Series 4 PropTech: Introduction to Property Technology Part 3 – What’s all the fuss about?

http://www.ispeech.org

I just wanted to pause for a moment this week, after our two heavyweight guests from the last couple of weeks, to take stock and perhaps consolidate a little. What exactly is PropTech, how will it impact our lives and what should we look out for? These are some of the questions that I will be answering in today’s show.

From Smart Homes to Property Management, from Blockchains to AI and Bots, and from The Sharing Economy to Big Picture Megatrends...we have you covered!

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Transcription of the show

Hello, and welcome to another episode of The Property Voice podcast. My name is Richard Brown and it’s a pleasure to have you join me on the show again today.

I just wanted to pause for a moment this week, after our two heavyweight guests from the last couple of weeks, to take stock and perhaps consolidate a little. What exactly is PropTech, how will it impact our lives and what should we be looking out for? These are some of the questions that I will be answering in today’s show.

So, let’s go!

Property Chatter

PropTech or property technology is an umbrella term that collects together a whole range of initiatives and sub-topics. Literally speaking, PropTech combines technology advances into the property sector. It takes on elements of other initiatives, such as InfoTech and The Sharing Economy, but these are not exclusive to PropTech either. It has enablers to its success, and as I am discovering through some of my conversations, some inhibitors too! PropTech is not exactly new either, consider how the Victorians used manufactured bricks as a standardised building material, or how in post-war Britain we managed a house-building boom through the use of pre-fabricated structures.

What seems to be different now is the pace of advancement and change, which is generally true of everything we see around us now. Pause for a moment and consider that our greatest friend, Rightmove, will have its 18th Birthday this year, the iPhone is only 10 years old, Airbnb is just 9 and Purplebricks is still pre-school at just 4 years old.

With some assistance from Dan Hughes, who joined me on the show last week, in the last couple of years alone, we have seen:

• 20 million Amazon Alexa devices sold that lets people talk to their homes!
• Facebook and Google are starting to build houses...they are Internet companies remember!
• L&G, an insurance company, has set up a factory to assemble what is essentially flat-pack homes
• WeMove is becoming an industry term for flexible workspace and arrangements…but now we also have WeLive for a new spin on social / co-living

This is under the backdrop that according to IBM we have seen 90% of all the data EVER created in the world take place over the last 2 years alone!

So, we could also be forgiven for thinking that the rate of advancement is exponential too. In fact, I also fell into that trap a little myself. However, as with all things new, there are also bumps in the road and obstacles that slow the rate of progress down. Regulation is one, literally processing the huge volume of data is another and both industry and consumer adoption being yet another significant drag on the development and roll out of the technologies possible.

So, sometimes what we are seeing is possibly evolution rather than revolution…but both are still progress and that’s what I want to bring out throughout this series. What is here right now, what is coming soon and how will this affect us as property investors.

I have had a number of conversations already with people in different sectors and at times it does seem that it is two steps forward and one step back…after all most progress follows this path rather than taking quantum leaps. Even so, there are exceptions, just look at anything Elon Musk is doing to see how electric cars, self-drive, space rockets at 10% of the cost of NASA’s and the Hyperloop to name just a few of the radical ideas that are shaking up some traditional or more established industries and companies.

It is true that we have seen perhaps greater progress in sectors such as retail, propelled by the Internet and e-commerce making online shopping an everyday experience for many. However, as Andrew Baum highlighted, the number of transactions in property is way lower than it is in retail. This makes the velocity of transactions and stock turnover in property slower too. Planners and council building control departments stipulate what, how and where we build, financial regulators put straitjackets on the lenders and valuers can literally put a zero valuation on a property if it does not meet certain pre-agreed conventions or standards.

So, we have a way to go yet. But I am optimistic about the future and also with what we already have available right now. For example, whilst on holiday in the USA recently, I signed a loan agreement electronically to support a recent property transaction, I managed a booking in one of my holiday rentals using an app on my smartphone and conducted a video-conference call with a mentee using Skype. These tasks were all completed using advances in technology that were not with us 10-15 years ago and we can often take for this for granted.

I read a book recently called The Second Machine Age, which discusses information technology as the new industrial revolution. In the book, the story of the second half of the chess board was shared. In summary, this shows how the doubling of quantities of rice placed on each square of a 64 square chess board up to half way is nothing compared to the geometric or exponential growth that we will see in the second half. It has been said that in information technology, we only reached the first half of the chess board in 2013 after starting in or around the mind 1960s probably.

Another principle, known as Moores Law, shows how the cost of technology is falling at a dramatic rate, with the cost of transistors halving approximately every 18 months. This implies that the cost of computing power is getting smaller and smaller at the same time that the rate of progress, as per the second half of the chess board, is getting faster and faster. So, we could say that the fastest, most advanced and cheapest technologies are still ahead of us…but maybe not too far ahead!

So, before I get too hi-tech, let’s just consider how PropTech breaks down and perhaps what the big areas of change will be for us.

PropTech consists of three core elements: Information, Transactions & Management / Control. It is the combination and interaction of these three elements that brings property and technology together.

