Machines for living: How ICT is changing the way the property sector works

Developments in information and communications technology (ICT) have had a significant impact on every sector of the economy, from banking and insurance to manufacturing, logistics and retail. No longer the preserve of the office, and certainly no longer limited to true computation, ICT, and the internet in particular, has dug deep into our daily activities with new technologies changing the way market actors communicate and do business in dramatic ways.

The property sector is no exception, said Gavin Fitzgerald, senior associate real estate lawyer, at Ogier Leman.

“Put simply, ‘proptech’ is the term we use for the application of technology and software in property,” he said.

Use of proptech runs the gamut of the property sector, from planning and construction, to sales, conveyancing, energy use and even ongoing estate and building management.

Ogier Leman’s work in the proptech sector is principally at the consultation and application stages, said Fitzgerald.

“In terms of our offering, I lead our proptech team, and what I do on a day-to-day basis is . . . well, I’m not a coder and I don't build things, but start-ups come to us who need answers to their questions,” he said.

Taken broadly, those questions fall under three general rubrics: is the tech fit for purpose, is it solving a real problem, and are there any legal pitfalls.

Fitzgerald said that two businesses that Ogier Leman work with illustrate the diversity of the sector quite well.

One is Offr, which started as an online bidding tool but has since expanded, to bring real transparency to the property buying process.

“Purchasers of homes are, rightly, sceptical about competing bidding offers and “gazumping” has been an issue for a long time. Offr solved this issue via its transparent platform where all bids made can be seen by all stakeholders. However, the platform has grown legs and now it is looking to digitise the entire legal conveyancing process, everything from start to finish. You can even execute the bulk of the documents digitally using DocuSign and that’s it; everything gets done under a single umbrella – no more paper,” he said.

Ogier Leman’s role has been to look at the pinch points in the legal conveyancing process where efficiencies can be made.

Another client integrating proptech into its business is the Barina Property Group, an Irish developer currently building 65 apartments in Blackrock, who has recently integrated VST Building Technology into elements of modern prefabrication in its construction programme to improve quality control and achieve better energy performance.

“What really helped proptech explode is a recent focus on sustainability and now ESG [environmental, social and governance] at a macro level,” said Fitzgerald. “A lot of property investors, particularly on a global scale but also with domestic investors, require sustainable investments and this has trickled down to real estate.

A knock-on example of this is the rise of sustainable “green” buildings. These ESG requirements start at board level ultimately and as a result, investor demands dictate the stock that is being delivered.”

Other technologies also slot in, including blockchain. This is a technology whose time has long been said to be coming in real estate, but Fitzgerald said it might just happen soon.

“It's a superb technology, and will no doubt revolutionise the way in which we do business going forward but many proptech start-ups integrating blockchain technology have placed the cart before the horse. They banged the drum loudly on the benefits of the technology but ultimately business is quite simple and has been for 2000 years: your product or service needs to solve a real problem if it is to be a success,” he said.

2022 should see that change, he said, as successful start-ups have finally realised that they need to illustrate how their business solves a real-world problem and lowers costs first, and then explain how it is solved using the technology.

Blockchain is not well understood by most people on a technical level, but this need not be a barrier to adoption if the use case is clear.

“When I started in the legal industry, we were sending out post. Now it’s all e-mail and instant messaging. Communication is instant – changed the game. However, if I was asked to explain how e-mail works under the bonnet I couldn’t do it on a deep level, but we all use it. So, in short, yes, technology in real estate is here to stay and it’s only going to get better,” said Fitzgerald.

The other catalyst is, of course, the global pandemic, which hastened adoption of a wide range of technologies.

“Terrible things have happened over the past few years, but from a technology perspective we have realised that we couldn't have stayed connected without the integration and use of technology. Zoom, Microsoft Teams, DocuSign and so on are not directly associated with property but the wide-scale adoption of digital technology in the business world certainly was a catalyst for the embracing of proptech.”

Adoption of proptech could also help drive costs down in the market, said Fitzgerald.

“The two biggest heartburners for developers are cost and delays. Any time you can introduce effective technology into a process, you shave the costs and increase efficiency, so we will certainly see technology in construction incorporated even more than today,” he said.

Management of businesses with technology is also now a reality, including by using artificial intelligence (AI).

“Some of the most revolutionary things we see in the market use AI at its core. Through various new pieces of technology – we see more and more highly automated smart buildings - we are now able to extract live data directly from these buildings,” Fitzgerald said.

This has obvious implications for improving energy performance, but it goes beyond sustainability.

“Building owners can see which amenities are being used, which are not being used, and so can make strategic decisions in that regard, and they get predictive maintenance and safety data by using meticulous observation tools. In retail, in shopping centres, we see the monitoring of footfall for shopping patterns. It sounds really simple but as and when we use these new technologies, we realise we can't go back to the old ways. In fact, we need to build on them, and property owners and managers are asking us: ‘What else can we do?’”

Ogier Leman also uses AI tech to create value in its own business, helping to simplify the paperwork-heavy commercial leasing process.

“Through machine learning, it can analyse a lease for us and summarise key points. The report still needs to be reviewed and checked, but it automates a very, very mundane task which can free up a solicitor for two hours to do higher-value work,” Fitzgerald said.

Not all law firms are on board with even basic technology, but the last two years have seen an improvement, said Fitzgerald. This alone indicates an openness to wider use of technology.

“Acting for home builders, we put together booklets of title for new home developments when issuing contracts and I would say that, previously, one in three solicitors would request it to be printed out and posted to them rather than using e-mail. A waste of time and money and slows down the whole process. But since the pandemic that has reduced down to one in six or seven. That, to me, is quite telling and is a positive advancement,” he said.

Hybrid working is also having an impact on building occupancy, and Fitzgerald said this needs to be understood in terms of technology, too.

“The office is still the hub for most companies but the use of the office has evolved and, from our experience, office tenants now place more focus on connectivity, collaboration and wellness in a building post-pandemic to facilitate this new form of working we live in,” he said.

As a result, buildings that integrate technology which facilitate modern work are the ones that are in demand.

“The older, more traditional type of building is the kind that is losing out. Occupier demand now focuses on smart and sustainable buildings but this has been to the detriment of older second-hand stock, causing a two-tier office market," he said.

“Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road.”