Three ways technology is providing value in real estate
INSIGHT ARTICLE |
As digital solutions from the Internet of Things (IoT) to machine learning transform how we live and work, businesses across the US economy are looking to technological innovation to stay ahead of the competition.
The real estate industry has largely been slow to adopt technology, but the industry is getting pushed in that direction. And when we talk about technology within real estate, there are largely three different key use cases.
1. Customer Care
The multi-family sector is really the driving force behind incorporating technology into how we work with our customers. You see Amazon partnering with several homebuilders and multifamily providers to make smart units. These are buildings equipped technological processes that allow tenants an easier, cheaper and more efficient way of living through smart security, energy savings, system monitoring and other IoT integration. Such smart systems are becoming expected, not a luxury. This market is set to grow and we’ll see more multi-family projects looking at creating smart homes and utilizing that kind of technology integration.
2. Asset Management
This is where technology can provide cost saving and analysis to asset owners and managers. The cost saving side is seen through monitoring equipment, or the Internet of Things (IoT), where you have internet-enabled sensors tracking water, electricity, air conditioning and other systems. These systems can often avoid expensive repairs with the help of IoT monitoring. That means instead of relying on maintenance staff to flag problems, you could use Alexa. IoT would also be able to provide analysis on how tenants are using the property, giving insight into tenant requirements and potential vacancy risks.
3. Investor Relations
As the investor generation transitions from boomers to millennials, investor reporting will have to evolve. We're talking about a generation that expects to get nearly any piece of information or purchase any good with a few taps on their phone. They're not going to wait for a quarterly email or PDF on how their investments are doing – they will expect mobile, technologically enhanced investor reporting, or you won’t be having a meeting.
Ultimately, technology will become ever more embedded into real estate. We’re already seeing increased activity in the PropTech market - direct investments in companies focused on real estate-related technologies. Recently we spoke to an institutional real estate fund that has historically just invested in traditional office and multi-family assets, now it is launching its first PropTech fund.
As this trend continues, if you’re not investing in PropTech - either internally or as its own asset class - in 5-10 years’ time you may start to struggle to attract capital.
This article was originally published in partnership with Preqin. For more Preqin and RSM sponsored insights, including the hottest sectors in US real estate, Opportunity Zones and where investors are likely to see some big plays, download the Real Estate Quarterly Report.
RSM and Preqin cover the key sectors in real estate right now, Opportunity Zones and attractive opportunities for US investors.