PROPTECH: Driving the built environment’s sustainable future
The rise of technology in recent decades has affected almost all areas of society and now influences nearly every aspect of our lives. Proptech encompasses a great many technologies, being utilised in all different areas of the property environment. The development of technologies in the property sector can be traced back to the early days of online property listings and transactions in the 1990s. By the 2010s, significant attention had been paid to data and analytics, and improving user experience. Most recently, there has been a greater emphasis on harnessing technology to create more sustainable buildings and settlements.
The South African landscape
Internationally there has been a focus on the property industry as an area of greatest impact in terms of sustainability, and this has also been a driving force for proptech. Further to global issues, South Africa has its own, unique set of problems relating to the power grid and general service delivery. It was in this context that the South African Property Owners’ Association (SAPOA) recognised a need for a specialised sub-committee that would provide proptech-related research, education and support to its members. The SAPOA proptech committee was constituted in 2022 and quickly embarked on a large-scale survey to ascertain where South Africa stands in terms of proptech needs and uptake. The data collected formed the basis of the first SAPOA Proptech Report in 2023, compiled by REdimension Capital.
REdimension Capital’s Peter Clark and Matthew Marshall, the authors of the report, explain that there has been a recent focus on technologies that aim to drive efficiencies, improve the end-user experience, and reduce environmental impact within the property sector, but that South Africa is still lagging behind the rest of the world. Fundraising within the South African proptech sector is challenging and, combined with a developing appetite for adopting new technologies, investment and uptake has been relatively slow. However, there are indications that the sector is set for growth.
Peter Levett, Joint-Chief Executive at iShack Ventures, adds that South Africa “has seen the implementation of environmental, social and governance (ESG) regulations and Energy Performance Certificates (EPC) that directly impact the real estate industry. These initiatives have had significant impacts in other markets such as the UK and, given potential fines and reputational risk of breaches, compliance with these regulations is important, and will become increasingly so. Possibly more important is the fact that investors and tenants are more inclined to consider ESG factors in their decision-making processes”.
The SAPOA Proptech report survey produced insightful results as to how proptech is currently being utilised in South Africa and what the potential appetite for growth is.
Constituted in 2022, the SAPOA proptech committee embarked on a large-scale survey to ascertain where South Africa stands in terms of proptech needs and uptake
Sector categories and groups
The three main sector categories that derive benefit from proptech, as defined by the SAPOA report, are the Space Users, the Building level activities (development, facilities management and leasing), and Portfolio level (monitoring, managing and reporting – see below). There are currently over 150 companies servicing these proptech requirements in South Africa. These companies service across nine main categories: Data & Analytics; Artificial Intelligence & Digital Innovation; Management Software; User Experience; Leasing & Sales; Smart Building & Sustainability; Future Retail; Space-as-a-Service; and Finance, Investments & Payments.
Proptech has the potential to be able to track built environment operations and enable control and adjustments to be made to contribute to more sustainable cities.
Proptech advances affect three main groups: Space Users, the Buildings level activities (development, facilities management, and leasing), and Portfolio level (monitoring, managing, and reporting).
Unpacking the Smart Building & Sustainability category
The built environment has long been understood to be the largest contributor to greenhouse gas emissions globally, both through embedded and operational carbon. So, unsurprisingly, there is an increasing focus on a building’s ability to monitor and reduce its environmental impact. This report category deals with how smart-building technologies provide the much-needed insights and monitoring ability to be able to optimise consumption and enhance building performance. The Internet of Things (IoT) refers to the interconnected network of objects and devices that are now equipped with some sort of smart chip or other technology, allowing communication and monitoring across a broad spectrum of objects and installations. IoT sensors, benchmarking and analytics platforms, predictive analytics and automation tools that produce analytics are all utilised more frequently to drive consumption optimisation within property portfolios. South Africa is also at the forefront of distributed sustainable energy adoption, owing to its unique and pressing energy-supply failures, with numerous technologies assisting in an asset’s embedded renewable energy infrastructure.
CEO at GCX, Kevin James, adds that when combining behavioural factors, lack of control measures and engineering expertise, the global average for avoidable energy wastage is 43%. “Using IoT and other monitoring technologies, combined with artificial intelligence (AI) and machine learning (ML), utilities (electricity, solar energy, diesel, gas, water) can be monitored in real time. When there is availability of real-time energy demand and consumption (kWh, kVA, power factor, tariffs, time of use), energy costs and consumption and can be optimised.”
A Digital Twin is a detailed model that represents a reallife city, building or system, enabling in-depth monitoring and reporting of operations or other data.
Using Digital Twin technologies, entire cities or precincts can be mapped, their operations monitored, reports created and resource usage or emissions controlled.
Using the Internet of Things, every aspect of a building’s operations, equipment and usage can be easily tracked.
