Smart Technology is already shaping real estate and will continue to do so into the future, as major innovations like 3D printing, Blockchain, the Internet of Things (IoT), Augmented Reality (AR) and Virtual Reality (VR), Artificial Intelligence and even drones find useful applications in everything from building management to customer engagement. There are two main reasons for this, namely the human need to innovate and an increasingly enabling environment (catalysed by COVID-19).

Innovation – or the drive to do things better, if you will – is part of the human psyche. Socrates said that “The secret of change is to focus all of your energy, not on fighting the old, but building on the new.“ From the invention of the wheel to today’s advances in AI and Machine Learning, the human desire to strive for improvement is alive and well. 

From an economic perspective, innovation and economic growth go hand-in-hand. William Brody, ex-president of Johns Hopkins University and renowned scientist, radiologist and academic administrator discusses the calculus of innovation, describing it as follows: “… Knowledge drives innovation, innovation drives productivity, productivity drives economic growth.“ And Steve Jobs – widely acknowledged as one of the great innovators of our time – said that to be a leader, you also need to be an innovator.

The realm of smart technology is ideal for thinkers, innovators, leaders and businessmen to develop, fine tune and implement ways to improve their businesses and the lives of people affected by those businesses. In the real estate space, it’s about better experiences for tenants and employees, which lead to customer and employee loyalty, improved efficiencies, cost savings and, ultimately, profits. Whether you use AI to improve your customer service journey, or 3D printing technology to build more sustainably or save on costs in fit-out, smart technology is rapidly entering into the industry with their promise of improvements across the board.

Of course, the second factor – an enabling environment – is critical to successful innovation. In the case of smart technology and its application in various industries, internet connectivity is critical. IoT, AR, VR and AI are dependent on cost effective, reliable and far-reaching internet connectivity to function. In fact, all the smart technologies that are finding application in real estate are enabled by quality cloud services and high-speed, high-volume internet access.

Today, we’re seeing smart technology and digital transformation being discussed at C-Suite and Boardroom level. It’s no longer the purview of a few technically-minded specialists in the IT department. In fact, executive committees and Boards that are not actively looking at ways to transform digitally and leverage smart technology are positioning themselves to go the way of Kodak during the rise of digital photography and the birth of the camera phone. Though Kodak has managed to rebuild itself since it filed for bankruptcy in 2012, real estate players would do well to learn a lesson from this tale of caution and embrace innovation in their businesses.

New, more cost effective technologies have added to engineering efficiencies. Cloud computing and blockchain technology have made massive storage infrastructure and computing power available to any user at a fraction of the historic costs. Open APIs (Application Programming Interfaces) allow for different systems to connect and integrate, leading to greater collaboration, automation, and innovation across all industries and especially for real estate professionals. We’re seeing the Software as a Service (SaaS) model gaining traction, too, allowing real estate developers to reduce Capex requirements and time to market, and mitigate against a lot of the risk involved in digital transformation.

Value creation, cost savings and risk management are not the only drivers behind smart technology adoption in real estate. Tenants are becoming much more demanding, too, as customer service and engagement standards continue to rise and consumers’ tolerance for mediocre service continues to diminish.  Digital has become an expected part of the tenant experience.

With so much innovation available to transform businesses, we’re seeing real estate companies begin to appoint innovation managers to help them choose the right technologies and implementation strategies. And we believe the industry is only getting started.

In next month’s article, we will kick off with a look at the impact that 3D printing is having in the construction industry.

Post-COVID, as more and more businesses have adopted technology solutions to enable and improve operations in hybrid working environments, cyber threats have been on the rise too. According to British telecommunications giant, BT, “More than 46 million signals of potential cyber-attacks are spotted by cyber security experts every day around the world.”1 A 2023 study conducted by IBM indicates that the global average cost of a single data breach was USD4.45 million, representing a 15% increase over three years.2

Given that real estate businesses deal with exactly the kind of data that hackers would like to get their hands on – bank account details, ID numbers and other personal information – the industry is an obvious target for cyber-attack. As more and more real estate businesses adopt PropTech solutions to reap operational and cost efficiency rewards like improved utilities and building management, smoother tenant engagement and more efficient leasing, keeping all that data secure is vital. So how do you make sure that your cybersecurity measures are keeping pace as you digitally transform your business?

The human factor

Most cyberattacks happen through human error. Customers falling for phishing schemes, employees failing to follow security best practices and other avoidable human errors are responsible for as much as 82% of data breaches, according to Verizon3. Though it’s seldom intentional, people are your business’ biggest weakness when it comes to securing data. Implementing regular cybersecurity training for your employees, and engaging with your tenants to help them avoid falling prey to scams, will go a long way to protecting your data.

