We now have no choice but to design smart, connected and sustainable infrastructure to accomodate this global growth.
Resilient cities
If we are to cope with the growing strains of urban population, then cities must be liveable, competitive and sustainable — environmentally, financially and socially. They must also be equipped to create opportunity. We have seen a rise in the ‘trust deficit’ being faced by governments and corporations. The relevance of this to the property sector is particularly significant when you consider the link between property ownership, urban access and inequality. While urbanisation generally affords economic opportunity, it also presents significant resource risks. Rapid urbanisation is contributing to global resource depletion, while some of the potential effects of climate change, such as flooding and other extreme weather events, will hit cities hardest.
One successful case study of this approach can be found in Barcelona. The city – like so many others – was searching for ways to stave off economic and developmental stagnancy following the 2008 recession. To help save money and optimise the urban infrastructure, the local government employed the latest computing technologies and embraced “smart city” initiatives in 12 areas including water and lighting. This helped reduce congestion and emissions via sensors that led drivers to empty parking spaces; created a sensor network to monitor precipitation and humidity, allowing officials to target irrigation; and installed nearly 20,000 smart meters to measure energy consumption and improve efficiency, among other efforts. In total, Barcelona calculates that it saved $37 million from smart lighting, $58 million from smart water measures, and increased cash flow from parking by $50 million, thanks to the city’s Internet of Things implementation.
Real estate companies have made great contributions to cities through placemaking efforts. In the future the data they contribute will be as critical to the city’s potential as the design elements of the buildings they construct.
The 100 Resilient Cities program (100RC)
Pioneered by the Rockefeller Foundation, 100RC is helping cities around the world become more resilient to the physical, social and economic challenges that are a growing part of the 21st century. Cities selected to join the network are provided with resources to develop a roadmap to resilience along four main pathways:
- Financial and logistical guidance to establish an innovative new position in city government, a Chief Resilience Officer, who will lead the city’s resilience efforts;
- Expert support for development of a robust resilience strategy;
- Access to solutions, service providers and partners from the private, public and non-government sectors who can help them develop and implement their resilience strategies; and
- Membership of a global network of cities that can learn from and help each other.
Through these actions, 100RC aims to help individual cities become more resilient, and to facilitate the building of a global practice of resilience among government, not-for-profits, the private sector and individual citizens. Both Sydney and Melbourne were selected as members of the first 100 Resilient Cities and are working to develop strategies that will build the strength of the community, infrastructure and economy in these cities.
Asking the tough questions
Property companies are well-drilled in asking themselves questions about the market, but in a world of disruptive innovation, this is no longer enough. As the sector evolves, leaders need to continue evaluating their ability to adapt to change. Here are the five questions they should be asking themselves:
What business are you in? Disruption changes the very business that companies are in. Customers don’t necessarily want to own a car, their real need is to get from point A to point B, which can just as easily be accomplished with a ride-sharing service, self-driving car or drone.
Who is your customer? Disruption does more than empower customers, it creates entirely new customer segments with different needs and expectations. Understanding how the customer base has changed and the needs of the new customers are critical inputs for self-disruption.
Who are your competitors? Responding to disruption requires making the right comparisons, such as assessing your company against the appropriate competitors. Since disruption attracts non-traditional entrants from other sectors, the peer group you historically identified with may no longer be relevant.
Who are you aligning with? Whether technology or innovation partners, or the creation of alliances with traditional competitors to pool investments and R&D to compete with disruptors, the partnerships you create for the future will require different skillsets to the ones you have today
Is your culture playing it ‘safe as houses’ or ready for innovation? Sustainable innovation requires an understanding of how an organisation currently works and what is needed to embed innovation into the company culture. Central to this is how to link innovation to your growth agenda. Once this is achieved and you have created a culture that can actively encourage ideas, it is also critical to have an approach to triage, test and manage the innovation process adding predictive intelligence to improve outcomes.
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Summary
Evolving technology has created disruption in the Australian property market. The industry is now being challenged to embrace innovation as research suggests that many are underestimating the impact of emerging disruptive forces.
