Alternative Investments: The Tech Revolution Is Hiding In The Stairwell

As the world's digital pathways multiply and thicken—and even begin, perhaps in some ways, to rival the world's road networks—any sector slow to start using them is increasingly conspicuous. Thus, the real estate sector, or more broadly alternative investments. Where is the industry overhaul, the massive sweep of technology? Elsewhere, fintech companies are building digital ledgers to settle transactions, healthtech companies are 3D-printing knee bones, and much more—but alternative investment firms have been largely shielded from this wave. In this article, leaning on the results of a recent survey carried out in this area, I'll discuss why this might be and when it might change.

Slow burn

In one sense, it would be ludicrous to suppose that proptech could spread as swiftly as e-payment apps or such things, simply because the latter rely on a pocket-sized device that people generally replace every two or three years, whereas buildings, well—the one I'm sitting in right now was built in 2014 and shouldn't need replacing for a good five or six decades. So when it comes to, for example, smart hubs using radio waves to interconnect a house's appliances, these are not easily implemented without invasive renovation. Another barrier is that such networks are not yet really standardised across manufacturers in the same way apps are on smartphones.

So the Internet-of-Things side of proptech will follow the truncated pace of building construction, which is fair. But there are business-side stumbling blocks too. According to a recent KPMG and CREATE-Research survey, margins are mostly healthy for real estate companies which lessens the appetite for risky innovating. The same survey uncovered some other themes of hesitation amongst decision-makers too: many are more focused on keeping immediate investment returns buoyant than on getting inventive in their garages, and the crisis of ten years ago is still reverberating in the form of risk aversion. Quite simply, the industry is still collectively comfortable—it's still risker to be the first mole poking your head out of the ground. But time will alter that: at some point, the riskier move will be to cling to the tattered old business models, down in the mole hole, built on aged technology.

Thus, the remaining question is: when exactly will that transition point come? Nobody can put it down to a date and time, but these do seem to be ripening times. The same survey cited above concluded that, of 125...