There are some key enablers that are pushing this technology drive:

1. Hardware & software development – such as PC’s, servers & data-centres, along with software development,
2. Mobile communications, such as smartphone applications and smart-connected devices,
3. The Internet, including social media & web services such as the property portals.

The convergence of these enablers is what is fueling the growth of the PropTech industry.

My own knowledge and awareness in PropTech is growing, almost daily. At the time of recording, so subject to change, I see a number of key areas to keep an eye on when it comes to PropTech, these are:

1. ConTech or Construction Technology. The ways that PropTech will change our physical or built environment. In building methods think of pre-fabricated or modular building methods, alternative and sustainable building materials and 3D printing. In design and build, there are emerging trends in Build-to-Rent and also Self-Build Housing.
2. Smart Homes. Smart homes and home automation are dramatically changing the way that we live. We already have devices and apps that improve energy efficiency, the Internet of Things (IoT) movement allows appliances to be connected to the internet, and simple, inexpensive hubs and devices are available that allow us to literally speak commands to our homes.
3. Property Management & Business Technology. There are a plethora of systems, apps and tools that can help us to better run our business lives, whether they are specific to property management, like Arthur, or more general business tools, such as Xero for accounting and banking integration. There are simple tools, such as spreadsheets & calendar apps being two. Task-based apps, such as Doodle & Evernote, communication apps like WhatsApp, Join.me audio / video-conferencing, and cloud storage services like Dropbox / OneDrive / Google Drive that are no doubt already helping in our property business today.
4. Big Data, Systems and Apps. Are driving efficiency and cost reduction for property service suppliers, such as conveyancers and surveyors. Desktop appraisal solutions, to assist investors, lenders and surveyors in valuing properties. Rightmove, Zoopla, UPad and Land Registry are all providing data at an increasingly granular level, spanning several years now, which allows us to have greater confidence in our investment and rental decisions.
5. Artificial Intelligence (AI) and Bots. Are already being used by some Estate Agents to give a better, more personalised service to clients with fewer staff. Selling off-plan and other forms of development is aided by Augmented Reality (AR), Virtual Reality (VR) & Drone technology. Algorithms, AI and Bots are already serving up relevant suggestions in some fields and will be a growth area in property for sure. Then, consider the Blockchain technology, which can make a ‘smart digital contract’ binding; this could revolutionise conveyancing, lending, insurance and a range of other property-related services in my opinion.
6. FinTech, or Financial Technology. The worlds of finance, payments and lending are changing due to technological advances. Property transactions have taken place in alternative or Crypto-currencies like Bitcoin, specialist P2P and crowd-funding sites are enabling almost anyone to invest in property and alternative funding sources for investors and developers are starting to emerge. Mobile/digital payment technology is revolutionising the way we make transactions domestically and internationally.
7. Education, Learning and Development. Everyone from RICS through the NLA / RLA to law firms, software providers and specialist property training companies seem to have a training offering these days. If we want to become an accredited landlord, a certificated property developer, or develop more operational skills in areas such as HMOs, rent-to-rent, serviced accommodation or a range of traditional or alternative / creative property strategies, there is some sort of online or face-to-face learning offering to suit.
8. The Sharing Economy. A number of new technologies have come together to make Sharing Economy business models possible in a number of different sectors. From peer-to-peer lending, room and holiday rentals, one-way furniture removals, to online contracting & staffing, the Sharing Economy continues to be a major disruptor.
9. Regulation and Compliance. Yes, its boring, but also essential. Property law and compliance is often just a mouse click away through the online services of the landlord associations, legal services can be selected from service providers such as Law Depot and financial and planning information for investors is being supported by a number of apps and online services now too.
10. The Big Picture. Or how megatrends, smart cities and globalisation are going to affect us over the coming years. Economic power and wealth is shifting to the east, this means that our tenants, buyers and even lenders might have origins and roots from unfamiliar places. Accelerating urbanisation means more city-living, where space is at a premium, Smart-cities are more interconnected ‘hubs’ where home-meets-work-meets-play in a more aligned way, and heightened environmental factors mean we need to constantly upgrade our properties to remain both compliant and competitive, not to mention save the Plant's resources.

These are the key themes that we will continue to explore in greater detail over the coming weeks as the series unfolds. I am joined by a selection of guests, many of which you may not have encountered but for this series, as we merge technology and property and lift the lid on what is happening right now and what we can expect down the line too. There is no doubt that PropTech can improve our property businesses in terms of productivity and also profitability. There is also no doubt that if we choose to be an ostrich and bury our head in the sand, that we might also get our bums bitten if we are not too careful!

So, please continue to tune in and hear from some people at the heart of these changes as to what is going on, but also what is holding us back as well. Like all things new, there will be opportunities and threats along the way. But one thing is for certain…change is coming, whether we like it or not!

As usual, the show notes can be found over at www.thepropertyvoice.net or if you want to talk about anything from today’s show, receive an intro into one of my guests or just talk property investing, email me at podcast@thepropertyvoice.net, I would be happy to hear from you!

But for now, all I want to say is thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao-ciao.