HOW SELF-DRIV­ING CARS WILL CHANGE PROP­ERTY MAN­AGE­MENT Ja­son Turn­bull

JA­SON TURN­BULL OF CON­SOLE takes a look into the fu­ture, a world where con­nec­tiv­ity mat­ters more than what we own and life­style choice is not limited to where we live.

Elite Property Manager - - Contents -

I’ve just taken off from Syd­ney on the way to see our teams in Mel­bourne. Aero­plane time is al­ways good to get through a back­log or just have some clear headspace. It’s an over­cast, windy day in Syd­ney and take-off is bumpy as we pass through a layer of cloud. I re­flect on our own jour­ney from client-server busi­ness sys­tems to cloud plat­forms in­side the Con­sole Group, as we build our next gen­er­a­tion cloud plat­form and pre­pare to help our clients on the same jour­ney.

RealTech (real es­tate tech­nol­ogy) is the buzz­word in the mar­ket at the mo­ment. Last year Fin­Tech (fi­nan­cial tech­nol­ogy) was the flavour for where to put your cap­i­tal; this year it’s our in­dus­try – any­thing that has a sniff of com­bin­ing real es­tate and tech­nol­ogy seems to be a mag­net for cap­i­tal right now. Not only here in Aus­tralia, but right across the world.

When we think about the in­ter­est and in­vest­ment in tech­nol­ogy in and around our prop­erty man­age­ment businesses there are some in­ter­est­ing tools and so­lu­tions com­ing to fruition, packed with words like au­to­ma­tion, vir­tual re­al­ity, aug­mented re­al­ity, ma­chine learn­ing, ar­ti­fi­cial in­tel­li­gence, chat bots, bea­cons, data lakes, an­a­lyt­ics... the list goes on.

Th­ese tech­nolo­gies all come to­gether to pro­vide so­lu­tions around how we work, mak­ing us more ef­fi­cient, more col­lab­o­ra­tive, giv­ing more di­rect ac­cess to data and in­for­ma­tion, and most im­por­tantly im­prov­ing our level of service to our clients.

An in­ter­est­ing ques­tion, though, is how will tech­nol­ogy out­side of our di­rect scope change our in­dus­try in the fu­ture? Tech­nol­ogy con­tin­ues to grow and im­pact other ar­eas of our life, chang­ing our be­hav­iours and be­liefs, and this will no doubt have an im­pact on the way we think about real es­tate in the years ahead.

We know that prop­erty is the sin­gle big­gest as­set class in Aus­tralia. We’ve spent decades, and even cen­turies, build­ing up crit­i­cal in­fra­struc­ture and ser­vices to sup­port com­mu­ni­ties, and prop­erty val­ues in high­den­sity, well ser­viced ar­eas, typ­i­cally close to city cen­tres, have con­tin­ued a steady growth in de­mand and value. Con­se­quently we have our own agency as­sets built around that de­mand, and our real es­tate busi­ness value is heav­ily aligned to the un­der­ly­ing prop­erty val­ues in our ar­eas.

But how much thought do we give to how this is chang­ing, and what im­pact that will have on our busi­ness? An in­ter­est­ing start­ing point is just the tech­nol­ogy that ac­tu­ally ex­ists to­day. Look at au­ton­o­mous drones as an ex­am­ple. Ama­zon, DHL and a whole bunch of oth­ers have pro­grams in var­i­ous stages of de­vel­op­ment, test­ing and op­er­a­tion around rapid de­liv­ery of goods on-de­mand, straight to your door us­ing drones. Run out

SUD­DENLY THE RE­LIANCE ON PROX­IM­ITY TO THE OF­FICE IN THE MID­DLE OF THE CITY IS GREATLY RE­DUCED.

of milk? No prob­lem; a drone can have that in your kitchen in 20 min­utes with­out you need­ing to leave the house. This is hap­pen­ing in the world right now as you read this.

In­ter­est­ing, sure, but why would this im­pact real es­tate, you ask?

As we adopt more and more on-de­mand, just-in-time, or even just home-de­liv­ered shop­ping, our re­liance on prox­im­ity be­comes less im­por­tant while band­width and con­nec­tiv­ity be­come more im­por­tant. Our re­liance on our own ve­hi­cles be­comes less im­por­tant and our re­liance on ser­vices that will get us from A to B be­comes more im­por­tant; thus we will shift from a need to own a ve­hi­cle to the col­lab­o­ra­tive con­sump­tion mar­ket: car shar­ing.

What hap­pens when those cars be­come driver­less? In op­er­at­ing a driver-based service like Uber, hire car or taxis, the two most ex­pen­sive parts of that sys­tem are the driver and the fuel. Smaller, ef­fi­cient au­ton­o­mous elec­tric ve­hi­cles will pro­vide very low-cost, time-ef­fi­cient di­rect trans­port op­tions (for ex­am­ple, Sin­ga­pore’s nuTon­omy driver­less taxis). This means that we can be pro­duc­tive while we com­mute and our per­sonal in­vest­ment in trans­porta­tion will be greatly re­duced, free­ing up crit­i­cal cash flow in our own per­sonal bud­gets to in­vest in dif­fer­ent ar­eas of our life – say, maybe that dream house on 16 acres two hours north of the city.

