PropTech is gaining traction as a critical tool for property developers and owners around the world.

Technology advances in areas such as big data analytics, machine learning, and artificial intelligence, according to a new report by real estate consultant JLL, are transforming industries around the world, providing insights and opportunities for those in the vanguard, while technology laggards risk becoming obsolete. housing

But the question now is how much of an impact these technological advancements are having on the real estate industry.

While location is still very important in real estate, developments in property technology (PropTech) have changed the game. Connectivity and accessibility are becoming increasingly important market considerations, and this trend is only expected to continue.

Late adopters risk being left behind, according to George Thomas, JLL Asia Pacific's Chief Information Officer. "As more investors, developers, and landlords adopt more PropTech features and services, those who do not implement even the most basic technological services will see their properties' competitiveness degrade over time as renters are given more options."

Real World Applications Technology has always been a differentiator in the real estate business, with top developers and asset managers applying various PropTech elements throughout their assets and portfolios.

"Security sensors and climate control sensors, for example, have been in place for years to maximize the comfort of office building tenants," Thomas explains. "We've also seen use cases in many sectors for building monitoring, particularly for energy efficiency."

Another long-running subject is data analysis. Historically, planners and merchants have used demographic and geographic analyses of traffic data trends collected by municipal governments to help them make placement decisions. Recently, the emphasis has switched to utilizing the vast amount of big data that is now available.

"With the introduction of smartphones and increasingly modern Wi-Fi/Bluetooth sensors, malls, particularly those in developed markets, have used various sorts of big data to optimize their retail tenant distribution, product allocation, and footfall patterns," Thomas explains.

Alibaba's Hema stores in China and Amazon's cashier-free convenience stores are two notable brands that have used big data and AI to connect customers' online and offline experiences. Logistics companies are also using big data behind the scenes to better organize, automate, and optimize their distribution processes and support to meet the demands of the offline retail industry.

Potentials for Success

Incumbents and new start-ups/disruptors equally profit from rapid developments, lowering technology costs, and the increased sophistication of accessible toolkits. These changes are also providing technology leaders with a significant competitive advantage, making the deployment of cutting-edge technology capabilities more inexpensive and essential.

"We anticipate an increasing emphasis on integrating technology with offline assets and processes, as well as a shift in real estate toward a service-based offering," Thomas says.

The value machine learning may provide to investors and portfolio managers is one area that Thomas emphasizes. From a capex investment standpoint, it can be used to improve the predictability of the lifespan of an asset, such as an elevator. It might tell whether a store is generating enough revenue to cover the rent for the following month. Similarly, keeping track of how many employees come in and out of a facility during business hours can assist determine whether a tenant should expand or contract their footprint.

Thomas says that technology is also changing the way office workers operate. "This can be seen in the merging of virtual reality and augmented reality services. These can assist in attracting new tenants or customers, as well as increasing the stickiness of the service provider's offerings. Meanwhile, heat-mapping employee movements allows corporate tenants to optimize their floor area in order to satisfy the evolving workforce's expectations."

Keep an eye out for traps.

While the latest generation of PropTech efforts promises increased efficiencies and improved returns, there are a number of important obstacles to overcome. According to Thomas, one of the most important is to comply with country privacy requirements, especially as industry participants increasingly use and rely on big data and artificial intelligence. The Internet of Things (IoT) also raises concerns regarding data security and privacy.

The technology's scalability is also a challenge.

"Developers and landlords prefer to regard their assets as distinctive," says Thomas, "resulting in site-specific apps that cater to their individual tenants or occupiers." "As a result, deploying services in such situations would necessitate a larger technological investment. Furthermore, the time it takes to physically install and implement the techniques on an asset per asset basis will limit the speed of any rollout."

Another problem is that accessible technologies are continually developing. "Significant continuous investments will be necessary to modernize each property and its accompanying services to keep pace with tenants' and occupiers' shifting needs and demands," Thomas points out.

With occupier expectations moving in lockstep with the latest technological breakthroughs, Thomas believes that real estate investors, developers, and landlords may find themselves with no choice but to evolve with the times.