Innovations in technology are changing human society more rapidly than ever before, and such changes are already affecting what people expect from real estate and how investors must approach their projects, delegates heard at the ULI Asia Pacific Summit in Hong Kong.
Vivek Wadwha, vice president of academics and innovation at Singularity University, put forth the premise in his keynote speech that technology and computing capabilities are developing so fast humans can barely keep up with them. Indeed, he pointed out that the iPhone he keeps in his pocket has more computing power than all the computers in the world combined had on the day he was born 55 years ago.
“My cell phone is actually more advanced than [Star Trek] Captain Kirk’s tricorder,” he joked.
Lynn Thurber, chairman of LaSalle Investment Management, added on a panel that the pace of change is both exciting and “downright scary” for property investors, because the traditional ways of constructing buildings and attracting tenants are fast becoming defunct. Even if the bricks and mortar haven’t changed, what happens inside each city and the amenities people expect inside buildings has changed, according to Ian Hawksworth, chief executive of developer Capco.
Thus, in order for an investment to be profitable, developers and investors are starting to take non-traditional aspects of real estate into account. Panelists pointed to the possibilities of incorporating internet capabilities, making residential spaces smaller and more efficient, using only clean energy, and even altering entrances of buildings to accommodate driverless vehicles.
“For our industry, I take this as a wake-up call,” Thurber said. “We need to think about how we design and execute our projects, and be sure they are flexible and adaptable.” She insisted that this means breaking real estate down into its many components, and finding which components fit in which individual projects.
Many people, for example, are actually demanding more real estate and space for social interaction, since they can be so efficient in work with technology, she said. And integrating technology to facilitate both efficiency and interaction could have a positive impact on the valuation of an asset and the bottom line for investors, Wadhwa added.
Hawksworth confessed that he no longer goes to architects first when developing a building. Instead, he and the investors come up with a “commercial vision,” looking at what technology the tenants want and how that has to be integrated into the building and made user-friendly. “How the building looks has become the least important factor,” he explained.
“Our industry is very risk-averse, because real estate must live with its mistakes for a long time,” Hawksworth said. “So we need to drive the investors to be more creative, because the generic central business district offices built for investment banks will not be the future of real estate.”