So now we face the prospect of: • cheap trans­porta­tion avail­able that costs

cents per kilo­me­tre • an op­por­tu­nity to sit in a com­fort­able one or two per­son ve­hi­cle and work while we com­mute • im­proved re­mote work­ing or telecom­mut­ing ca­pa­bil­ity and hot-de­sk­ing, re­duc­ing our need for ac­tual hours in the of­fice • A grow­ing col­lab­o­ra­tive con­sump­tion cul­ture, where ac­cess to some­thing is more im­por­tant than own­er­ship of some­thing. Sud­denly the re­liance on prox­im­ity to the of­fice in the mid­dle of the city is greatly re­duced. Our re­liance on prox­im­ity to shop­ping malls is greatly re­duced. Life­style choice will be a driver for where we live; a beach house north of Noosa is com­pletely fea­si­ble if you work in Bris­bane. How will th­ese changes shift the distri­bu­tion of wealth away from the hearts of our ma­jor cities and, more im­por­tantly for our in­dus­try, what will that do to the value of our real es­tate businesses in the ar­eas where we are es­tab­lished?

The Uber busi­ness model, for ex­am­ple, has dis­rupted our taxi in­dus­try. Im­por­tantly, though, the Uber busi­ness model is al­ready star­ing its re­tire­ment in the eye (if you look at the choice of in­vest­ments that Uber is mak­ing, they are aware of this). Those same au­ton­o­mous elec­tric ve­hi­cles re­move the need to col­lab­o­rate with peo­ple who own and drive their own cars. No need for a driver any more, and less in­ter­est from the con­sumer in ac­tu­ally own­ing cars, means that Uber will need to own and op­er­ate their own fleet in­stead.

In our house­holds our cars are usu­ally the sec­ond or third most ex­pen­sive phys­i­cal as­set that we own be­hind our prop­erty. Own­ing and op­er­at­ing a ve­hi­cle of any sort has a rea­son­able im­pact on any house­hold bud­get. It also has an im­pact on where we live (I’m look­ing at you, Bondi Junc­tion, and your lack of garages!). When that ex­pense be­gins to fall away from our house­hold bud­gets over the next five, 10 or 15 years, what will the im­pact be on real es­tate in­vest­ment? If I don’t need to service a car in my bud­get, can I sud­denly buy prop­erty rather than rent prop­erty? Will we see a rise in owner/oc­cu­piers, and a de­cline in rentals?

Or will col­lab­o­ra­tive con­sumerism (‘the shar­ing econ­omy’) change the way we think about our home too? It’s hap­pen­ing with bi­cy­cles (JC De­caux/Ci­tyCy­cle), cars (GoGet/Uber), aero­planes (Wingly), cloth­ing (Le Tote/Ren­tez-Vous), con­tent like movies and mu­sic (Net­flix/Spo­tify) and even pets (DogVa­cay/WAG). It will hap­pen with sport­ing goods, chil­dren’s toys, lawn mow­ers, tools, your BBQ – why not your home?

Maybe the tech­nol­ogy and sys­tems that en­able those other shar­ing plat­forms will in­flu­ence the way we think about how we live. Maybe we’ll be­gin to move around more. Own­ing less, but en­joy­ing more. Live in one house in the city for a school term, an­other near the beach for the hol­i­days, back again to a dif­fer­ent house for the 12-week term be­fore we take a house in the snow for the hol­i­days again.

There’s an el­e­ment of crys­tal ball gaz­ing that we need to do. As an in­dus­try are we cer­tain about which way this will go at the mo­ment? No. What is for sure, though, is that tech­nol­ogy is be­ing adopted at a faster pace than ever be­fore in his­tory. The rapid adop­tion of th­ese tech­nolo­gies is chang­ing be­hav­iours and be­liefs (own vs ac­cess) faster than ever be­fore. All of the tech­nol­ogy that has been dis­cussed ac­tu­ally ex­ists to­day... this isn’t liv­ing on Mars or tele­porter-type stuff. It’s right here, right now, to­day.

What we need to start do­ing is think about how aware, ag­ile or re­spon­sive we are as businesses. How do we be­gin to think about strate­gies and pre­pare our­selves for the in­evitable changes that tech­nol­ogy is go­ing to make to our in­dus­try, be­yond just the tools that we use to do our day-to-day tasks?

More than ever be­fore in this in­dus­try, we need to be go­ing back to our busi­ness plans and re­view­ing them fre­quently. We need to check in more reg­u­larly that our as­sump­tions about the next year or two are still true. What are the new threats to your busi­ness? They are chang­ing, and they are chang­ing more quickly than ever. You need to put plans in place to en­sure that as busi­ness lead­ers you keep your fin­ger on the pulse.

WE NEED TO CHECK IN MORE REG­U­LARLY THAT OUR AS­SUMP­TIONS ABOUT THE NEXT YEAR OR TWO ARE STILL TRUE.

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