It seems a good time to reflect on some of the advancements in property technology I’ve already discussed on this site, and to introduce others which are still yet to be featured. After all, this column is about looking ahead to how our market will be in 2025, not just to next year!
Before we begin, we need to understand what the general market is likely to look like in 2025. Firstly, we will probably have gone through another economic downturn, which will have had an impact on, or even have been caused by, another crash in the housing market.
The baby boomers will be another ten years older, the retirement property sector will have swollen considerably, and now, according to consulting firm Strategy&, 40% of the population will be known as “Generation Z” or the “Post-Millennials” (on account of being born after 2000).
Another key statistic is that internet speeds will be 1GB as standard, which is a significant improvement on our current 14mb average (according to Akamai State of the Internet Q4 2015 report). Access to the internet will underpin everything in 2025, and will impact all demographics, and both leisure and work activity. The internet will define people’s relationship with technology, and in particular, as we are concerned with here, property technology.
HOW WILL TECHNOLOGY IMPACT HOUSE BUILDERS IN 2025?
With the surge in both the retirement property sector, and Generation Z, there will be a huge diversification in house building needs. Though acceptance will grow in the retirement property sector, which will free up larger houses and cause less of a bottleneck at the top of the market, affordability will still be an issue for first time buyers.
This may lead larger house builders to reflect and diversify product ranges, forcing them to become smaller, more agile departments or companies, which are able to react to changing demands of buyers. Consider, for example, the recent forecast by Knight Frank, who are predicting a huge increase in institutional investment to the Build-to-Rent sector, to the tune of £50 billion by 2020.
The need for agility, both in planning and financial modelling, will drive the use of technology in the property and construction sectors.
BIG DATA WILL HELP PLAN
Big Data strategies will be instrumental in helping house builders to create the buildings of the future. Once their target market is understood, house builders will need to go to the newly-established Data Stores (you think Generation Z will give away their personal data for free in 2025?) and, as The Future Laboratory report on Property: A 2020 Vision puts it, the data will help build a “detailed psychographic profile of a consumer’s lifestyle preferences and choices, and so create hyper-personalised portfolios of suitable neighbourhoods and properties within those neighbourhoods”.
It is at this point that sites like LandInsight will grow in importance – a start-up now, with large potential to thrive in the market of 2025. The opportunity to immediately source land in particular areas, know its ownership rights, understand past applications, and assess other planned developments, is all already accessible. However, it is possible that, in 2025, with head-worn devices, this information will be visible in your field of view while you are visiting an area. This will make development and planning information immediately available, and thus allow decisions to be made on the spot.
Assuming that, by 2025, Blockchain (the underlying platform for Bitcoin, and a public ledger) is commonplace, survey information and title deeds will be immediately ascertained and understood. The existing process, of several weeks and months of research and expenditure, may well take just a couple of clicks and a phonecall, (unless these now take place through our head-mounted displays, of course).
Once the decision has been made, accurate plans will need to be drawn up. Fixed UAV drones, which will be commonplace by 2025, may then be used to draw up accurate plans of the ground layout using LIDAR. The results will then be fed into a Business Information Modelling system like Autodesk, which is especially likely given the current push by the UK government, who want a significant number of builders and product suppliers using BIM as standard.
As Dan Hughes, Director of Data Products at RICS puts it, “Whilst BIM is not only a technology solution, it is a good example of how the industry is changing. The practices that are being put in place now through BIM will provide the foundation for the sector for many years to come”.
Funding will now be required, and given we will have gone through another economic downturn, banks will no longer be the primary source of funds in the UK. In fact, we are already seeing alternative finance as a viable option. Peer-to-peer lending will be commonplace in 2025, and builders will raise funds through finance vehicles like crowdfunding in order to finance their developments.
Frazer Fearnhead, founder of the first property crowdfunding company, The House Crowd, states that “we are approached by developers on a daily basis, who are unable to obtain funding through the banks”, and goes on to say that they have “the ability to be more flexible than the banks in terms of who we lend to or partner with, and are more likely to be understanding and work with the developer if things do not go according to plan”.
Looking forward, crowdfunding is estimated to be a $250 billion industry by 2020, and for many small developers, it will provide a more attractive option than traditional means of finance.
Once funded developments start to be built and marketed, 3D printing will become more prevalent. As Phil Bernstein, Vice President at Autodesk, points out, houses “won’t be built, they will be manufactured”, and this is supported by research. 3D printing had an annual revenue of just over $3 billion in 2013, which is expected to grow to over $20 billion in 2020 alone. This will all be made easier by the move to BIM, which will also aid the marketing of the products as well, which I will come to in the next section.
Whether built by 3D printing or not, an understanding of the make-up of the development will be required. This is where augmented reality (AR) will feature. Digi Capital recently predicted that AR and virtual reality (VR) will be worth $140 billion by 2025, with AR taking the lion’s share of the market capitalisation.
