As part of Avamore’s on-going investigation into PropTech, we are excited to be working with industry expert, Dan Hughes, who is going to give us his views on how the sector is evolving and what benefits PropTech brings.
Here is what we learnt from the discussion:
Dan, from your perspective, can you explain what PropTech is?
PropTech can be perceived as a bit of a buzzword, but actually, it does represent technology coming together with property to re-shape a sector which is generally quite traditional and has been slow at adopting the change. The meaning isn’t too important, the fact that things are changing is essential.
How important do you perceive this advancement to be?
I think that at every stage a developer goes through, technology has a role to play, whether it is speeding up processes, improving decisions or reducing risk.
In general, what are the challenges a developer faces?
There are lots of challenges to being a developer, for example three key questions a developer needs to ask before starting a project:
- How do you make sure that you build something that is wanted?
- How do you make sure that you get planning permission?
- How do you make sure you have enough labour?
It has become evident that technology can help in all of these instances.
What technologies exist specifically to help developers?
I think it is important to break down the process and examine advancements in each of these. Let’s first look at site selection.
In general, it depends what size developer you are. For those that are larger or more established, they are used to conducting a wide search operation but for smaller developers they tend to look locally and search for comparable points.
Increased access to data can help identify new areas and it makes scaling much easier and more feasible. A small developer can look at the whole country based on certain criteria making them a national developer rather than one that is local.
This sort of technology helps identify risks and opens up new opportunities. Whilst it helps on initial search stages, a developer probably still needs to conduct site visits and undertake appropriate due diligence, it just means that they can discount sites quicker over a large area.
What about the conveyancing process & planning
It is well documented that there aren’t enough homes and we need more. Planning, in general, can either be a blocker or an enabler but there are lots of factors which slow the process down.
Technology such as the planning portal can help developers understand what plans are in place and the likelihood of new applications being passed. As technology progresses it can help engage people in the local community and as automation becomes more sophisticated, processes will naturally speed up.
Let’s talk about the construction side of things, what changes have been made there?
Traditionally, this is the part of the process which is the least technologically advanced; productivity certainly hasn’t grown as quickly as it should have done. The introduction of BIM (Building Information Modelling) has the potential to change the whole building experience. It creates a digital model of a site which all contributors can work from. The BIM makes for a more efficient and collaborative process, but the challenge is that adoption of this technology is a huge cultural shift. Not so long ago, it become mandatory for government projects to use the BIM methodology although it may take a while to filter through to smaller residential projects.
Other technologies are starting to have an impact on construction, such as off-site manufacturing which has a whole host of benefits and it significantly increases the speed of projects.
How about the selling process, where are the big shifts?
When it comes to selling, it is clear that this is where technology has been adopted more openly. It’s now so easy to list and sell a huge number of properties, particularly in the residential sector. It’s easier for buyers to identify appropriate properties and for sellers to list and market their projects. In addition, the technology is becoming more sophisticated. Take Rightmove for example, it’s now factoring in features such as the quality of schools nearby and the speed of the local broadband, which are all important parts of the buying decision.
Finally, what about the funding process, how has that benefited from an advancement in technology?
Technology tends to drop barriers to entry. What wasn’t possible a few years ago, now is. So, now there are lots more ways of accessing capital and assessing what is available. At its most basic, this could be finding a company online through to new ways of raising funds. In summary therefore, the lending process is technology enabled rather than technology driven.
From your perspective, what’s the most disruptive technology for the sector?
There isn’t a single technology which has changed or will change everything. The biggest advancement is the cultural shift and the openness which people are now starting to adopt. If we look back at the past 100 years, the development process hasn’t really changed because it doesn’t need to. There aren’t huge numbers of people testing things out but as awareness is increased and more and more people are starting to talk about the benefits of PropTech we’ll see people taking it on more regularly.