By Daniel Hart
Why major tech changes will be seen first in real estate leasing
One thousand dollars. That is the current potential value for a patient healthcare record on the robust and largely unpoliced Dark Web black market. With the mean size of data breaches in the healthcare industry at roughly 20,500 records, this adds up to a profitable segment of cyber theft. In fact, it is the most profitable sector for cyber threat actors to focus their energy and efforts on.
The signs are endless, we hear in every conference and stitched into every article. Disruption is coming to the real estate industry and property technology companies are tripping over each other to implement it.
When I discuss technology with real estate frontrunners, the conversations fall into two categories: technology that makes existing companies more efficient and technology which is designed to disrupt existing models, cutting out middlemen and attempting to change the way the world works.
Whether directly, or indirectly, the entire PropTech industry is here to improve customer experience. While some choose to do this through existing models, others are looking to build entirely new models that eliminate middlemen.
Technology has historically impacted the high volume, low value transactions models first. The low-value transactions that happen frequently are the best candidates for disruption and the best place for technology to have a positive impact on customer experience.
In real estate this equates first to the residential leasing market – more specifically with Airbnb re-imagining hotel apartments and short-term leases. The next in line is annual residential leases, and it’s here we find the front lines of change in real estate.
Tenants will expect buildings to take care of themselves, leases to be automated, and approvals through biometrics
Residential leasing in the UAE has already changed dramatically over the last few years. When Rera implemented Ejari, a government-run programme to regulate all tenancy contracts in Dubai, in 2010, the technology streamlined every part of the lease customer journey. It created a repository of data that enables individuals to process their services and utilities faster while simultaneously providing the data and knowledge to understand rental rates and create a lever to control rent prices in the market.
With multiple initiatives in place within Rera and the government as a whole, we’re going to see dramatic shifts taking place in the next two years to software systems and to business processes. By 2020 we expect to seamlessly connect with government blockchain systems and to leverage the advantages of doing so. Imagine lease data being fully transparent or Ejari extended to allow public access to the transactional data. Our systems, both technological and interpretative, will need to process that volume of data and make sense of what to do with it. It is data driven decision making inserted into the leasing process as a whole.
To do so, we will need to embrace smart contracts that streamline the flows of your everyday property management processes. Repetitive tasks such as lease renewals, break lease scenarios and maintenance requisitions should be moved to smart contracts which, when activated, trigger automated results. These tasks could be done through a combination of systems across multiple platforms with the end goal of simplifying the process to a few clicks and approvals by both the tenant and landlord.
Your time should be focused on the interpretation of information and the construction and maintenance of the systems.
But don’t get comfortable here. That role will be replaced within five years by Artificial Intelligence. Ongoing government real estate related initiatives include the Blockchain Initiative, Dubai Future Foundation, Dubai 10X’s Real Estate Self Transaction (REST) and the Happiness Meter.
Google today offers machine learning on a pay-per-use model and you can already ‘rent’ a brain for less than $1 an hour. Today I can search my personal photos for “beach” and get results of all my weekend trips whether I diligently tagged the photos or not. In the not-so-distant future we will be able to ask our systems “what’s the status of the A/C units in my buildings?” and get a report on whether they’re performing optimally and the last time the coolant was serviced.
Tenants will come to expect all this. Have you seen a child try to use a non-touch screen for the first time? The frustration and bewilderment that it’s not responding to their touch will be mirrored in an expectation that buildings take care of themselves, leases are automated, and approvals are done through biometrics. Tenants and landlords will want to trust pre-planned maintenance to AI which analyses global historical trends of assets and sets predictive scheduled maintenance which they didn’t even ask for.
Government will want this too. In summer months refrigeration and coolant contributes to 60 percent of the electrical consumption in the UAE . Web connected units will be combined with data from the past to identify trends and help reduce demand on the power grid first through smart meters, then sub-meters that continuously track consumption trends.
All these changes will hit the highest volume area first: residential leasing. Pay attention. It is the front line.