EDITOR’S COMMENT: The earth is shifting under the real estate industry’s feet and the future is one of much greater responsibility.
Real estate owners who shirk the responsibility of technological change and environmental investment or think they don’t have to consider the downstream social implications of their assets are on the wrong side of history and history will be unforgiving to them.
Not my words, sadly, but those of Fifth Wall’s Brendan Wallace – this week’s EG Interview – talking about the wholesale transformation the real estate sector is going though.
In this week’s EG, we take a special look at how the real estate sector is metamorphosing and how new opportunities are opening up that provide not just for business growth but for a positive shift in the way that real estate is viewed more widely in society
Wallace is an unapologetic optimist. He sees opportunity everywhere. Particularly when it comes to tech and research and development and even more so when it comes to climate change.
He believes that real estate, in the not-too-distant future, will be driven by decarbonisation, not by ROI, not by cashflow, not even by tech. He believes that somewhere out there is the property equivalent of Elon Musk, someone so visionary and smart that they will turn real estate’s massive culpability when it comes to climate change into a huge opportunity.
“As big as the real estate industry is in the economy, it is even bigger when it comes to climate change,” says Wallace. “There’s culpability in that, but there’s also opportunity. The real estate industry is definitionally going to become the single largest consumer of climate-mitigation technologies and the most sure-fire conclusion anyone can draw about climate tech is that the real estate industry has to be its biggest customer.”
It’s a uniquely VC way to look at it. Where there is a problem, there’s a product. And where there’s a product, there is money to be made.
Wallace reckons that for too long real estate has just been buying the product to solve its own individual problems. Where he believes the opportunity lies is in investing in the research and development that builds the product. That way the solution is much more wide-reaching and the collision he talks about in our interview (which I’d recommend you listen to as well as read by subscribing to the EG TechTalk podcast) will have a much larger impact.
There’s a tipping point that has been reached in these Covid times, where outcomes have become infinitely more powerful. And that tipping point is particularly clear in tech.
Proptech is no longer about the technology or the gadgetry, it is about the solutions it provides. And, importantly, whether those solutions are actually useable and being used. We see that in the shift from fear of AI making too many of us redundant to realising just how useful it can be in helping us be better at what we do, in the changing definitions of smart, of the rising investment from traditional real estate into digital solutions.
We see it too in the physical world of real estate with the ongoing repurposing of existing product to multiple different uses – be that shopping centres to life sciences or City of London offices to residential.
The earth has shifted beneath real estate’s feet, and those who fail to react, will be left on the wrong side of history.
