When should developers look to incorporate smart technologies into properties?

The potential that smart technologies have in revolutionising and disrupting various markets is undeniable. However, the property sector still hasn’t fully embraced them. This year’s MIPIM played host to live demonstrations of disruptive technologies from innovators and early adopters in the sector, with discussions centred around what these technologies could mean for property developers and their customers.

From intelligent light fittings and smart meters that enable homeowners to better manage their energy consumption, to fall detection floors and sensors that remind those with memory issues that they have left the oven turned on, the possibilities that these connected devices offer are infinite.

However, with the disposable nature of many technologies, how can developers decide when the adoption of smart technology is right for them?

1. Think about the audience

Developers should think carefully about their target audience and if they would actually value these smart technologies, or whether it’s just clever marketing from the creators of these innovations that is creating the buzz. Incorporate them if your target audience sees the value, but don’t simply see it as a tick box exercise.

So far at CityBlock, we haven’t extensively incorporated smart technologies into our student properties, as we don’t believe our residents value them enough to warrant the capital expenditure. However, we believe they are more appropriate for owner/occupier residential homes, so we will be considering the use of smart technologies as we enter the residential market this year. Saying this, we are not naïve enough to think that everyone that moves into our residential properties will be interested in living in a smart home. In fact, for some people, moving into an advanced home might put them off. Knowing your audience is key to getting the balance right.

2. Weigh up the cost vs. need

The value that smart technologies have to some consumers is obvious. For example, WhatHouse? magazine conducted a survey in 2017 that revealed that over 50% of estate agents had sold houses containing smart technologies for a higher price than comparable properties, and in most cases, for over 5% of the asking price.

As a result, property developers should weigh up incorporating technologies with how much extra residents are willing to pay for them. At the moment, we believe that in the student market, the majority of people aren’t willing to pay more for these technologies, whereas in the residential market, there is a slightly bigger appetite.

The current demand across the board probably isn’t high enough for many developers to justify the cost. However, cost of these technologies is likely to fall as competition increases, so those that don’t want to go down the early adopter route and are happy to sit back and observe the market for a while could benefit from lower prices.

3. Added value

The needs of residents should be top priority for property developers, however, they should also look at how much these new technologies add value to their business’ bottom line, compared to other investments. At CityBlock, for example, we’re currently incorporating new operating systems that enable us to streamline our processes and focusing on investing in our digital platforms to better serve our customers, as well as including environmentally friendly technologies into our properties. For us, these are our core investment priorities at the moment.

To incorporate smart technologies, or not?

Not everyone will immediately uptake a disruptive idea. Actually, the largest percentage of consumers within the technology adoption lifecycle are in the early majority and late majority groups – people who usually take much longer to adopt a new technology. Innovators and early adopters actually make up a much smaller proportion of consumers.

At CityBlock, we appreciate the value of smart technologies, and have a lot of respect for those that are developing and using these innovations and helping to push the sector along. However, for us it’s about weighing up what our customers want, and whether they want it enough for it to push the price of their home up. And at the moment, within our student properties at least, the need is just not great enough. Saying this, to ensure we are continually evolving we will continue to follow trends in the market and assess their value to both our customers and the business.