Digital Twin, AI and beyond
New proptech applications tend to combine technologies such as IoT and Digital Twin (a virtual model of a real-life system) to create a smart model that collects and stores real-world data. AI and ML can then be harnessed to collect and analyse data, monitor operations, and make recommendations and adjustments to enhance building performance. Any number of reports can also then be drawn from the data automatically.
Abhijit Nath, Lead Technologist at GCX, explains that there are several other technologies that he believes will soon start to play a greater role in proptech and sustainability. Firstly, virtual reality (VR) and augmented reality (AR) will play a larger role as “custom VR/AR experiences will highlight a property’s sustainability features by integrating with third-party ESG data providers to display ESG information within VR/AR experiences”. Secondly, 5G technology, combined with IoT and edge processing capability (the ability to act on data as close to its physical location as possible) will be used to collect and analyse ESG data. “This will involve developing custom IoT sensors and devices that track ESG metrics by integrating with third-party IoT platforms that provide ESG data. Vast amounts of ESG data generated by these devices can be analysed and reported on at source, reducing time delays. This data can be used to identify opportunities to reduce energy consumption, improve indoor air quality and promote sustainability”.
Nath adds a third up-and-coming advancement, where ESG metrics can be incorporated into existing property management software, which learns from the data that it has been fed and outcome that it provided, and later relearns from it. “This will help property managers identify areas for improvement, set sustainability goals and demonstrate their commitment to social responsibility.” Finally, Nath says that “Implementing cybersecurity measures will become more crucial in coming days. It will help properties meet regulatory requirements, protect tenant data and build trust among stakeholders. Strong cybersecurity measures will protect sensitive ESG data, prevent data breaches and ensure business continuity, all of which contribute to a positive ESG profile.”
Aspects like waste management can be managed and controlled, enabling a real understanding of how waste can be reduced – see “Waste Not, Want Not” on page 14.
Proptech apps like Smart Building bring all the metering and monitoring functions across a building portfolio into one, easily accessible place.
The Smart Building app provides an easy user interface for any aspect of a building to be monitored on a phone or tablet.
Facilities managers are able to use apps like Smart Building to monitor their buildings’ operations in real time
Case study: Smart Building (AI)
Developed by iShack Ventures, Smart Building is an asset and property management, tenant communication and facilities management smart data portal. It incorporates IoT data and AI into a user-friendly centralised app that collect and collates usage and behavioural data about buildings and their operations. Peter Levett explains that this type of technology enhances efficiency and decision-making, increases tenant satisfaction, drives sustainability and social responsibility, creates connected communities, and fosters financial and operational transparency. It integrates easily into existing property and accounting systems such as MDA.
Smart Building boasts universal IoT device compatibility, enabling links with any devices: usage sensors, indoor condition devices, smart thermostats, lighting controls and security installations. It enables monitoring of utilities use in real time, which highlights potential leaks early and enables optimised, data-driven resource management, and even facilitates predictive maintenance. Routine processes can be automated, and machine learning technologies can highlight patterns in data and make predictions and suggestions that can continuously enhance a building’s performance. In addition, indoor air quality can be monitored, as can desk and room occupancy. This allows for both a healthier and more efficient space.
Proptech affects many areas of the built environment and building operations, including the sustainability of buildings and their operations.
Case study: GCX DASH
GCX has developed a proprietary platform for collecting and sorting building operational data, allowing it to be analysed and formatted for ESG reporting. Kevin James explains that “once data has been collated from various systems across the enterprise (utilities systems, building management systems, waste management dashboard, ERP systems, travel agencies), this data can be reviewed using a combination of AI and humans to ensure its integrity, and then visualisations and reports can be automated to ensure efficient and timely reporting and communications.”
The platform allows for the data to be formatted in different ways to suit different ESG reporting requirements. Enhanced accuracy in terms of data optimisation, scrutiny and digital transformation minimises disclosure risk when reporting to the public domain. Landlords can now also benchmark tenants’ performance in categories such as electricity, diesel or water consumption, as well as waste production, on a per square metre basis. This allows them to judge how tenants are performing overall and fosters better landlord tenant engagement on resource management.
James adds, “Our clients use the data to benchmark performance at all levels of the data hierarchy and across all relevant human resources to ensure that targets and milestones are tracked and met. 3D Digital Twin functionality and visualisations are part of our product development roadmap and will help clients see their assets in 3D and be able to visualise the material flows of utilities and waste through the facilities.”
Using GCX Dash, landlords can now also benchmark tenants’ performance in categories such as electricity, diesel or water consumption.
Building apps like GCX DASH enable easy monitoring and reporting of facilities and processes, consumption and emissions.
PROPTECH OF THE FUTURE
“The future of climate tech in South African commercial real estate is promising. We can soon expect to see the emergence of even more innovative technologies and practices,” believes Levett. “Smart buildings equipped with advanced automation systems, energy storage solutions and circular economy practices are likely to take centre stage.”
With proptech increasingly being embraced, particularly by larger building portfolio managers, technology advancements – and the inevitable sustainability improvements – are likely to see an exponential rise in coming years.
