50% of UK’s housing market will be made up by tenants who are privately renting. ‘Generation rent’ is choosing to rent, rather than buy, which gives way to a new plethora of opportunities, fuelled by technology. It is a trend we will continue to see in the coming year, as ‘housing-as-a-service’ and on-demand accommodation become the norm for the young population.


Arnie Sriskandarajah is the MD of European proptech venture capital firm, Round Hill Ventures.

 

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• #proptech
• #real estate
• #round hill ventures
• #arnie sriskandarajah
• #tech trends
• #2020

Published on: 22nd December 2019