By Jackie Newstead, Hogan Lovells
New technologies have the potential to transform how we think about and use real estate property as well as create efficiencies or change the way it is monetised. From blockchain to solar energy, here are a few disruptors that have the potential to transform the real estate landscape in Kenya.
Blockchain technology provides secure evidence of the ownership of assets and make transfers of or encumbrances on those assets. It allows every property to have its own digital address where all information relating to it may be stored, in a universal system on a national or international scale. This includes ownership and financial information, taxes, bills, liens, easements, building performance, physical characteristics and the transaction history relating to the property.
Access to such information is either made available to anyone or encrypted with limited access.
Blockchain technology provide for fast, efficient and secure transfers of real property interests, and it can be used to enhance the efficiency of the mortgage finance sector to track ownership of borrower payments, covenant compliance and other ban activity, with smart contracts working to enforce obligations and identify defaults, potentiality reducing mortgage servicing costs and due diligence costs.
Autonomous vehicles have the ability to transform how we think about and use real property, the same way that roads, waterways, railways and airports influenced the creation of cities and suburban centres. The possibility for a revolutionary change in the location, use and design of buildings cannot be understated.
People’s choice of where to live could be less dependent upon access to fixed public transportation networks and more disbursed. Children’s schools choice could be less dependent on location and bussing.
Car parks could be redeveloped for other uses or allow for more efficient use of total space as car parks are transitioned into developed property, as cars will move to less density populated areas to “wait” for their owner, or more likely take on other activities, such as delivery of packages or driving others as an Uber car.
The need for appropriate logistic hubs for long-haul truck shops and logistics will change too, affecting many commercial and industrial properties as well.
The use of internet auction sites and data rooms have been exploding over the past few years to help monetize real property and reach the largest group of potential purchases quickly and easily.
We see this as useful for “commoditized” real property – simply to understand. However, for more complex transactions with larger price tags, its use may be years away, and will likely require a strong blockchain infrastructure.
Energy efficiency is something that developers strive for in their building as it helps their bottom line. Its primary benefit will be in suburban areas, schools, shopping centres, factories, warehouses, where the roof space is significant compared with the building density.
As the cost and efficiency of solar panels increases, they will become a common fixture in the landscape. In addition, buildings that generate solar power may be able to use similar contracts and blockchain technology to facilitate the negotiation and sale of this power into the national grid, enhancing the productivity of an investment.
Mobile applications – the great disruptor
Mobile applications and the ability to work remotely will affect the need for how we use office space. We already see companies that use hoteling to allow their workforce to work flexibly and other companies like WeWork that create a sublease shared office environment that are competing with traditional models. This age of flexible work environments will change how offices are designed and used, and owners will need to adapt to keep their assets financially viable.
We may also see applications using augmented reality (such as the recent hit Pokémon Go) start to affect the real estate sector as well.
The path of progress
Although everything and everyone uses real estate (weather to live, shop, work, play, commute, house our electronic “cloud” or transmit our energy etc.) how we use it will be changing as technology advances, until we leave this planet.