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Technological advances remain as captivating and disruptive as ever for the real estate, infrastructure and construction industries; digital disruption is shaping our future. This disruption will be driven by both changes to the needs of the consumer and also changes to how work is carried out within the real estate, infrastructure and construction industries.
"…as technology becomes ever more sophisticated… an ability to apply knowledge in different contexts and adapt skills across jobs and industries will be essential…"1
Chief Executive of Deloitte UK
17 January 2018
Following Deloitte's TMT Predictions Event 2018 in Manchester, Deloitte Real Estate offers their forecasts on some key disrupters for our clients to continue to consider within real estate, infrastructure and construction sectors. The following shares some insight on the continued impact of smartphones, mobile broadband, augmented reality and machine learning.
Smartphones - Deloitte Global predicts that by the end of 2023, the adoption of smartphones by citizens in developed countries will surpass 90%2, consolidating the smartphone as the primary access point to digital services and content. The smartphone will continue to assume non-PC functions such as serving as keys for vehicles, buildings and construction sites due to the success of security functions such as Apple's TouchID and FaceID.
Smartphones have revolutionised the way people interact with each other and the next decade will transform the way enterprises interact. For example, as agile working practices become increasingly prevalent, the need for workers to be anchored to their PC will continue to reduce (will they even need a PC?). IT departments should look to evaluate how to effectively integrate smartphones more into their IT strategies and working styles. They could consider the best pairing between devices and employees and how best to utilise smartphone biometric authentication to improve business security. The increase in agile working will also alter the real estate needs of businesses as less desk space will be needed in offices as more employees are able to work remotely. An evaluation by NHS England for example, predicted that by 2020 smartphones could become “the primary method of accessing health services” with almost 16 million enquires dealt with by algorithms, rather than telephone operators sitting in a call centre environment.3
Access to social media is also playing a larger part in home buying. Estate agencies are listing properties on sites such as Facebook and Twitter, in a bid to reach users in a simple, streamlined and cost effective manner. 3D virtual or video tours of properties and construction projects are becoming increasingly popular allowing potential purchasers to walk through the development from the comfort of their sofa or whilst on the move via their phones.
Mobile Broadband - Mobile broadband is the marketing term for wireless internet access through things such as portable modem, USB wireless modem (dongle), tablet or smartphone.
By 2023, 5G networks should have launched in most developed markets, offering much greater capacity and connectivity speeds, consolidating smartphones as the primary and perhaps even solitary work device. This has the potential to serve as a key disruptor in the communication and exchange of data in the real estate, infrastructure and construction sectors. The greater demand for mobile broadband across wider and geographically remote areas could have a noticeable impact on the infrastructure sector due to increased demand for installation, maintenance and upgrade of antennas and base stations which are suitable for driving the transition to 5G connectivity for all, at pace.
In the long term, perhaps the most important market for mobile broadband will be the developing world. Challenges still present themselves in these cities as there is often no coaxial cable and few or no fibre-optic lines installed in the ground. Therefore, wireless data delivery is often the only way to move and share data. The infrastructure sector being increasingly prepared to respond to this demand by providing the capabilities required for global access to 5G connectivity quickly, is an opportunity, with digging roads up not the only answer.
Virtual and Augmented Reality - Virtual Reality (VR) is a wholly computer-generated scenario that simulates a realistic experience. Augmented reality (AR) is a special effect that enables digital images to be superimposed on to real ones. AR and VR are not new to 2018; what differs is quality.
We have seen several practical applications of such technology in our sectors, including the ability to position furniture in a room to see how the layout may look, appealing particularly to architects and designers. However, in reality, the bulk of AR will continue to be used on social media platforms. We expect that during 2018 and onwards, an increase of home decoration apps will be released into the market. However, such apps are likely to complement rather than replace the visit to the showroom. Some predict AR to be replacing the tape measure too this year, but don’t worry surveyors, we don’t think robots will be taking your jobs that quickly.
VR and AR allow real estate and construction professionals to offer a unique experience and perspective to potential buyers and other stakeholders by digitally touring properties and construction sites from anywhere in the world. This technology is only expected to grow further, as indicated by a recent Goldman Sachs report predicting the VR and AR market in real estate to be worth at least $80 billion by 2025.4
Machine Learning - Machine learning (ML) is an artificial intelligence (AI) that enables systems to learn and improve from experience.
Labelled as the revolutionary technology of the future, artificial intelligence has already started to reshape the way it is carried out. For example, a report produced by NHS England predicts that NHS 111 calls will be handled by robots within two years. Within commercial real estate, chat-bots are altering the way in which real estate services are provided, with recommendation engines transforming the way we find property. Residential real estate firms Trulia in the US and Sevi in Singapore are two examples of companies using Facebook chat-bots for users to message their property needs and the bot serves up listings, summaries and images.5
We also expect the automation and efficiency within contract management will be significantly improved too. With AI systems being used to extract and codify contract clauses, connect documents with amendments as well as identify missing documentation. AI could identify areas of risk where key clauses or terms have been omitted and recommend additions or alternatives.
AI is enabling changes across various areas, including cost estimating, cost management, risk management, schedule management, performance management, reporting, subcontractor management, construction site monitoring, and health and safety.
Summary - The term 'digital disruption' is an understatement, more fitting perhaps is the 'Digital Revolution', one much more along the lines of its industrial predecessor.
"The fourth Industrial Revolution will completely alter how we produce, how we consume, how we communicate and how we live."
Founder and Chairman of the World Economic Forum
2018 World Economic Forum in Davos, Switzerland.
By linking up physical infrastructure to the digital world, technology empowers us to transform our industries, our economy and shape our future. This is directly linked to the real estate, infrastructure and construction opportunities we seize today. If you would like to discuss any of the content further with the team please do not hesitate to connect with us.
1 David Sproul interview; "Power Up: Challenging traditional career paths: The rise of technology means employers and workers have to be more flexible", 17 January 2018, http://www.cbi.org.uk/businessvoice/latest/power-up-challenging-traditional-career-paths/
2 Deloitte's Global Mobile Consumer Survey across 16 developed markets, with a total sample of 29,056 respondents.
4 Forbes.com: Eight Ways Virtual And Augmented Reality Are Changing The Real Estate Industry;https://www.forbes.com/sites/forbesrealestatecouncil/2017/07/14/eight-ways-virtual-and-augmented-reality-are-changing-the-real-estate-industry/#24de15ed65a3.
5 Cushman & Wakefield; Artificial Intelligence and Machine Learning in Real Estate; http://blog.cushwake.com/apac/artificial-intelligence-and-machine-learning-in-real-estate.html.
Greg is a Consultant within our Real Estate Consulting (REC) team, having joined Deloitte in 2014. Based in Manchester, he has experience in business transformation, portfolio, programme and project management. Greg has a Masters Degree (MSc) and track record in delivering and managing portfolio, programme and project management requirements, as well as business transformation programmes. To date, he has worked in a range of sectors including Defence, Nuclear, Local Government, Infrastructure, Energy, Oil & Gas.