Proptech - the shock of the new

Proptech will transform real estate; that is the buzz at virtually every industry event. Five years ago no-one was talking about it and now everybody is. For digital disruptors, property is one of the few sectors of the economy that remains more or less virgin territory, and they are flocking to colonise it.

There are now more than 7,000 proptech businesses around the world, according to James Dearsley, co-founder of the global proptech community platform Unissu. “We know that things can be done quicker, more effectively and profitably with technology, and one of the reasons why there is so much appetite for doing things differently is that, to date, the real estate sector is almost the least innovative”, Dearsley proclaims.

Having the skills necessary to manage and utilise new technology will be one of the crucial differentiating factors that determines the success of real estate businesses in the future, suggests Thomas Herr, EMEA head of digital innovation at CBRE: “It is not technology that will disrupt the property industry, but the ability of companies to adopt it and to educate their employees about it.”

Recent research suggests that property professionals lack confidence in their ability to fully exploit the latest digital innovations. In 2018 a questionnaire about the impact of proptech on surveying carried out by RICS, Teesside University, tech company GoReport and surveying firm Trident found that 95% of respondents believed it represented an opportunity for surveyors, and 88% thought it would have a positive impact on the profession.However, 57% thought they did not fully understand proptech and only 40% felt they had the skills to fully embrace it.

What kind of skills will be needed to seize the opportunity offered by proptech? Will the surveyors of tomorrow need to develop high-level computing smarts alongside their current, more traditional abilities?

The future of data within real estate

GoReport’s CEO, Anthony Walker FRICS, believes not: “My view as a surveyor who has entered the tech sector is that surveyors’ unique core skills, knowledge, experience, expertise and reflective thought must always remain,” he says. “It is about how technology can augment those core skills with powerful intelligence. We don’t need to become coders or data analysts, because those are specialist roles in their own right. They are difficult to get on top of, and if we are not careful could dilute the role of the surveyor."

"The core skill we should develop is design thinking, the ability to put processes in place that can generate creative problem-solving, because that is where clients see the greatest value in the services they buy from surveyors.”

Technology will only increase the emphasis on human insight, argues Dan Hughes, founder of real estate technology consultant Alpha Property Insight: “Surveying, whether you’re producing a bill of quantities or a valuation, is very process-driven, and those processes will become more automated because data collection and data analysis is what computers are really good at. In the past we taught people to do a process, but in the future things like critical thinking, judgement and ethics will become more important as technology takes away the process bit, while the humans are left to do the human bit.”

Nonetheless, Kevin Thomas FRICS, associate dean (international) at Teesside University’s School of Science, Engineering and Design believes that data analysis is going to account for an ever-more significant part of a surveyor’s workload. “Proptech will give us a richer data set and information that is more analytical. Surveyors will have to develop the skills to analyse and interpret that data, but a lot of the proptech software does that for you so it is about learning how to navigate through that software.”

Some firms that can afford it are hiring data analysts to ensure they have that base covered, Thomas adds. “Right now that works for larger firms, but in the long term we need to ensure that new graduates coming into the profession will have data skills so that they can act as trailblazers in the smaller firms. Eventually surveyors will pick up those skills and you won’t need data scientists.”

In the immediate future, however, firms will need to decide whether to develop their data infrastructure and data analysis capability in house, or to farm them out to specialists, says Hughes. “We are now at the stage where people are starting to move beyond what we have previously done – which is to bulk up the IT team – to thinking about whether they need help with digital strategy, which requires different skills. Real estate is used to outsourcing functions such as valuation or facilities management. Most developers and investors are pretty small companies in terms of people. We should take the same approach with technology, but we haven’t quite got there yet.”

Bossing it

While rank-and-file property professionals will need to improve their understanding of technology, industry bosses will also require a firmer grasp of the solutions they need to implement, says Sean Godoy, founder and director of Johannesburg-based consultant Divercity Property Solutions. “Decision-makers need to be aware of the possibilities of proptech at a strategic level. In the past, companies have recruited sustainability directors, and now they may need to hire a head of disruption as some banks have done, so that they can keep up with the changing tools that are available.”

Meanwhile the technology that has underpinned the rise of “space as a service” concepts will mandate the development of a more diverse skills base, argues technology strategist Antony Slumbers. “If you look at companies such as WeWork and The Office Group, they are a combination of hospitality, workplace and real estate, which have previously been separate businesses. Developing and delivering a service requires a lot more skills, so it is broadening the whole scope of what it means to be in real estate.”

For the most part, real estate firms’ success in the proptech era will depend not on whether they have a deep understanding of how technology works, but on whether they have the skills to successfully manage and employ it, suggests Herr. “Businesses need a good overview of what technology is available and a good understanding of the software architecture within their company so they don’t end up with lots of different applications that are not interlinked. And they need to have the skill set to apply the applications,” he says.

Some firms may be tempted to leave the pioneering to others and wait until tried-and-tested applications emerge before embracing proptech. That approach carries its own hazard, says Thomas. “Anybody who is an early adopter runs a bit of a risk in that the technologies might not be well developed, but I am a great believer that the early adopters tend to be the ones that succeed in the end. They manage to deliver more quickly for clients, develop expertise, and expand their client base. The risk of not engaging with it now is that you get left behind.”

Walker accepts that busy surveyors focused on earning fees may feel reluctant to invest the time necessary to truly embrace new ways of working, but he warns that, in the long term, failure to do so will prove more costly still: “Clients don’t want paper-based reports any more. The world has moved on; people want instant information at their fingertips in order to make decisions,” he says. “For surveyors who can’t capture data by electronic means, that problem will only become more acute. Unless they embrace technology, they will find it increasingly difficult to win work.”

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