Innovations in the Real Estate Market in North America

Consider how the pandemic impacted the commercial real estate market, for example. Remote working became the norm, pushing businesses to reconsider (future) work practices and lease agreements. The necessity to eliminate on-site staff prompted the rapid adoption of automation via IoT, sensors, and remote monitoring software. Touchless entry systems become common in most office buildings. Users' expectations for health and safety evolved into their perspectives on sustainability and ESG.

Operators and users wanted to see more data and analytics integrated into the user experience and reporting




Everyone was searching for more process agility and robots to improve efficiency.
Innovating the solution.
With demand to innovate rising from all sides, real estate stakeholders across the value chain are investing heavily in sparking innovation in their businesses and ecosystems. Four sectors, in particular, are attracting major attention from real estate players, as well as technological companies and venture capitalists.

Safety and hygiene. User demands for sustainability, health, and wellbeing are providing a vast opportunity for new technology and applications. Wearables and monitoring gadgets help to ensure workplace safety and social isolation. In some circumstances, UV-light robots are being used to ensure consistent cleaning cycles. Data and analytics are increasingly vital – for example, in optimizing cleaning services or identifying potential safety issues.

Integrating the digital and physical. In practically every field, cutting-edge technology such as AI, virtual reality, and robotics are changing the way humans interact with physical space. In the back office, technology is employed to automate real estate procedures. On the front end, new technologies are enhancing the customer and user experience, optimizing the workspace, and creating new ways for workers and residents to interact virtually with the places they lease.

User experience. For developers, property managers, owners, and brokerage businesses, the user experience is evolving from 'product push' to 'client first' ideals. Data is being collected from all across the asset, providing comprehensive insight into user expectations and interactions and allowing developers, property managers, and brokerage firms to identify and target the correct clients. To support new front-end user interfaces and solutions, we are witnessing increased activity in data management and compliance.

Construction and architectural innovation. The push for net-zero carbon buildings is acting as a spur for the development of new environmentally friendly construction materials. Using cloud-based technologies and remote collaboration tools, new off-site construction management strategies are generating innovative models and concepts. The rising acceptance of 3D printing and modular construction is opening up new avenues for developers, property managers, and technology businesses to collaborate and create.

Leading banks acknowledge that sustainability is an issue that necessitates industry-wide (and, indeed, financial system-wide) collaboration and response




Is proptech ready?

The demand for new breakthroughs, solutions, and technology is increasing. The good news is that the supply of both new and old proptech choices is increasing. In KPMG's recent Real Estate Innovations Overview report (our sixth annual edition), we examined 42 different nations and territories throughout the world to identify innovations aimed at the real estate and construction industries. The research identifies 742 organizations in 40 different fields of competence.

There are literally hundreds of technology businesses attempting to create novel solutions for the real estate and construction industries. Consider this: more than US$23 billion of new capital was invested in proptechs last year alone. While this is a big decrease from 2019 numbers, it still indicates a strong interest for proptech among investors, including corporate and traditional VCs.

From Pilot to Profit

So, what's keeping real estate and construction companies from developing and using these technologies and innovations? For some less-established players and those with assets that have been particularly hard damaged by the pandemic's effects, the decision comes down to money. Ultimately, that is a losing equation: less innovation translates into lower valuations, which leads to reduced profitability and less room for investment in innovation. It's a fatal cycle.

Better data, better judgments. Percentage chart

According to KPMG, the majority of real estate and construction players are failing in three areas. The initial step is identifying new ideas and opportunities. In this regard, our study is a thorough resource. We offer an online tool that allows you to select specific technologies, regions, innovations, and value chain components from among the 742 distinct and distinctive innovations highlighted in the research. KPMG businesses also assist customers in developing their own ideas, either by challenging their entire organization to crowd-source and jointly enrich fresh ideas, or by conducting innovation challenges to collect and test solutions.

The second major problem is to quickly transition from pilots and proof-of-concepts to scaled solutions




For the most part, this is about developing a tailored innovation approach for your firm. It necessitates novel methodologies like as design thinking, lean startup, and scaled agile. It will also require leaders to patiently bring their colleagues along, to foster an innovative culture and organizational capabilities, and to inspire them along the way by assisting them in experimenting with technologies and testing new business models while also validating client demand.

The third major area where most businesses struggle is converting their efforts and solutions into measurable and lasting value. This includes the ability to quantify the outcomes of innovation by determining each project's brand, business, and/or cultural value. Leaders must also stay up to date on the latest trends, technologies, and start-ups in their fields that align with their innovation plans. Those on the cutting edge may wish to concentrate their ideation efforts on underexplored topics in order to discover new sources of value.

Time to deliver.

Over the last two decades, there has been no upheaval or innovation in the real estate business. But that's about to change. And it is projected to change rapidly. The push to innovate comes from all sides of the value chain: customers demand it, regulators anticipate it, investors reward it, operators require it, and property managers and brokers rely on it. Are you doing enough to deliver it?

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