At the rate smart city initiatives are being hatched in every corner of the globe, the real estate sector is racing to embrace technology to catch up with the new requirements of an industry that has gone digital almost overnight.
Clicks and Mortar: The Growing Influence of Proptech, a report commissioned by JLL and authored by startup community Tech In Asia, revealed that property technology (proptech) startups have begun entering a space traditionally dominated by large incumbents.
These tech startups are at a good vantage point to size up and respond to the needs of an industry being buoyed not only by increasing rates of urbanisation or increasing mobile phone penetration but the growing legion of tech-savvy consumers, especially from the Millennial generation.
The study itself analyses the convergence of real estate and technology in 13 markets across the Asia Pacific (APAC) region and the ways that emerging technologies are being applied to connect urban real estate, infrastructure, and services.
Are smart cities ready for cyber risks?
However, with this development also come new risks.
“The evolution of smart cities would prompt the need for smart property development and management, giving a boost to proptech. For example, smart cities are highly data-driven, as extensive data collection and analysis are necessary to fully realise the benefits of smart cities,” the report noted.
This leads to the question on the readiness of smart cities to mitigate cyber risks.
“Proptech is a key tool in the future development of cities and we in the real estate business have a vital role to play, particularly in smart property development and management. Digital infrastructure investment is increasingly important for cities to create more liveable environments and attract and retain the best talent”, said Albert Ovidi, JLL APAC COO.
“But considering the region’s acceleration in the use of the Internet of Things (IoT) and high reliance on data collection and analysis, it’s imperative for smart cities to develop effective safeguards against cyber risk”, he added.
In as much as any connected device is vulnerable to attack, the IT security component of building connected homes and connected cities cannot be ignored.
George Thomas, JLL APAC CIO, affirmed that as a firm, JLL is “committed to harnessing the latest technology to provide new products and services” to its clients.
“But we also have to consider the implications of data security and privacy as the sector evolves” Thomas said.
Why cyber policies are important in the proptech industry
Notwithstanding the security issues involved, the JLL-Tech In Asia study highlights the opportunity for the use of proptech in APAC.
In the report JLL predicts that the total value of investable global commercial real estate will reach US$65 trillion by 2020, with APAC accounting for over 30 percent of that figure.
It also added that “governmental regulations have not always been able to catch up with changing technology, presenting a hurdle for proptech startups.”
This has a vast implication for IT security initiatives that may be put forward by stakeholders in the industry.
Ovidi puts it in context: “As the proptech space evolves there are huge opportunities for real estate owners and occupiers”, he said. “Smarter cities and workplaces bring incredible prospective value. But to reap their full benefits, we have to prioritise systemic resiliency to ensure we manage the potential risks.”
In Hong Kong, which is one of the region’s most mature and liquid real estate markets, there are great opportunities for the development of proptech, according to Denis Ma, Head of Research at JLL in Hong Kong.
“In our opinion, the government’s latest move to earmark HK$50 billion in the 2018/19 Budget to support innovation and technology in the city is a big step in the right direction, and this will go a long way in helping Hong Kong develop as a smart city”, he said.
However, Ma added that to truly see this industry flourish, Hong Kong will also need to address its IT talent issues in a bid to ensure that it has the substantial pool of talent to augment the city’s historical focus on trade and finance.
“This will require parents to change their mindset and encourage their children to consider careers as software engineers rather than in finance”, the Head of Research said.
The cybersecurity landscape is complex. But as IT security experts have always said, what is needed is not only a technological solution. Along with the continued the continued advanced proptech tools, cyber policy initiatives must evolve in the same, if not faster pace.
Governments working towards reinforcing domestic information systems security, collaborating with international partners for intelligence sharing, improving threat identification, and protecting critical infrastructure are very much needed.