As the pace of digital innovation continues to accelerate, real estate must be sure not to get left behind. In this fast moving environment, INREV is looking to help the industry harness the potential of new technology and achieve favourable outcomes from the vast range of choices it will face.
Among other things, this is likely to mean researching the most promising applications, sharing best practices and establishing ground rules. As a first step along this path, INREV is setting up a Technology Committee, involving many of those who are already getting to grips with the implications of real estate-related innovation. The members of this group, drawn both from the investor and fund manager communities, will begin by researching the technologies that are already available in Europe and beyond, investigating which are likely to have the biggest impacts on our industry.
The plan is for the committee to start its investigations by focusing on two key questions:
First, what will be the impact of technology on how we use real estate? This will include a broad range of issues like the effect of self-driving cars on the urban landscape (particularly the reduced need for parking) and the impact of online shopping on the demand for shopping centres.
Second, how will technology influence the internal operation of real estate investment? Again, a wide variety of areas could be affected, including the way we make strategic decisions and regulation and compliance. Technology has the potential to disrupt the structure of the industry, making some functions redundant while changing the service model for others, for example lawyers and advisers, so it will be important to find the right balance between change and stability as the business moves forward.
The committee faces quite a daunting task, given the array of different technologies that are out there. Many of these fall under the headings of PropTech, ConTech, RegTech and FinTech.
The committee faces quite a daunting task, given the array of different technologies that are out there. Many of these fall under the buzzword headings of PropTech, ConTech, RegTech and FinTech. One innovation that is bound to capture their attention is blockchain, which has recently made a lot of headlines.
This decentralised settlement technology, which is used as the basis for issuing digital currencies like Bitcoin, could lead to a revolution in the way financial transactions take place. Blockchain’s proponents claim that it will make transactions much cheaper, faster and more transparent. It has applications for monetary transactions in shares as well as for contracts and ownership, and has the potential to make transaction processes more transparent, as information about individual events can be displayed in real time. It is argued that all actions and contracts in the blockchain are counterfeit-proof documents and that creating an online register will make the complex, expensive work of notaries and trustees obsolete.
As a financial asset, blockchain could have big implications for transacting real estate and reporting on these transactions. But so far it’s not at all clear how the industry is likely to take up the technology. Real estate tends to be a late adopter of any digital technology, arguably due to the physical and legal complexity of the underlying asset. This kind of innovation doesn’t seem to be in the industry’s DNA. A further complication is that blockchain is not just one system, but rather a generic technology with multiple applications and potential formats.
As a financial asset, blockchain could have big implications for transacting real estate and reporting on these transactions.
Still, this could make it even more important for real estate to get to grips with the technology and to make the right choices at an early stage. INREV may have a role to play here, helping organisations to share best practices and perhaps to set up a data sharing standard. This would represent a natural progression of its existing guidelines work – in effect, ensuring that we all speak the same language.
Another important step may be to encourage blockchain pilot projects in the real estate arena, to see what’s possible. INREV’s new committee could be a catalyst for this, bringing companies together and raising awareness of potential applications. This might help ensure enough IT resources are made available, particularly within the larger organisations that are most likely to innovate. The fact that many kinds of software are becoming more standardised across real estate augurs well for the industry, but it’s also crucial that real estate is open to thought leadership from other sectors, for example private equity, when looking to apply new technologies.
For further information on the committee view the Technology and Innovation Committee page.