This is an original article written by Gawain Pek.
When there is disruption, there is crisis and opportunity. Technology has been sweeping the world for a while now. However, real estate, comparatively, has been around for far longer. Characteristically, technology’s advances have left no industry untouched, not even real estate. Even as the pandemic swept through the world, investments in PropTech (property technology) were reportedly up by $551 million. With an eye-catching figure like that, it is hard to ignore its potential. However, what exactly is PropTech and why do we care?
PropTech: Another fancy portmanteau?
Referring to the use of technology to help individuals and companies manage real estate assets, PropTech, short for property technology, is real estate’s very own wave of technological disruption. It combines data, technology, and innovation to transform one of the oldest industries in the world. For example, the paperwork could be a thing of the past. Exciting, right?
The innovations on the market today are endless. Industry players and technology companies are talking about the integration of blockchain with property transactions. There is the use of AI-enabled technology to monitor a property’s performance on the market, providing forecasts for both house buyers and property sellers. Advancements in 5G and the Internet of Things may provide contractors with real-time updates on a building’s construction progress. In short, all stakeholders – from the property builders to the property sellers and eventually the owners – will feel the impact of PropTech. However, PropTech is not only limited to the intangible. PropTech may also refer to larger-scale innovations, for example transforming the way buildings are built. Singapore’s latest public housing development – Tengah Forest Town – is a prime example. Computer simulations, pneumatic technology, and centralized cooling units are integral to the creation of the town’s blueprint. All told, PropTech not only changes the ground-level, owner-seller landscape of the real estate, but also has the potential to change how buildings are constructed and estates are planned.
PropTech and Sustainability: The Link
The World Green Building Council’s framework helps us to understand the link between PropTech and sustainability. A property’s carbon footprint is divided into the following stages: embodied carbon, upfront carbon, use stage embodied carbon with operational carbon and finally, end of life carbon. With this framework, the carbon footprint of a building and its users become apparent.
World Green Building Council’s framework (Source: WBGC Report)
When we look at the carbon emissions of the construction industry on a broader scale, the impact is even clearer. The United Nations reported that the construction industry contributes to about 30% of global carbon emissions. It also consumes up to 39% of the global energy share, with 28% stemming from the energy needed to heat, cool, and power them and the remaining 11% from construction. On this front, the impetus to accelerate the adoption of more green technology and practices is undisputable.
Opportunities and Risks at the Interface
At the interface of PropTech and sustainability lies opportunities and risks to homeowners, businesses and investors. Collectively, they motivate the adoption of PropTech.
Businesses also have reasons to push for PropTech. For one, the in-built efficiency of green buildings translates to cost savings. As the Business Times reported, one building in Singapore reported savings of up to US$650,000 following the installation of high-efficiency cooling units and intelligent lighting controls. For real estate agencies, PropTech’s innovations may mean saving on the costs of building showrooms.
For the construction industry, the adoption of PropTech is also a sound future-proofing strategy. As the 2015 Paris Agreement has stipulated commitments to cut national carbon footprints, the scale of the industry’s emissions means more of such regulations will come into force. Already, in cities such as New York and countries like the United Kingdom, policies stipulating net-zero building requirements are already in effect. Some governments, such as in Australia, require commercial offices that are more than 1000 square meters to undergo energy efficiency evaluations.
That means future building projects must adopt newer, greener technologies. It is cheaper to do so than to implement mitigation strategies after construction. For existing properties that are already built, the adoption and implementation of PropTech solutions can help to reduce carbon footprint. This is where PropTech’s smaller-scale technology utilisations, such as tapping on AR for property-viewing, will come in handy. In this way, adopting PropTech is not only to stay ahead of the curve, but it is the necessary next step forward.
Global Urban Population as Percentage of Total Population over Past Decades (Source: World Bank)
Disruptions are both nerve-racking and exciting, and PropTech’s wave is no different. From the ground-level property buyer and seller to the builders, there are opportunities and risks for everyone. However, unlike in other industries, PropTech’s new toys are not merely fancy applications. They are more existential and consequential. If the construction industry continues to operate in its current ways, the industry’s carbon footprint will only expand as the world’s urban population increases. Fortunately, governments are already working to compel the industry to act. In response, businesses should also pay attention to, invest in and quickly adopt the innovations PropTech offers.