PropTech Megatrends: Factors Shaping Our Built Environment in 2022

As we move into the new year, Switch CEO Deb Noller highlights emerging PropTech industry megatrends, and we examine how these will impact our experience of the built world. 

According to data firm CB Insights and reported by the Wall Street Journal, proptech funding reached record highs in 2021 with US$9.5 billion worth of investments which reflects the current global priorities for the real estate sector to leverage technology for meeting occupant satisfaction, operational efficiency, and environmental goals.  

Owners and asset portfolio managers of commercial real estate want to reiterate the value of traditional workspaces, and the hospitality industry is on the hunt for technology solutions to better support guest experiences in a pandemic world. In 2022, buildings will be putting plans to action and the investment landscape for proptech is projected for continued growth.  

Why now? 

Increasingly, sustainability and climate consciousness are becoming necessary factors in decision-making. Last year, COP26 saw the largest number of observers and protesters of any of the conferences, totaling over 100,000 people calling for dramatic and immediate change. Proptech is a valuable tool to give people more power and visibility into their consumption habits. Having insights into their energy usage in real-time allows for strategic and data-driven decision-making while being accountable for how their actions impact our environment. 

This is not only happening at a consumer-level but at an investor-level too. Investors are increasingly aware of where their money goes, what impact that has and how that affects the planet. For instance, Swiss bank UBS has noted that investors are beginning to demand companies to show their commitment to fighting climate change. As a result, financial instruments linked to sustainability will form the next phase in the evolution of green fundraising, specifically across Asia.  

With the rise of Gen Z entering the workforce and leading operations or driving decisions, a generational change is occurring within the proptech industry. Younger people are entering the building operations, engineering and facilities management industries and, having grown up in the digital era, are prioritizing digitalization and data over antiquated, time-consuming, manual processes. According to McCrindle, Gen Z will make up 27% of the workforce by 2025. Consequently, property management companies need to pursue digital investment to maintain their competitive edge.  

What now? 

Indoor Air Quality 

As COVID-19 restrictions begin to wane around the globe, the focus for companies everywhere is getting people back into the office. Tenants are beginning to demand landlords and owners to provide accurate, transparent and real-time data about indoor air quality to determine whether it is safe for them to return to work. Environmental sensors can provide information about the number of occupants within a space, as well as levels of particulate matter in the air, helping to optimize tenant experience, health and comfort levels. As a result, managing air quality metrics within your building operations is going to be a main priority in 2022. 

ESG Reporting 

ESG (Environmental, Social and Corporate Governance) reporting and investing saw a steep upwards trajectory in 2021, as public attitudes and investor demands shifted towards increased conscientiousness for environmental and social factors. Again, this was accelerated by the pandemic, and many firms now consider ESG reporting as front and central when establishing corporate purpose. This is set to continue in 2022, with 50% of global asset owners currently implementing ESG data/analytics into their investment strategy by 2025.  Furthermore, research from PwC shows that institutional investors in Europe expect ESG and non-ESG products to converge and, from next year, 77% of these institutions to stop buying the latter. As the world shifts towards a more sustainable mindset, the need for transparent and accurate ESG data will become increasingly popular and necessary within the proptech space. 

Data-Driven Intelligence   

During the pandemic, data-driven intelligence and machine-learning technologies have proven valuable for the real estate industry, giving owners, investors, and occupants a quick but detailed synopsis of their property and lease portfolios.  As businesses were forced to close their doors, landlords and tenants needed fast and accurate information about their energy consumption. The use of data analytics is expected to continue and expand in 2022, including helping with sustainability efforts. Energy efficiency can be greatly improved through the collection and analysis of data. With the help of algorithms derived from analytics, this information can modify systems to reflect the desired temperature, air quality and energy usage during office hours, thus optimizing tenant experience and, if no one is in the office, ensuring energy is not wasted.  

If 2021 is the year of deliberation and experimenting with solutions, 2022 is the year to act and implement solutions to manage your energy efficiency, automate your building operations and reduce carbon emissions. If you would like to have a chat on how to transform your buildings, book a discovery call with one of our smart building experts to plan your digitization journey.  

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