Make cybersecurity part of risk management

Ensure that cybersecurity is on the agenda in your management meetings and included in your risk management efforts. Assessing and understanding your risks is the first step, followed by prioritising the risks that have the biggest potential to cause harm. From here it’s important to understand what your existing solutions include in terms of security, and where the gaps are, as well as to put a robust incident response in place should something go wrong.

Form the right partnership

Cybersecurity skills are rare. The cybersecurity workforce gap is estimated at around 3.4 million people worldwide4, meaning that hiring your own crackerjack team of cybersecurity ninjas is not an easy task. Partnering with a managed services provider is the most effective way to gain access to these rare skills and ensure your security environment is keeping up with the threat environment. The right partner can guide you on how to get the basics in place, and how to close the gaps you’ve identified in your current systems. They should also be able to help to automate day-to-day security hygiene measures, like monitoring and patching, as well as other routinised security tasks.

Real estate businesses must take advantage of PropTech solutions to ensure their profitability and sustainability going forward. Protecting your business against data breaches and maintaining client trust is paramount in a digitally enabled world, and so is proactively securing business data.

ChatBots are getting better and better at handling customer service queries. More and more businesses are finding opportunities to automate processes and analyse datasets using AI. And in Real Estate, the opportunities to streamline and improve processes are already taking shape. In general, AI can be used to automate repetitive tasks, analyse large datasets, and make predictions based on patterns in data. All of this can help property managers, agents, and landlords make better decisions and improve the overall efficiency of the real estate sector.

For example:

1. Chatbots: AI-powered chatbots are already being used to deal with first-line customer queries in many industries. The more the bot engages with customers, the better it gets at finding answers to simple queries that don’t require a human being to answer. In real estate, this technology could be used to assist potential tenants in finding suitable properties and answering basic questions about the properties listed on the site. This could help to better qualify leads before a human agent gets involved. For example, by answering questions about unit size and cost, a Chatbot could redirect a person enquiring about a 2-bed rental going for R 11 000 per month, that only wants to spend R 6 000 per month, towards suitable properties in their price range.

1. Image recognition: AI is capable of analysing property photos to extract information such as the number of rooms, square meterage, and other details that could be used to create more accurate property listings. More accurate data like this could also be useful in property development planning, helping to determine the appropriate number of units to be built on a brownfields refurbishment for example. 

1. Pricing analysis: AI can analyse market data to provide landlords with insights into the most competitive prices for their properties. AI can gather and assimilate bigger volumes of historic data much faster than a human can – such as current rental prices in the area, how long space has been on the market at each price point, and what space used to go for. More accurately collected data like this could help a human being spot trends in the area and use this to set more appropriate rents, in turn attracting more appropriate tenants.

1. Building Management: AI can support more proactive building management by alerting facilities managers to opportunities to optimise the use of resources and offering predictive maintenance recommendations. In essence, the AI analyses data from building information systems and sensors to spot inefficiencies before they become a problem. Inefficient water use could indicate a leak, for example, that would reduce utility costs when fixed. Similarly, inefficient energy use could indicate an HVAC system using more power than it should, and potentially in need of maintenance. A well-built AI could not only warn you of the energy consumption increase, but pinpoint the air conditioner at cause. A good example is www.smartbuilding.mob – our cloud-based property management software that benefits from our AI module integration to deliver predictive maintenance, energy optimization and document storage recommendations and information extraction.

A good South African example, that combines a number of AI capabilities to improve user experience for both landlords and tenants is www.instantproperty.co.za. As a commercial and industrial listing platform, InstantProperty.co.za  uses AI to provide more accurate and useful data on the properties listed. We have incorporated ChatGPT to use our data and data available on the internet to write vacancy-specific copy which improves the experience of the tenant looking for space as well as the landlord listing on Instant Property. It drastically improves the searchability of Instantproperty.co.za listings on Google from an SEO (search engine optimisation) perspective, which in turn results in more leads and more traction.

Locally and Internationally, companies are using AI to improve business operations in real estate by providing more accurate data, better insights, and more efficient processes. International examples include Zillow’s “Zestimates”, which can help homeowners and agents price homes more accurately. Cherre’s data platform helps real estate professionals make more informed decisions by providing a comprehensive view of the market, and Bricklane.com’s investment platform helps investors find the best opportunities by analysing large amounts of data. 

