In our latest ‘Leaders in Property and Technology’ blog, we spoke with Andrew Baum, an internationally acclaimed real estate professional, researcher and author.
Andrew is Chairman of Newcore Capital Management and Emeritus and a Professor of Practice at the Saïd Business School, University of Oxford.
PRODA: Hi Andrew. In your report ‘PropTech 3.0’ you suggest there are three main movements in the space: smart buildings, the shared economy and real estate fintech. Are these categories static or do you see them changing in the near future?
AB: The digitalisation of data and processes is the main driver underpinning change. Here is an extract from my new book, Real Estate Investment: Theory and Practice:
I see a coming together of smart buildings and the shared economy, with the latter hippy ideal being taken over by space as a service. Smart building technology is all about the efficient use of buildings and urban environments, about control and sustainable management. There is a huge appetite for power by tech firms, and energy costs will increasingly become internalised in property rents and pricing. New property sectors, including data centres, are emerging. Based on our expectations about the big technology impact on city form, there is a strong demand for growth in this sector. This is a natural growth area for PropTech, and requires much more focus by real estate professionals.
Space as a service, by contrast to the concept of smart buildings, is concerned with the occupational management of real estate assets. Space as a service has developed as an idea alongside the concept of the shared economy and the returns created by more intensive short term use of space. With the appropriate software, a space offering which is fractionalised by time can be offered to a large marketplace, with economies of scale justifying heavy investment in high quality UI/UX (user interface/user experience). This idea is a long way from the traditional long lease to a single tenant, which requires very little expenditure on innovation and customer service.
PRODA: From your experience, what makes a PropTech company stand out?
AB: Impressive leaders, a great idea, and credible experience or research to understand what will work and what won’t, plus a resolute determination to focus and thereby succeed.
PRODA: What are the big trends that have led to the digitalisation of real estate in the past five years?
AB: It’s about space as a service or hotelisation again and the rise of operational properties, which are more directly dependent on the provision of services within the building. The heightened operational risk means that specialist skills are required to manage these real estate assets and understand the needs of customers, and to use data and apps to provide a better service.
Many thanks to Andrew for taking the time to speak with us. We will be back soon with another post as we continue to speak to leaders across the industry.