Will Technology Replace Traditional Property Expertise?

Earlier this week, we came across an article written by Connell McGill last year, with the provocative title ‘Will Technology Blow-Up the Relationship Model in Real Estate?’. For anyone not familiar with Connell McGill, he is the CEO of real estate operations performance company Enertiv, based in New York. For anyone thinking that innovation Stateside is not relevant to the market here in Ireland, it’s worth pointing out that Forbes included Enertiv as a likely disrupter to the traditional industry globally.

The article in question caught our attention, not just because of the title, but rather because it started by referencing infamous characters like Don Draper (advertising) and Gordon Gekko (Wall Street), whom, despite their deep moral flaws, were portrayed as being at the very top of their respective games.This was not attributed to merely their work ethic, but rather an intuitive understanding of their industry and an innate wisdom in ‘handling’ the people around them, their teams, clients and competitors. In the age of computer algorithms and structured data – without even bringing artificial intelligence (AI) or machine-learning into the mix – this intuition and wisdom cannot compare when it comes to professional outcomes.

When resourced with enormous data sets and ruthless efficiency, will real estate – which is still the largest asset class in the world – continue to rely on the human experts? We have no doubt that many people reading this will be tempted to reject it, or perhaps shrug it off (We know that we certainly were) but denying the inevitable will not stop it happening. Resisting change and progress should never be a long-term business strategy. Construction activities today, similar to buildings management, is still largely dependent on manual processes and personal relationships, however, the standards are set to become more exacting, quickly; is your business preparing for this? Are you?

In practice, this is not a choice that businesses face; think back to the Mark Farmer UK construction study that we mentioned a few weeks ago, the industry is at a crossroads this decade, it must ‘Modernise or Die’. Again, this is not a choice, it is a market imperative.

If course, this industry is well used to responding to market pressures; in fact, many blame the reactionary nature of the industry for the lack of real innovation over the past few decades. Technology will simply not allow this kind of passive, bit-part progress to continue, it demands attention, now. In fact, the article states “With the smart application of technology, new entrants can close the gap quickly or incumbents can invest their resources to solidify their position and accelerate growth”. This is a very real threat to long-established industry players and to industry leaders.

In the past, it was efficient to rely upon personal interactions, experiences and anecdotal colleague banter to form judgements and make decisions, however, this is not sufficient in the modern era. A more scientific, reliable and repeatable process is called for. While this is true across the entire value chain of construction and property, it is particularly relevant for modern property management where technology can replace the reliance on maintenance personnel relationships by uncovering small issues and notifying property managers to make the necessary adjustments or arrangements. “The effects of shifting decision-making from relationships to objective return on investment are profound and hard to understate.”

While some property companies are embracing the changes, others believe that real estate has some inherent differences from other major industries that somehow lends itself to trust and relationships over data and efficiency. This latter school of thought is like to be proven wrong very quickly. As always, we would be interested to hear your thoughts on this…

Ian Lawlor
086 3625482

Director / Business Development
Lotus Investment Group