AR gives you the ability to superimpose digital imagery over physical landscapes. We have already discussed head-worn devices, and some of us may be aware of what Google Glass has been trying to do in the last few years. 2025 will see the original idea becoming a reality, with property technology offering the opportunity for builders and architects to see exactly what they are building overlaid on the physical landscape. BIM will integrate smoothly into these displays, so AR will benefit everyone, from the 3D printer to the architect looking at the entire development from afar.
Let’s now review how a house buyer will interact with technology in the future, as this will continue our journey.
HOW PROPERTY TECHNOLOGY WILL IMPACT HOUSE BUYERS IN 2025
In 2025, there will be an even larger blurring of the work-life balance. We need to factor in that the needs of buyers will be more focused on ancillary services that a development offers, rather than just its location and price. The rigidity of the office and office hours will have lessened, and with the growth of co-working and rather transient work space, more people will be working from home, and will spend less time physically inside their place of work.
To consolidate The Future Laboratory’s sentiment to the buyer, Generation Z will expect “house buying and selling to be a digital experience, seamlessly connected across every device that they use. They will conduct the vast majority of their house discovery and viewing remotely, and they will want technology to drastically reduce the physical demands, not only of finding, but also of setting up, their new home”.
ARTIFICIAL INTELLIGENCE AND PROPERTY SEARCH
To begin with, a house purchase will no longer be a conscious event. It will be a part of everyday life.
With the machine learning world to which we are moving rapidly, search engines and property portals will already know that we are reaching a stage in life where we may be looking at a new apartment. Machines will know the changes we are going through in our lives; they will know we are accepting a new job or having a baby, or that we have been looking up certain forms of healthcare. They will start to prompt suggestions based on learned algorithmic criterion that we will likely be looking for a new property soon.
This is all assuming that we are willing to trade our data, of course, and reminds me of the quote by famous tech evangelist Robert Scoble: “the more technology knows about you, the more it will help you”.
IMMERSIVE REALITY AND ITS IMPACT ON PROPERTY VIEWING
Once we realise that it is time to move home, we as consumers will not want to waste any time.
The property ‘search’ online will be transformed. I put ‘search’ in inverted commas because, arguably, properties will be chosen for us, and sent to us to view, rather than us going to search as is the tradition today. We will not want to view 12 to 15 properties before making a decision. We will want to view them in the comfort of our own homes, using VR.
As Matt Ratcliffe, of creative studio Masters of Pie, states: “the experience offered by this technology will have become so convincing that it will be difficult to tell the difference between reality and virtual reality”.
We may shortlist a few apartments, but be undecided on the area. Rob Ellice, of easyProperty, predicts that we could then be using our own personal drones to conduct live researches on the property location, “to find out whether the neighbours throw loud parties every weekend, how noisy the traffic is at key points throughout the day, and other information that is not easily available from an inspection of the hours, but vital to long-term happiness”.
It is at this point that we may select a couple of properties to see in person. We may arrive at the showrooms and be greeted by our advisor (will estate agents be necessary in 2025?) who will show us to the apartment we are there to view. These advisors will know all about us before we get there, and know exactly what we are looking for in the apartment. It is at this point that we are shown into the shell of the appointment.
Who needs furnishings when we will be given our head-worn devices that we can use to augment our physical view? Given that we have programmed our own furniture into the system already, we can just see how our own furniture looks, or, because all the furniture stores will have embraced property technology, and pre-programmed their own furniture into BIM, we can see a selection of new furniture on offer.
When we have decided that this apartment is the one for us, we can put in an immediate binding offer, through technologies like ClickToPurchase, which we discussed in this article a few months ago. Giving both client and developer certainty in a deal will help both sides of the purchase, and improve transparency all round.
However, there may be one final issue to address before the sale goes through. Affordability.
We have an issue in this country, in that some cannot afford to own properties outright. Yes, there will be alternative products, as discussed earlier, but even so, the banks hold the option on considering whether a person is credit-worthy or not. This may be an area in which crowdfunding and peer-to-peer lending again come in: this time, on the consumer side.
There has been the suggestion of crowdfunded mortgages, where the “would-be home buyer in 2025 will ask crowds of micro-investors to lend the money to buy the house, circumventing obstacles such as a lack of deposit or poor credit rating”. These crowdfunded loans may not necessarily replace longer term, existing mortgages, but they will be particularly useful in order to demonstrate to the larger mainstream lenders that a person has the ability to pay what is owed, and thus opening up various financial products that would not otherwise be available.
PROPERTY TECHNOLOGY: CONCLUSION
Ultimately, throughout this article, you may have noticed some common themes. The property market of tomorrow needs convenience, immediacy, transience and ease. Technology and innovation will shape these three factors, but an awareness of data is integral, both for building and planning of developments, but also for shaping your company’s future, by understanding the consumer marketplace. Equally, understanding the significance of BIM processes and their integration with both AR and VR will play a significant part in both building and promoting developments, and will also help you to shape the future.
A book I read recently about the growth of modern Britain stated that “technology was regarded by many not as an instrument of liberty but a tool of oppression”. I would now argue that it is now turning full circle, both for the general public and for businesses that understand that we are about to enter one of the most exciting periods of modern times.