Driving Value in Real Estate
Innovation is at an all-time high and the stark increase in proptech knowledge and solutions has only just begun to uncover the endless ways in which intelligent technology can be applied to property to improve outcomes. The world is quickly cottoning on to the vast potential that proptech solutions pose, with reports showing that global investment in the industry grew from $0.6 billion to $24 billion between 2010 and 2021.
Modern proptech solutions don’t just automate and optimise processes; they also have the potential to seamlessly integrate ESG principles, initiatives, and targets, on a large scale. Though ESG is a fairly new concept, successful businesses can not afford to ignore it. This is evidenced by the attitudes of the S&P 500 companies, of which 90% publish annual ESG reports.
So how can we use proptech and ESG integration to drive value in real estate?
Consider the context
The first question to ask before setting to work on this dilemma is what the asset class is. This is because the drivers of value will differ across different building types.
If your property portfolio focuses on industrial properties, value drivers will likely include regulatory compliance and waste management efficiency. Alternatively, if you are investing in residential properties, a core value drivers will be how accessible local services are from the property. Both these asset types will benefit from energy and water efficiency, so there will be commonalities and differences. Though this may seem obvious, understanding value drivers in your domain is crucial to integrating the appropriate proptech solutions.
Though it is clear that proptech solutions need to be tailored to individual businesses and ESG KPIs to work effectively, some technologies are so versatile that they are being commonly used across different sectors. Let’s explore some of the prevalent technologies that many businesses are utilising currently to facilitate proptech and ESG integration.
Smart Waste monitoring and Smart Buildings
Smart waste monitoring refers to waste management systems which integrate technology such as sensors, AI, and analytics, to create a more efficient waste management system. These systems provide environmental benefits by reducing wastage, as well as reducing running costs for businesses. Pretty much all businesses have waste, which is likely why this proptech solution has gained huge traction in the last decade, and it shows no signs of slowing down. In fact, the global waste management market is predicted to reach 2.6 billion dollars by 2030.
Potential applications of waste management technologies will depend on your business needs. There are specific solutions targeted at each stage of waste management, from the sorting of waste to its disposal, so identify where the efficiencies are likely to be gained in your business.
Recent years have also seen the rise of ‘smart buildings,’ which businesses can opt for to increase their efficiency and lower their carbon footprint. This term refers to a range of attributes but common design features include smart glass which can switch between being transparent and opaque in response to external conditions, in order to maintain a suitable level of insulation and internal temperature.
Simple proptech and ESG integrations such as this require relatively little investment but can have monumental effects on business efficiency.
Tenant apps
While its true that businesses tend to focus most heavily on technologies that will improve their efficiency before they think about social harmony, this is not to say that the tech isn’t out there, and many proptech solutions address both needs at once. The last few years have seen the rise of intelligent mobile applications which are aimed at enabling effective and timely communication between landlords and tenants. These go beyond emulating a simple chatroom; they instead offer an extensive range of functionality which assists in resolving disputes and issues between parties. These applications hit the motherlode when it comes to satisfying ESG. They improve efficiency, promote fairness, and provide useful data which can be used for regulatory purposes.
Governance
As awareness grows around the need for sustainability in our society, governments are increasingly introducing legislation which makes it a mandatory requirement that businesses accurately record and share data around ESG targets such as energy usage and emissions. This presents a daunting task for businesses who may not feel confident in their ability to produce these reports. Proptech solutions can assist in each stage of this task. IoT sensors can effectively monitor and capture the required information, while data processing solutions can be used to automate the creation of ESG reports.
Conclusion
Proptech is growing rapidly, and each day, innovative solutions are emerging which are tailored to the various elements of ESG, and the specific niches within it. Businesses now face both the carrot and the stick, with new legislation imposing ESG requirements and reports, as well as the huge potential benefits to be gained by businesses who incorporate technology to optimise real estate. Intelligent ESG and proptech integration can reap large rewards for businesses who are willing to dream big. The sky really is the limit.