By using AI to automate repetitive tasks and analyse massive amounts of data, these companies are making the real estate industry more efficient, transparent, and accessible for everyone involved. As the technology continues to advance, the timing is ideal for real estate professionals in South Africa to leverage the benefits in their own businesses.

In our Asset Mag Technology column, we looked at a few Smart Technologies that are making an impact in the Real Estate and Property Industries. In our Smart Tech to Watch series, of which this article is the first, we’ll dig into these technologies individually to see how they are finding application, and what benefits they offer. 3D printing is our topic for this month. 

In 2015 – almost a decade ago now –  the Chinese construction company WinSun made headlines when they created the world’s first 3D printed apartment buildings in China. The 3D printing process allowed WinSun to create modular building components that could be quickly and easily assembled on site, which reduced not only construction time but labour costs as well. Because the 3D printed components were also lightweight and used less material than traditional construction methods, the project produced less waste and overall costs were reduced even further. The 3D printed apartment buildings were completed in just a few months, demonstrating the potential for 3D printing to significantly speed up the construction process.

Since then, there have been several 3D printed construction projects worth noting, including 3D printed bridges in Spain and The Netherlands, and houses and more by Branch Technology and ICON in the United States. South Africa has also seen its share of 3D printed construction projects.

The “New Jerusalem” project, initiated by the University of Johannesburg’s Fada Architecture Department uses 3D printing technology which is capable of printing concrete structures. The project aims to provide affordable housing to low-income families in South Africa, and has so far delivered two successful prototype houses, each consisting of 26 layers of 3D printed concrete walls. The houses were built in just three weeks, and the team estimates that they cost 30% less than traditionally constructed homes.

The “Mars House” project in 2021 saw a team of South African architects and engineers create a 3D printed house that is capable of withstanding the harsh conditions on Mars. The house, which was constructed using a 3D printing robot, is made entirely of recycled materials and can be built in just two weeks. The team believes that this technology could be used to build sustainable housing on Earth as well.

And the “Project Gateway” initiative, led by the Belgian-based 3D printing company Kamp C, aims to build the world’s first 3D printed eco-housing development in South Africa. The development will consist of five houses, each constructed using 3D printing technology and sustainable materials. The team hopes that this project will serve as a model for future sustainable housing developments around the world. The printer that will be used for the project is capable of producing walls up to 8 metres wide and 3 metres high.

As property developers and real estate companies continue to look for more cost effective ways to build, 3D printing should be considered. It opens up a new realm of opportunity, potential cost savings and constriction advantages. Some of the applications to consider are:

1. Building Components: One of the most common applications of 3D printing in construction is building components such as walls, roofs, and floors. Using 3D printing, these components can be made quickly and accurately, reducing construction time and waste.

1. Formwork: These temporary structures are used to support concrete during construction. 3D printing can be used to create formwork more quickly and precisely than traditional methods, which reduces labour costs and improves construction quality.

1. Customised Design: 3D printing allows for highly customised designs to be created quickly and easily, allowing for unique architectural elements to be added to a construction project.

1. Construction Equipment: 3D printing can even be used to create construction equipment and tools, reducing the time and cost of acquiring and transporting these items to the job site.

Locally, from the project examples we’ve shared, it seems clear that 3D printing is being explored to address our shortage of affordable housing for lower-income households. Because 3D printed houses can be completed exponentially faster than traditionally built ones, and produce less waste in the process, it seems a viable way to create safe homes for those that need it most. 

But let’s not discount the impact this technology can have on higher income housing markets, commercial rental housing businesses and even infrastructure – such as foot bridges. Developers looking to attract first-time buyers could keep their apartments more affordable with 3D printed building components, without compromising on quality. And those looking to attract buyers and tenants that value environmentally friendly living/ working environments could benefit greatly from the ability to use less construction material, implement recycled materials or simply save on the waste produced during the construction project to achieve higher Green Star ratings.

Since the Built Environment contributes 39% of gross annual carbon emissions globally, according to the World Economic Forum, perhaps it’s time to start taking 3D printing more seriously in the construction sector.

Co-authored by Wayne Berger & Peter Levett

Joint Chief Executives of iShack Ventures, a venture building technology business with specific focus and expertise in property, providing a number of technology digital capabilities to the property sector.  

3 Steps to Tackling Digital Transformation in Real Estate in 2022

As a real estate professional, you may wonder if you even need a digital transformation strategy. After all, real estate companies have operated very effectively for decades without significant digital transformation. Any strategic change fundamentally changes how the people inside and outside the business interact and operate, and digital transformation certainly does this.

