RealTech (Real Estate Technology) is the buzzword in the market at the moment. Last year FinTech (Financial Technology) was the flavour for where to put your capital, this year it's our industry - anything that has a sniff of combining real estate and technology seems to be a magnet for capital right now. Not only here in Australia, but right across the world.
When we think about the interest and investment in technology in and around our property management businesses there are some interesting tools and solutions developing fast.
These technologies all come together to provide solutions around how we work, making us more efficient, more collaborative, and most importantly, improving our level of service to our clients. An interesting question though is how will technology that isn’t currently directly affecting our industry, potentially change it in the future?
Thinking outside the tech box
We know that property is the single biggest asset class in Australia, estimated to be worth $6.5 trillion across 9.6 million dwellings. We've spent decades, and even centuries, building up critical infrastructure and services to support communities, and property values in high-density, well serviced areas, typically close to city centres have continued a steady growth in demand and value.
Consequently we have our own agency assets built around that demand, and our real estate business value is heavily aligned to the underlying property values in our areas. BUT - how much thought do we give to how this is changing, and what impact that will have on our business.
An interesting starting point is the technology that actually exists today. Look at Amazon’s autonomous drones as an example. Amazon, DHL and a whole bunch of others have programs in various stages of development, testing and operation around rapid delivery of goods, on-demand, straight to your door using drones. Run out of milk? No problem, a drone can have that in your kitchen in 20 minutes without you needing to leave the house. This is happening in the world, right now as you read this. Interesting sure, but why would this impact real estate you ask?
As we adopt more and more on-demand, just-in-time, or even just home delivered shopping, our reliance on proximity becomes less important - bandwidth and connectivity becomes more important. Our reliance on our own vehicles becomes less important and our reliance on services that will get us from A to B becomes more important - we will shift from a need to own a vehicle to the collaborative consumption market - car sharing.
This means that whilst on an aeroplane for example, we can be productive while we commute, and our personal investment in transportation will be greatly reduced, freeing up critical cash flow in our own personal budgets to invest in different areas of our life.
In our households our cars are usually the second or third most expensive physical asset that we own behind our property. Owning and operating a vehicle of any sort has a reasonable impact on any household budget. It also has an impact on where we live (I'm looking at you Bondi Junction and your lack of garages!). When that expense begins to fall away from our household budgets over the next 5, 10 or 15 years what will the impact be on real estate investment? If I don't need to service a car in my budget, can I suddenly buy property rather than rent property? Will we see a rise in owner/occupiers, and a decline in rentals?
The sharing economy
Consider: will “the sharing economy” change the way we think about our home too? It's happening with bicycles (JC Decaux/CityCycle), cars (GoGet/Uber), aeroplanes (Wingly), clothing (Le Tote/Rentez-Vous), content like movies and music (Netflix/Spotify) and even pets (DogVacay/WAG) - it will happen with sporting goods, children's toys, lawn mowers, tools, your BBQ, why not your home?
There's an element of crystal ball gazing that we need to do. As an industry are we certain about which way this will go at the moment? No. What is for sure though is that technology is being adopted at a faster pace than ever before in history. The rapid adoption of these technologies is changing behaviours and beliefs (ownership vs access) faster than ever before. All of the technology that has been discussed actually exists today... this isn't living on Mars or teleporter type stuff. It's right here, right now. Today.
“There's an element of crystal ball gazing that we need to do. As an industry are we certain about which way this will go? No.”
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How to shift our thinking
What we need to start doing is think about how aware, agile or responsive we are as businesses. More than ever before in this industry we need to be going back to our business plans and reviewing them frequently. We need to check in more regularly that our assumptions about the next year or two are still true.
What are the new threats to your business? They are changing, and they are changing more quickly than ever and you need to put plans in place to ensure that as business leaders you keep your finger on the pulse.
By Jason Turnbull Chief Product Office Console Group