How sustainability and technology are impacting real estate

PropTech is a buzzword, currently disrupting the status quo of global real estate. It has garnered attention from some of the most vaunted venture capitalists around the world. Investment in Proptech was around $1.3 billion in 2012 and, at that time, was projected to escalate to $5.2 billion by 2018(1). However, as Property Week recently pointed out, global funding for PropTech actually grew to a whopping $10.2 billion by 2018(2) – a meteoric rise that defied all odds and projections. What’s more, at current rates and traction, growth in PropTech shows no sign of cessation anytime soon and appears on course for further sustained expansion.

One of the contexts in which Proptech is attracting particular attention is the question of sustainability. Technology, specifically when it is contextualized for real estate, is an important tool to ensure that solutions can be employed to reconcile sustainability with the continued upgrade of infrastructure. In the realm of smart real estate (SRE), sustainability can be defined as successfully meeting current needs, without egregiously depleting natural resources and compromising the possibility of future development.

Technological impact

The initial adoption of personal computers, in the late 1980s, created the basis for procuring, saving and computing property-related data. This impact was, at least initially, largely restricted to the US and the UK. The advent of Craigslist and other similar digital classifieds – in the mid-nineties – then facilitated non-traditional modes of real estate transactions. Almost concurrently to these digital marketplaces, Argus appeared on the scene, to provide software solutions for the digital management of the industry. These early innovations have since been eclipsed, and built on much further, by the growth of internet services, cloud computing, mobile devices, VR and AR, distributed sensors, big data, cognitive technologies and much more. Technology has taken the industry by storm and the possibilities for the future appear to be, quite literally, endless.

By 2010 PropTech had the undivided attention of savvy investors, probably reaching a zenith when Google acquired Nest—a smart home company which pioneered the development of real estate specific devices, such as thermostats, smoke detectors and smart-security systems, to enable system automation. The most recent iteration of Proptech is now leveraging a qualitatively more transformative generation of technologies, such as the internet of things (IoT), software as a service (SaaS), machine learning (ML), augmented and virtual reality (AR and VR).

Sudhakar Rao, Chairman of Gemini Property Developers, points out that disruptive technologies have consistently challenged the status quo of global real estate in the past decade, and are likely to be an even more significant enabling influence in the foreseeable future. However, according to Mr. Rao, the industry has to exercise a prudent approach in adopting new technologies, by taking into account their influence on sustainability. An enthusiastic proponent of digital tools that allow unprecedented performance levels, while concurrently reducing resource utilization and improving energy efficiencies, Mr. Rao believes that the real estate sector will play a central role in reorienting human societies towards this more optimal paradigm. 

Technology has had a significant impact on real estate properties in terms of design, material composition, safety, management and construction methodologies – across both the residential and commercial sub-sectors. Businesses such as Airbnb and WeWork have risen to prominence rapidly, accruing massive funding and scaling aggressively, thanks to market sentiment that recognizes the power of groundbreaking technologies. Looking forward, we are entering an era in which the robust political will to promote sustainability, consensus supporting these goals within the general population, as well as technologies that can enable those outcomes, are present concurrently. Not only is Proptech, in the service of a more ecologically sound world, commonsensical and desirable, one could go so far as to say that it is inevitable.   

Impact of sustainability

While ‘going green’, ‘clean energy’, ‘eco-friendly’ and ‘future-proof’ are recurring motifs across all business sectors, they find particular resonance within the real estate context. Unprecedented rates of urbanization, the sheer immense scale of valuation and the imperative to provide every citizen with sustainable modern housing, are goals that no right thinking individual can deny. Sustainability is an umbrella term that has social, environmental and financial implications and by 2020 all buildings in advanced economies are expected to have a ‘sustainability rating(3). Furthermore, such an assessment will be a pre-requisite for the approval of real estate developments moving forward. Mr. Sudhakar Rao believes that these top-down interventions will encounter a responsive general populace and market, and that sustainability concerns will have a very discernible effect on real estate market values, as a consequence of the demand for green properties. A user-centric, sustainable outlook towards future SRE not only offers long-term value generation, but also aligns with growing awareness and consensus on the need for sustainable practices, according to Sudhakar Rao.

Considering the very large proportion of energy consumption and greenhouse gas emissions, that the real estate sector accounts for, sustainable building practices will play a key role in the fight against climate-change. From a developer’s standpoint however, going green is not devoid of challenges. As real estate is inherently a capital-intensive industry with a long-life objective, investors and developers should strike a balance between current cost, future value, design and durability, so that consumers’ interests are protected and the environment is not compromised.

Within the context of the UAE real estate industry, this shift in focus has been rather stark to observe. When the World Wildlife Fund (WWF) declared UAE the country with the largest ecological footprint per capita in 2006(4), it was far from flattering. However, the UAE has since undertaken strong initiatives, to emerge as a leading promoter of sustainable development, within the span of a decade. Abu Dhabi’s Estidama—meaning ‘sustainability’ in Arabic—and Dubai’s Sa’fat, are among the key initiatives driving the UAE’s sustainability agenda (5). Having initiated this impressive turnaround, the UAE is not resting on its laurels. In fact, in the lead up to Expo 2020 Dubai, sustainability now has an even more prominent stage and looks set to be completely integrated into all future initiatives and projects as a basic and defining prerogative.


Fortunately, the convergence of sustainability and technology in real estate is within the bounds of possibility. Mr. Rao believes that Dubai is emerging as an epitome of such convergence, citing its predominant utilization of cutting-edge PropTech and sustainability oriented reforms. Echoing a very similar sentiment, Peter Avram, Director of Avani Middle East, believes that consumers in the UAE are becoming increasingly aware of the benefits of sustainability(6). Given the dynamism of the real estate industry in the Emirates, as well as the administration’s zeal to achieve the transformation, the country can emerge as a leader in the integration of measures and technologies that promote sustainability, into physical infrastructure, at scale.

Under the Paris Agreement of 2015, around 195 countries are obligated in principle to curb greenhouse gas emissions and foster climate-resilient development. In this context the adoption of more sustainable practices in real estate, one of the chief contributors to the carbon footprint of humanity, can have global implications. The impact can be monumental, but any incongruity between PropTech and sustainable real estate practices can be equally detrimental. It is this defining impact of Proptech that makes it one of the most powerful means for us to realize a better, more sustainable world. This new paradigm of technology enabled solutions in real estate is, therefore, inevitable and here to stay.


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