Investment in fin tech is six times that of prop tech, despite the fact that real estate contributes £94 billion to the UK’s economy; so, what’s holding us back? Experts at Future: Prop Tech 2018 explained some of the challenges.
- Lack of motivation
Enough housebuilders do well out of the current system to resist changing it. “There is limited incentive in planning policy and building regulations to make traditional housebuilders build in a different way,” said Dan Batterton, Legal & General’s Build to Rent fund manager. “It’s a very successful business model. Except they currently build 150,000 homes a year, and we need to build 250,000 a year.”
- Lack of affordability
With limited access to sites, finance and apprentices, the last thing SMEs need is one more advantage put out of reach. Nicole Bremner, Co-founder & Director, East Eight Property, said, “Developers need to make a profit. Larger developers need to utilise that technology before it becomes affordable for the smaller ones. We have to run a profit. We have to make money on every development or we don’t exist anymore.”
- Lack of capacity
While modular construction sounds great in theory, there is an undeniable mismatch between the size of the modular construction industry and the housebuilder who wants to use them. Steve Sanham, Managing Director, HUB Group UK, said, “There is a lot of talk about modular housing. Does the industry have enough capacity to make a dent? When our development are large, high-rise schemes we have to look at the risk. Who steps in if that modular contractor disappears half way through the project?”
- Lack of investment
To remedy the above, the offsite construction industry needs a lot more money pumped into it. Giles Carter, Co-founder & Director of Ilke Homes, said, “The strength of our balance sheet is something we get asked about all the time. Without that security, the industry won’t adopt this technology. This is an industry that does not make sense at 500 units a year. We need tens of millions of investment. We will only see the capacity when we see the investment.”
- Lack of imagination
Melanie Leech Chief Executive of the British Property Federation, asked if lack of capacity was really the problem. “Are we risk adverse, or are we dinosaurs?”
Killian Hurley, Chief Executive, Mount Anvil, believed the answer was bringing in new recruits to shake up the industry. “We want people to come in and disagree with us. As an industry, we’re too insular,” he said.
The remedy: being human
Anthony Slumbers, Founder of Estates Today, warned that there will be winners and losers as machines render a lot of real estate redundant. Already, 49% of all activities that are paid for could be automated by technology that is available today.
However, as Pablo Picasso pointed out, computers can only give you answers. “Do not try and beat machines at what they are good at. Do not bring a knife to a gunfight,” Slumbers said.
Instead, become an exponential human. Housebuilders need to harness creativity, empathy and flexibility. “Understand what technology is good for,” Slumbers said. “Artificial Intelligence (AI) reduces the cost of predictions. You can take more risk for less.”
There is no point swimming against the tide. More than 70 companies are already involved in AI for the real estate sector. The UK government has promised swathes of investment to accelerate its evolution. Slumbers is in no doubt this will change the world as much as the invention of the steam train did.
Slumbers referenced the old adage about two people trying to outrun a bear, where one explains that he doesn’t have to be faster than the bear – he only has to be faster than the other person.
“The bear is coming,” said Slumbers. “You don’t have to be perfect, but you do have to be better than your peers.”