Proptech: from hype to reality

Estates Gazette, 20 April 2016

Author: Simon Troup

Simon Troup offers a vision of the near future, and identifies the technologies that will deliver the next generation of connected buildings

While the increasing demand for smart buildings is evident, only the most far-sighted are invested in understanding and developing the range of technologies on which the next generation of buildings will rely. Technology has already fundamentally changed entire sectors of the economy, presenting unprecedented opportunities for some but also seriously damaging those unable or unwilling to adapt. Will the real estate industry embrace the coming wave of change or will it remain ripe for disruption?

Adaptive technology and data collection

The internet of things, blockchain and artificial intelligence (AI) form the foundations of smart buildings, enabling real-time control adapting to occupant and environmental factors. They will change the way buildings are operated by creating trusted and cost-effective frameworks for delivering smart, efficient buildings from design through to completion.

Digital concierge services will help tenants navigate buildings efficiently while adjusting the environment to their personal preferences. Operators will expect low-emission, low-energy buildings delivered by a secure and “always-on” infrastructure. Value will be unlocked by improving productivity and comfort; efficiency doesn’t equate to value if employees or guests aren’t happy. Successful smart buildings will not overburden us with data and information, they will ease the friction of daily life.

Information architect and author Steve Krug wrote Don’t Make Me Think on designing software user interfaces; the best building tech products will adhere to the same principle. Expect buildings to become increasingly adaptive as they process and act upon environmental and occupancy data captured in real time. The use of personal preferences, sensors and location-based services will help personalise spaces at increasing levels of granularity. But maintaining trust between operators and tenants will remain imperative, with issues surrounding privacy, ownership and monetisation of data being complex and sensitive.

Open source

From a technology perspective, new enterprises move faster than legacy systems providers by focusing on specific functions within building management systems. They are happy not to “own” the entire stack, rather aiming to deliver the best possible product to service a specific need. A new diverse set of open technologies will make it harder to lock customers into expensive closed solutions.

Adoption of open source technology is widespread, platforms are opening applications to ease system integration, and the growth of blockchain points to an open and decentralised future. However, permitting more digital access points increases operational risks by providing a wider opportunity to disrupt operations and threaten security. System hacks can remain undetected for months, so proptech products must help identify anomalies and provide actionable security insight for operators.

Existing building management systems are hard to hack simply because of physical separation. Smart buildings must be secure in delivering a trusted operating environment, while keeping an open architecture where new products can thrive.

Innovation accelerates in an open ecosystem benefiting from freedom of choice while ensuring vendor neutrality. It makes sense to have open protocols; Hypercat (an IoT device catalogue) and Project Haystack (a data ontology for building management systems) are leading the way in simplifying interactions with connected devices. Better connectivity coupled with structured data ontologies will make tenant-focused services quicker to implement, improving time to market and reducing cost.


Advances in connectivity, enabling network rather than analogue control of devices, will facilitate smarter buildings. The first phase of innovation is under way driven by advances in LED lighting using power-over-Ethernet (network) connectivity. Cisco’s Digital Ceiling aims to provide a framework for network-addressable lighting solutions delivering new levels of control with plug-and-play sensor support.

Leveraging existing network cabling for both power and control reduces cost while providing a digital backbone for data collection and distribution. Where traditional networking is unavailable, LPWA technologies will permit collection of data from the deepest plant room, while allowing battery-powered devices to have materially longer lifetimes.

What is blockchain?

The World Economic Forum’s Technical Tipping Points and Social Impact paper indicates 10% of global gross domestic product will be stored on the blockchain by 2025. But what is it, and how will it impact building management systems?

A blockchain is a ledger or record of digital events distributed between multiple parties. It can only be updated by consensus of the participants in the system, which makes it extremely difficult or impossible to hack. Many see the blockchain as one of the most significant technological advances of our time.

