Technology and Real Estate Meet in Smart Cities

Seventy percent of the world's population will live in cities by 2050, and this ongoing urbanisation will increase the demand for real estate in some cities by as much as 30%. This will need to be met by a combination of new, refurbished and repurposed real estate.

The property sector therefore has an enormous opportunity to help world cities, including Hong Kong, to transform and prepare for an increasingly digital future.

Technology is at the core of a smart city's success, but must be used in support of the smart citizen.

As technology and real estate converge, innovation is pushed to new heights. Data analytics, artificial intelligence, the Internet of Things, virtual reality and blockchain will collectively transform how we invest in and develop real estate, and how we deliver efficiencies and benefits for both owners and occupiers.

Hong Kong has been actively considering how to approach its future in light of what the World Economic Forum has called the 'Fourth Industrial Revolution.' The question is, how prepared is Hong Kong for these changes?

The city was an early adopter of 'smart city' development when the government published its 'Digital 21 Strategy.' However, it is now perceived to have fallen behind its regional rival Singapore.

"Hong Kong needs to push for innovation because other cities are moving fast," says our Head of Global Research Programmes, Rosemary Feenan, who notes Hong Kong has dropped outside the top 10 in some innovation eco-system indices.

The key elements of Hong Kong's smart city blueprint are mobility, living, environment, people, government and economy. The concept aims to create a "happier, healthier, smarter and more prosperous city."

Risks aside, new technologies have enormous potential to improve citizens' lives. Hong Kong's property sector already employs smart technologies to monitor building performance, maintain and improve operational efficiency, and facilitate maintenance. Data analytics can improve processes to lower energy and water consumption, contributing to greater sustainability.

Elsewhere, Massachusetts Institute of Technology (MIT) is pioneering "social physics" to draw data from occupants' smartphones and wearables to determine their mood when inside a building.

Technology could even help tackle Hong Kong's housing shortage. Today, New York boasts one of the world's largest modular buildings at 30 storeys high. That same technology could be applied to accelerate the supply of affordable apartments in Hong Kong. 3D printing is another transformational technology. In April 2016, Dubai's leadership announced its ambition to use 3D printing technology to construct one quarter of all its new buildings by 2030. 

In terms of improving liveability in the city, Hong Kong is developing intelligent traffic lights to collect data and improve traffic management. Other concepts include expanding the city's digital payment options; turning Kowloon East into a "living lab" to explore smart city feasibility; and creating an interactive 3D visualisation platform that will allow urban planners and architects make better use of city data.

Increased data sharing among government departments—and making that data available to the private sector—is key to making spatial planning a success.

The government will create a smart city steering committee, which is "essential for any city wanting to operate across all of the different functions," says Feenan. Its HKD 2 billion (USD 255.66 million) Innovation and Technology Venture Fund should help spur technology sector growth and, with it, property technology (proptech).

But Hong Kong must also address its I.T. talent in order to ensure it has the substantial pool of talent needed to augment the city's historical focus on trade and finance.

"Parents often push (or encourage) their children into finance even though there is a shortage of software engineers," says Founder of Spacious HK, Asif Ghafoor. "The cost of living is too high for young people in Hong Kong to create start-ups."