Though the real estate sector has, historically, been synonymous with being slow to adopt technology, international PropTech saw a record $32 billion invested in real estate technology in 2021 – up 28% from 2020. Growth in revenues of the PropTech industry (as a measure of increased usage) worldwide has increased by over 10% per annum over the last few years and is expected to grow at a faster rate going forward. The PropTech industry is booming, with almost 10 000 PropTechs in operation globally.

In my years as a digital transformation consultant, I have seen many real estate companies burning through small fortunes, not to mention years of time, only to end up with failed technology engineering and adoption projects. It’s understandable, then, that real estate companies are thinking more carefully about their approach as landlords ponder the question: How do I maximise my digital transformation journey and improve my portfolio’s yield through digital?

These are the 3 steps to tackling digital transformation in Real Estate in 2022:

• Understand why a technology (or digital transformation) strategy is important

Any strategy, including a digital one, needs to be central to the business strategy and driven from the Board and executive management. Unfortunately, technology is too often seen as a matter to be driven by the IT department or similar in the business. But we are seeing a seachange in the industry as Boards and executive management are beginning to understand the importance and significance of technology.

While everyone was locked down at home during the COVID-19 pandemic, digital solutions to everything – from healthcare to shopping to customer service – gained momentum. And consumers are not keen to go back to the days of sitting in waiting rooms, standing in till queues or listening to panpipe hold music while waiting for a customer service agent to answer the phone. From managing car insurance claims paperfree through an app, to getting groceries delivered to your house in 60 minutes, the world has changed and there’s no going back. 

In real estate, the opportunities for more effective facilities and utilities management, tenant communication, and even residential or commercial property sales and rental management are endless.  One fast-growing sub-sector, for example, is smart building which allows real estate owners to digitally manage their buildings, as well as reporting, inspections, communications and more between all those that connect to the building – all using an app on your phone. This has increased relevance with the introduction of ESG reporting requirements. 

• Exploring potential benefits & current pain points

The key to benefitting from your investment in PropTech is taking a strategic approach. Digitally transforming for the sake of it is a fruitless endeavour. Instead, tackle your digital transformation with a clear understanding of the potential benefits and current pain points you want to alleviate and develop a strategy that addresses these. Critically, your strategy should include targets that you can measure against your business goals to ensure you can report on whether or not your PropTech solution is working for you. 

Whether you’re aiming to achieve cost reduction targets through better utilities management, seeking to attract new long-term commercial tenants through improved sustainability and energy efficiency reporting, or wanting to improve facilities management efficiency through quick and easy facility bookings, digital transformation must support your strategic goals if it is to give you a return on your investment.

• How do we choose the right digital solution mix?

Implementing your digital transformation strategy will boil down to choosing between three possible solutions: Build it yourself, outsource it, or buy into Software as a Service (SaaS).

Build it

Landlords are asset managers and, by nature, there is a tendency to want to own any assets they invest in. So building your own solution probably sounds very tempting. However, software engineering is a very different game to real estate investment and the skills required to maintain and innovate your bespoke technology solution are scarce, costly and – frankly – unlikely to respond well to the same management techniques that work for your employees in your core business. 

Outsource it

For most real estate companies, outsourcing is a more realistic option. It gives you access to the scarce and expensive technical skills you need, often at a more affordable rate, and without all the challenges that come with managing a software engineering team in your business. In this scenario maintenance and innovation is outsourced to a specialist company.

An important consideration for outsourcing is the ownership of the ‘Source code’. An unwitting customer may purchase the ‘executable program’ but be unaware that from the onset they must request that the software engineering supplier’s quotation includes the intellectual property of the programming, known as the source code. This gives the purchaser the flexibility to move the development project to a new service provider, should problems arise in the future with their current supplier.

SaaS it

The last possibility and the most cost effective upfront and monthly is SaaS. SaaS solutions save you time-to-market, while ensuring that your PropTech solution is regularly updated with improved functionality and cybersecurity measures, without the hassle and expense of maintaining or outsourcing the teams behind the software.  This makes SaaS solutions accessible and ideal for smart real estate businesses looking to accelerate their digital transformation. 

It’s important to select SaaS solutions that integrate easily with other software packages your business uses to ensure smooth data sharing and shared functionality. Licensing archaic or international PropTech systems that can’t easily be customised for the local market can get very expensive, very quickly.

If these three steps seem daunting, you may want to consider appointing an Innovation Manager or equivalent in your business whose sole responsibility is to navigate your company through the treacherous waters of digital transformation. The right digital transformation strategy, supported by the right skills to deliver against it, is the recipe to a nimble and ultimately effective technology adoption journey.