The blockchain provides a framework for managing complex environments where diverse events and transactions occur. Historically, building management systems have not extended much beyond heating and ventilation control. New systems will be more ambitious; hospitals, airports and schools are examples of buildings requiring a data backbone shared across the portfolio of systems used to deliver a service.

The robust transparency and reliability of information offered by blockchain technology makes it ideally suited to systems that experience thousands of complex interactions daily. The shared ledger is stored simultaneously on devices forming the building management system, making it extremely difficult to penetrate.

Blockchain-based smart contracts can also be used for logistics and predictive maintenance. Heavy equipment will predict component failures, negotiate and order parts and schedule maintenance autonomously, with transactions bound by smart contracts. Smart contracts and a shared ledger of records are valuable components when building robust repeatable outcomes in smart buildings, and ensuring there is accountability for rogue devices and system failures.

Virtual reality (VR)

VR innovation has focused on high-end commercial property investors, but as the technology becomes commoditised it will become feasible for smaller projects. Cost-effective hardware such as Oculus’ headsets are already enabling software innovations that reduce the risk of costly misunderstandings during the design phase of projects.

At a larger scale, as AI evolves we will be able to integrate high-resolution video information into our data infrastructure, gaining insight into how crowds interact with urban environments.

A brave new world

As technologies mature, building operators must rise to the challenge of delivering innovative products and services to their clients. To quote Silicon Valley venture investor Chris Sacca, “ideas are cheap, execution is everything”; for smart buildings there is a lot of promise yet to be realised. However, expect the next 12 months to deliver step changes in the technologies described, importantly moving from innovation into commoditisation. The invention of the transistor was remarkable, but the wave of innovation it enabled even more so.

The challenge for the real estate industry is to put these technologies to work by inventing new products and services that otherwise would not exist. Ultimately, the real estate business is driven by valuations, so the motivation for delivering better occupant services is strong. Balancing user experience, security, trust and privacy with open autonomous systems will be difficult and a significant departure from existing processes.

Now is the time to invest in research and development, training and a commitment to a strategy enabling digitised buildings and planning. Build partnerships with organisations such as Future Cities Catapult, or catalyse innovation by opening data sets and building management systems for hackathons. Consider how to provide support through capital, either as strategic investments, grants, or by adopting early-stage products. Combining investment, leadership, talent and technology presents the best opportunity to be the disruptor rather than the disrupted.

The tech list – the terms you need to know

  • Artificial intelligence (AI) Advances in overlaying AI on 8k image capture will accelerate our control capability
  • Autonomous devices Devices that can make independent decisions and execute actions based on artificial intelligence
  • Blockchain Shared ledger system facilitating secure interactions between digital and/or physical assets. Blockchain systems may be operated publicly (eg bitcoin cryptocurrency) or privately (eg NASDAQ Linq trading system)
  • Data-driven planning Digitising the planning process will compress projects and reduce financing costs
  • Internet of things (IoT) Devices connected to the internet for data capture, exchange and control
  • Low-power wide area networks (LPWA) Gateways bridging low-power devices to the internet are more battery-friendly than WiFi connectivity
  • Machine-to-machine (M2M) Devices communicating and transacting peer-to-peer (rather than to a central hub), enabling decentralised systems
  • Micropayments Low-cost payment systems making small payments cost-effective for M2M transactions
  • Open data ontologies Ontologies provide structured data tagging and labelling, lowering both the cost and complexity of buildings systems integration
  • Open source Open source technology drives down the cost of systems supported by a healthy ecosystem of commercial partners
  • Power over Ethernet (PoE) Uses network cabling with low-power devices, such as LED lighting, to deliver IoT innovation over existing infrastructure
  • Smart contracts Interfaces explicitly defining how M2M and other digital contracts can be negotiated, enforced and their performance measured
  • Virtual reality (VR) For marketing, virtual site visits, or public planning consultation
  • 8k video High-resolution image capture delivers vast amounts of information in real time

Simon Troup PhD is head of data services at