Over the past decade, technological innovation has been a key driver for the success of several sectors, including banking, entertainment, transportation and e-commerce. Real estate and construction, although applied later, are also gradually accelerating technological innovation.
Recently, top business leaders have discussed technological innovation and sustainability in the real estate and construction industries, as reported by Australian consulting firm HLB.
Risky and complex landscape
As fears of the epidemic have subsided somewhat, confidence in the global economy has more than doubled, reaching 48% this year from just 22% last year. However, with the conflict in Ukraine, this belief can be shaken at any time. Real estate and construction business leaders remain cautious, aware that risks can come on a whim.
Along with the general economic instability, the specter of inflation was noted as the second most worrying factor in the real estate and construction industry. Nearly three-quarters of business leaders worry about how inflation could affect wages, material costs and delivery times.
Thousands of unfinished buildings abandoned in the wake of the 2008 financial crisis are a stark reminder of the economic pressures and inflation that can derail construction projects.
Along with social unrest, concerns about geopolitical instability and disruption to international trade flows remain high and are unlikely to be alleviated in the short term. Navigating these complex risks in the macro environment could be the biggest challenge facing real estate leaders in 2022.
Human resources problems
If real estate and construction businesses hope to thrive in 2022, they will need to adapt to changes in the workforce. In many cases, this will lead to layoffs. On the contrary, it also opens up the challenge of finding the right talent.
Remote working is also giving rise to the traditional real estate business trend. Concerns about the work environment combined with people's increasing focus on health and well-being will be a challenge for businesses in retaining employees.
Where do growth and profit expectations come from?
Today's most successful businesses have thrived on a combination of cost reductions and operational efficiencies, often achieved through automation, digitalisation, and sustainable practices.
More than half of real estate and construction leaders cite operational efficiency as their biggest business weakness, with 67% aiming to improve operational efficiency. In addition, other issues that can help increase profits include cutting costs, optimizing capital and human resources, as well as adopting new technology.
It is from the risks associated with various issues, combined with the practice of real estate businesses that have developed over the past year, experts believe that innovation and creativity will become part of helping the real estate sector generate profitable growth in the future.
Success through innovation
Fear and risk aside, 89% of real estate and construction leaders seem to agree on one thing: The challenges posed by a two-year market disruption have spurred them to innovate further. .
Applying advanced technologies and modern business methods will be the key factors determining the success of real estate and construction businesses in the future. However, tracking changes on a daily basis and knowing how to effectively integrate them into the business model is not simple.
Innovation is driven by disruption in the market
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| Disruption as Force of Innovation. |
89% of leaders surveyed cited disruption in the past two years as the main driver for change, with more than 80% believing in the ability of innovation to succeed.
The three most important factors mentioned by leaders when innovating include new technology, process improvement, and sustainability.
Technological innovation and development
Population is growing too rapidly, especially of the middle class, which is putting pressure on the real estate market. Real estate and construction companies serving this industry should have a clear understanding of how new technologies can be integrated into project development and asset pricing to increase efficiency and lower costs.
Several other technological developments are helping to drive innovation in the post-pandemic world, such as cloud-based services, blockchain, and artificial intelligence (AI).
Many of these offer the same benefits to any business, such as AI-powered customer care and low-cost cloud storage, but some offer specific benefits to the real estate and construction industries.
The three main technologies mentioned by the leaders include: Cloud services, internet of things (IoT) and human augmentation.
Sustainability and renewable energy
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| An electric van running by windmill fields |
Buildings account for a significant amount of global greenhouse gas emissions and about half of the world's energy consumption. Therefore, modern buildings must not only be functional and affordable, but also meet sustainability.
Open up profit growth
Confidence is gradually returning after a long time affected by many factors. More and more focus is on new, post-pandemic work environments. To drive profitability, business leaders must be prepared to adopt unfamiliar methods and embrace change.
Although about a quarter of the leaders polled expect global industry growth in 2022 to decline, confidence in their investments is still growing. Specifically, about 21% of investors surveyed believe that their real estate business will be profitable this year, 12% higher than HLB's survey in December 2021.
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