The present pandemic has accelerated many trends within the market. The main accelerated trend was the need for technological solutions to enable remote working. Businesses have had to evolve to align with Covid-19’s regulations, restrictions and constraints.
Within the property industry, proptech systems have been evolving slowly and being implemented to drive innovation, efficiency and a fit for the blockchain that is the property industry. Blockchain is made up of the segmented parts where new systems are created to quicken the process and each of these systems are integrated with each other. An example would be a transaction of commercial property. The landlord would hire a broker and market the property online through various channels or the broker would contact a few longstanding buyers who would be interested. The buyers would hire consultants or accountants to run the numbers and make an offer. Thereafter, the banks and attorneys would ensure the legal documents were signed and the transaction was made with or without finance. Each segment plays a role in the process to meet all the requirements, both legal and financial. Today, businesses are feeling the rising pressure to relook their innovation, reduce inefficiencies and embrace technology & integrated systems, not only to be in line with competitors, but also survive in the current economic downturn. The current pandemic made many of the traditional methods impossible to perform and new ways are needed.
The efficiency experienced by adopting these proptech services is the shortening of a process and being transparent by using the technology as a tracking tool. One downside is that the technological systems may cut out certain middle men. The first that comes to mind is a lesser need for the role of brokers and attorneys who assist the landlords, banks and the tenants with the transaction but who could be made redundant by automation on a digital level. The question is how important is the human element within this industry. A few industry players in the market may have to adapt their roles to ensure their skills are still needed as technology cuts out physical human interaction. Cutting out the “middle man” comes with cutting costs and eliminating inefficiencies. This may require for brokers and lawyers to review their roles and fee structures. This review based on technology has already been experienced in the banking sector and travel industry.
One aspect of proptech which is very useful is the data collected may be used in service delivery and improving resilience within our cities, and is already being seen in developed - and smart cities. Proptech firms use data to understand markets better and improve their offerings. Data is therefore the link between proptech and smart cities.
Through these technologies, those previously left out due to institutional frameworks are now able to interact through their mobile phones and participate in these markets. An example is a program where citizens can overlay information on a map, such as their informal settlement plot, and then use the app to apply for a credit at a bank. South Africa has large informal settlements which are home to a large proportion majority of the country’s residents and by using technology, they can access products and services previously not offered to their communities. An example is Kenya’s sales transactions and backroom leasing via mobile phones where the apps allow landlords easy access to manage their property.
Another benefit to adopting technology on a government level is the stronger integration of departments and therefore more transparency. South Africa has the capability of combating social and structural issues by adopting technology that is already present within the market. Currently, we are not seeing it happen fast enough. The next step would be building relationships between the public and private sectors to integrate the current technology and use the data captured.
Will the property industry operate differently in the future or will it go back to business as usual? What role will technology play? Will it just create efficiency and capture the data or will it completely change the processes or sectors that the property industry, in fact any industry, will use?
In the property industry, the use of technology will change how quickly the on-demand products and services are met. Users will always drive demand. How tenants want to use space will echo how the space is managed. It is reconfiguring the way landlords and investors do things. It will also be seen in how our cities are run, the reconfiguring of frameworks, not just the optimization that technology first brings. This may be why governments may be cautious in adapting too quickly to the unknown. Urban governments, and their cities, are meant to be stable environments, with dependent inhabitants. Not only do they need to be risk-averse but also need to have the skillset to run these technologies and integrate them. Many questions remain unanswered, but one thing is certain, it will be difficult to go back.