How people, place and purpose align to redefine real estate

As we continue to ride the COVID-19 rollercoaster a new world order is ahead for real estate. The sector is coming to grips with major change as the interplay of people, place and purpose align to redefine how we think about the built environment and the skills we need to reimagine it.

In fact, nearly 20% of those polled by EY professionals recently see data scientists as an emerging in-demand role for the real estate sector, alongside experience managers (20%) human-technology integration experts (18%), workplace productivity specialists (14%) and augmented reality builders (12%). Have we reached the tipping point as the real estate sector delivers on the ambition to have technology and data at the heart of better human experiences? 

Dr Andrea Chegut, co-founder and director of MIT’s Real Estate Innovation Lab, is not surprised by EY poll results. Digitising our buildings has been an ongoing challenge, she told a global audience during the latest instalment of the EY/MIT Innovation in Real Estate webinar series.

“In the past, we faced disconnected systems, data hijacking from different manufacturers, complicated legacy systems, and poor data quality analysis. But the biggest challenges are not technical – they are structural and cultural,” Dr Chegut said. This is why we need to upskill people.

We are seeing this too at EY organisation, where we are walking our talk and are applying some of the best consultancy brains to investigate the interconnections between the three Ws of workforce, workplace and work smart. We are surveying our people, speaking to clients, mining a rich vein of data and using AI to understand new working patterns and what this means for the places we inhabit. We are bringing in new skills to look at space in new ways – all with the goal of accelerating innovation and building better human connections.

While we are in uncharted waters we are not alone. Some of the best minds are deploying digital technology to rethink the very reason real estate exists and how changing human behaviours will influence the places we inhabit. 

What we know now

Property companies that had invested in a strong technology spine prior to Covid-19 found it easier to ride 2020’s waves of disruption. On the other hand, “companies without a digital core – that haven’t started digitizing and automating their back-end processes – have struggled to offer the services that tenants demanded almost overnight,” Dr Chegut told our webinar audience.

Healthy buildings were on the real estate radar before Covid-19, but 90% of real estate investors are now ramping up their focus on health and wellbeing, according to the United Nations Environment Program.

Touchless technology has evolved rapidly in response to social distancing requirements, and QR codes and Bluetooth, facial recognition and gesture control are now “everyday tech,” Dr Chegut said. 

What is next?

The next evolution of the digital core is the digital twin at scale. At present, a smart building feature that is “still rare,” Dr Chegut admitted, but will gain traction as the benefits become widespread.

“The evidence so far points to a 7% reduction in construction timelines, up to 20% decrease in capital expenditure and a 3.5% increase in occupancy,” when project teams have access to a digital twin. Beyond the horizon are volumetric displays, Dr Chegut added. These 3D projections of buildings will “enable tactile and live storytelling”.

We will also see AI powered building management systems that integrate 5G, IoT, big data, cloud computing, AI technology and machine learning. GE Digital, for example, is using AI prediction to predict performance and failures in HVAC systems and has saved customers US$1.5 billion.

But the main game as we lift our heads from the COVID-19 battleground is net zero. With our built environment responsible for 39% of global emissions, net zero is the ultimate in healthy building. A quarter of our webinar audience agreed, citing ‘net zero credentials’ as the primary driver of value in the future.

A peek beyond

So how fast will this technological change occur? According to more than half (54%) of our poll respondents “big step changes” are ahead. Another 18% expect the change to be radical and that the real estate sector will “struggle” to keep up.

Dr Chegut outlined some of those next horizon technologies she is seeing in the lab. Hologram meetings will help remote workers beat the Zoom gloom. The start-up Spatial, established by MIT alumni Jinha Lee, is already simulating the experience of in-person meetings with lifelike avatars, dynamic sound and interactive controls. Digital fibres and fabrics will optimise the environment the moment we walk through a building’s doors – and “prototypes are moving into individual biometric configuration,” Dr Chegut said. Then there are virtual lands or buildings – which can already be bought and sold in online digital games – that may “revolutionise the health, social connectivity and wellbeing of people”.

As digital transformation steps up another notch, the big takeaway from our webinar was clear. The best time to start work on digital transformation was yesterday, but the next best time is now. Organisations that have invested in digital solutions are positioned to think differently about the future – and to act differently.

So, what can you do now?

1. Plan based on purpose: Technology is moving so fast that any investments today will be obsolete in just a few years. Paradoxically, this means looking further ahead than ever before. Start with scenario planning to imagine all the possible futures that may unfold. What are the risks, opportunities and conditions of play? We call this ‘future-back’ thinking. Then, with this view of the distant future, work backwards to understand the strategic and tactical implications. Use your purpose to chart a course. Only then do you choose the tech that will help you get there.
2. Get your (back of) house in order: We have seen back-office automation change the way our real estate clients make decisions all the way up to the board level. The efficiencies being made are eye-watering: trust distributions that once took weeks to complete can now be finalised in just 28 seconds. Companies often don’t consider this ‘real automation’, but it can create permission to play and move your company up the maturity curve far quicker.
3. Hero your humans: We believe leaders must look at business transformation through a fresh lens: with innovation at scale, technology at speed, and most importantly of all, with humans at centre. Prioritising people, rather than technology, will help guide ethical decision making and ensure you are solving a real problem.

Just 6% of our poll respondents thought it would be people from inside the real estate sector that would drive change. Instead, it will be occupiers (33%), their companies (23.5%) and investors (27.5%) stepping up simultaneously to demand better experiences in their buildings.

At EY, we are not so convinced that change will be driven from outside real estate. We are seeing inspiring and imaginative leadership from across the sector as organisations recognise how technology and data can enhance the human experience.