"The best way to predict the future is to create it." These were the words of RICS president Timothy Neal in February’s issue of Modus magazine. The property industry is destined for a complete digital transformation. It is happening now and the proptech industry is maturing at a pace. So, what are businesses in the property and technology industries doing to create change and choose the future we want to see?
At the end of 2019, Cripps Pemberton Greenish released its Creating Connections report, exploring where technology is making a difference and the practical challenges to adoption and implementation that the industry faces. The principal conclusion is that greater collaboration between the technology and property industries is essential for proptech to add value across the property lifecycle.
With a greater exchange of ideas and skills between the two industries, we will find practical applications for software that make sense to property professionals and benefits our working lives.
Here we present two case studies of active proptech projects where this meeting of minds is happening. They are written from the perspectives of both a property consultant and a technology start-up.
CBRE believe in disrupting themselves to reimagine a digital future, by adopting a build – buy – partner strategy. This includes strategic investment via proptech venture capital funds, partnerships with new technology providers, and looking internally to develop tools and technologies that deliver greater service for clients.
Asset iQ was borne out of the need for connected data to deliver energy management strategies in building design and management. CBRE’s London engineering team recognised the opportunity – underlined by the environmental, social and governance (ESG) agenda, socially responsible investment, and escalating prices – to embrace technology and unlock the potential of energy data to deliver better energy efficiency.
Around 80 per cent of a building’s energy requirements is controlled by the building management system (BMS). Asset iQ is a web-based platform designed to remotely connect to the BMS and other systems to capture building data.
Asset iQ software retrieves and analyses real time information from a building to provide valuable insights about its operation. The data gives management teams access to dynamic, real time energy use of a building and the ability to control it effectively in order to reduce its consumption.
Asset iQ enables the best use of BMS data. Landlords quickly see how to reduce hard operational costs, lower overheads through better use of building management resources and enhance the environment for the well-being of occupiers – which improves productivity.
The average asset saving from using the technology is £0.33 per square foot. One example from CBRE of a 310,000 square foot office building in Birmingham delivered £156,000 savings in year one. This equated to a 20 per cent reduction in energy consumption and an average saving of £0.50 per square foot.
The technology is enabling clients to identify the best strategy to maximise investment across their portfolios and achieve returns on the triple bottom line for positive financial and ESG outcomes.
Nick Wright, senior director, strategic consulting at CBRE says that "the industry challenge is often one of mindset and understanding the benefits of trialling new ideas and solutions, learning and adoption."
He believes the larger challenge "is moving clients away from tech tourism to asking the questions. What is the outcome I want that is going to give my organisation an advantage? How do I prove the business case for investment?
What is the solution and how can technology support better sustainability reporting, greater operational efficiency, improved productivity and enhanced end-user experience?"
Nick agrees that "technology is not the answer but an enabler."
For many companies in the property sector, a lack of digital expertise is one of the biggest barriers to proptech implementation. Understanding technology and how data can be harnessed for decision-making requires certain skills and experience that is not commonly found within the property professions.
With a combined background in finance, property and software development, the three co-founders of technology start-up Mortar knew they had relevant skills to bring to the sector.
George Unsworth, Mehmet Duran, and Alper Turktas set up Mortar to improve core financial processes within property investment and management, particularly in income generation and collection. By applying machine learning and artificial intelligence (AI) to the process of rent collection, Mortar removes time-consuming administrative tasks and enables staff to focus more on the tenant experience.
Mortar joined the PwC proptech scale up programme in 2019 and in conversation with PwC’s property clients, the team identified gaps in the type of data landlords were collecting. They also found financial processing and reporting systems that were unconnected to each other and out of date. The knock-on effect was that finance and collections teams were creating impractical and time-consuming workarounds that reduced their productivity.
Mortar is a finance platform for the property sector that helps address this problem. It is built on a core AI system and works in conjunction with clients’ legacy systems. The software pulls together multiple sets of financial data from clients’ existing systems and presents the data in a highly visual and user-friendly format.
Mortar also links to a mobile app that helps tenants manage their own arrears and set up flexible rent payments. Such consumer-facing tools are helping landlords create dialogue and develop a more active relationship with their tenants.
For one large property client, with both commercial and residential assets, Mortar created a complete visualisation of their revenue. Different data sets were pulled together to display a historical pattern of income. This was the first time the client’s finance team had seen their data in this connected way.
By running their data sets through Mortar, the property client has pinpointed the highs and lows in their financial performance and productivity and the associated triggers. This is transforming their business intelligence systems and informing their wider digital strategy.
Mortar is now providing the collections team with their own user interfaces to make it quicker and easier for them to identify and allocate income. The company is also working on turning visualisation of historical data into a real time, accurate and informed financial system that will be consumer facing.
The biggest challenge for Mortar has been communicating what the technology is and the benefits it brings. Clients want to hear about outcomes rather than the nuts and bolts of how the technology works. They also want proof of concept and, as a start-up without case histories, this is difficult to provide.
These case studies show how the property and technology worlds are converging to produce useful new tools but it can sometimes feel like mixing oil and water. Approaches to risk and accepted norms differ widely.
But, as we’ve seen, the property industry is balancing these differences by using business and contractual frameworks, such as:
As property professionals, we can see first hand the problems that could be solved through software, data and communication tools. Technology and property industries must continue investing time in educating one another by having conversations outside of our own networks and developing new skills.
Together we can test, learn and transform the way we work to shape the digital future we want to see.
Mike Scott is head of real estate and Liz Carter is senior business development executive at Cripps Pemberton Greenish