Sustainability, innovation and technology is converging to create the buildings of tomorrow. I.e smart and highly efficient buildings for us to thrive in.
PropTech (property technology) has a vast opportunity potential. Most buildings can become more efficient when it comes to energy usage (and hence the carbon footprint of the buildings and size of their bills). Given that real estate stands for 40% of overall energy usage globally and 30% of global CO2 emissions, there are a lot of efficiencies to be gained.
It is therefore also a tremendous company and investment opportunity. According to Business Commission for Sustainable Development (BCSD), energy efficiency solutions in buildings are rated as a top three topic of value creation opportunities from the SDGs, estimated to be around 770 USD billions annually by 2030.
Source: “Better business, better world”, Business Commission Sustainable Development, Jan 2017
PropTech involves several areas (including buying your house online or 3D printing), but let`s dive into the one of making buildings more efficient and smart – fuelled by technology. Real estate is actually quite old-fashioned in the sense that the utilization of technology has not mainstreamed the industry yet. A lot of the real estate managers do not measure or possess data on the performance of the building, and can therefore not either optimize for its performance. But data, analytics and monitoring technology will drastically change this, optimizing the building’s energy usage and several other areas. Other proptech solutions can be utilizing new materials, for example housing materials that has a dual function as solar cells, rethinking buildings and how they are built.
“Technology is fundamentally changing how real estate is used, developed, managed and invested in”
Salil Gandhi – partner in the technology group, Goodwin (international law firm)
Investors are also spotting this opportunity. Proptech is one of the fastest-growing investment sectors in the world. Inflow of venture capital in proptech start-ups are up from 186 million USD globally in 2011, to 2.67 billion USD in 2016, to 12 billion USD last year! Real estate provides investors with access to the largest asset class in the world, and is the largest driver of GDP globally. In the US for instance, real estate alone makes up 13% of the GDP.
There are numerous ways to disrupt and transform this traditionally conservative and non tech savvy industry. Those that gets this will make money along greening our buildings. Those that do not might go extinct.
As Forbes writes: “If you’re a real estate investor or developer, you have the opportunity to use data to make better decisions, install smart devices to increase home values and institute more efficient building techniques. Real estate technology naysayers will see their businesses dwindle and the early adaptors will experience exponential growth.”
Do you want to read more about PropTech?
Check out these Forbes articles:
“Questions on proptech that will make you sound like a pro”.
“3 PropTech investors talk trends, game changers and the future of real estate”