A shift to digital: the impact of Covid-19 on real estate
Most people would agree that digital disruption is a prominent feature of the modern world. Adoption and integration of technology in our day-to-day lives has been both persistent and widespread in the last two decades. Industries, including real estate, have been impacted by a range of innovative platforms and solutions delivering business continuity, boosting productivity and transforming the way business is carried out.
Pre-crisis, the real estate industry was on the path to digitising processes and creating digitally enabled services for tenants and users. One need only look as far as the high-tech security and monitoring systems in place, the prevalence of high-speed Wi-Fi, smart lighting and heating systems to meet modern property demands, and investment in the Internet of Things for the purpose of data collection and analysis.
Covid-19 fast-tracking digital transformation
The move to home office
The need to digitally transform has become ever more apparent in the wake of the Covid-19 pandemic which has profoundly shifted the way firms operate. To cater for a more location-flexible workforce, quick and reliable connectivity has been a high priority for businesses.
Despite the benefits of a distributed workforce, figures from a recent Workhuman survey indicated as few as one-third of workers in the United States alone worked from home before the outbreak of Covid-19. Many company cultures promoting rigid work-in-office policies and lacking the technical infrastructure have had to learn the hard way what is actually needed to ensure continued productivity.
Even companies providing employees with a variety of work options and managing multiple locations pre- Covid-19 have needed to act fast to stay competitive. Tech giants like Twitter and Google were among the first to promote home office-working to their staff. Big corporations and advisory firms like JPMorgan and EY were not far behind.
In response to the Covid-19 outbreak, a number of technology providers have launched tools and cloud services to streamline communication and collaboration amongst teams and optimise business efficiency. DingTalk, WeChat Work, Drooms ENTERPRISE have become particularly popular. Many existing products on the market have also seen large-scale adoption, particularly those which include free trial periods such as Google (who are enabling free access to certain features on Hangouts, G Suite and G Suite Education for several months), Microsoft Teams and videoconferencing software Zoom.
Other digital first products and services
Investment in alternative digital sales and leasing methods, particularly using virtual technology for the likes of viewings and augmented and virtual reality to enhance the user experience, has been witnessed among players in residential real estate.
As certain operators faced the prospect of continued closure, technology facilitating on-demand delivery and concierge services, virtual communities and contactless access for residents and maintenance staff has also been on the rise.
Technology key to recovery
Hands-on executives who take the appropriate steps can better prepare their companies for the new normal. Recovery involves learning from the health crisis and taking action to enhance resilience. Reviewing existing procedures and developing and or improving a digital road map to automate processes can keep the negative impact of future crises at bay.
Covid-19 does not likely signal the end of the office, but certainly the office as we know it. Enterprises still need a physical presence and the capacity to carry out face-to-face meetings with their client base. Aside from adjusting physical spaces to comply with the latest guidelines and health and safety requirements, commercial real estate companies in particular will likely need to invest in tools and technology that promote mental and emotional well-being of their employees post crisis.
Importance of security
As the pandemic continues to cause havoc to the global economy, uncertainty is not the only problem businesses face. Despite advances in technology, data security remains an issue for companies, many of which are inadvertently exposing the personal data they hold to hackers as they rush to purchase machines without antivirus and encryption software and begin working on new platforms with poor privacy safeguards.
According to SecurityMetrics, over 460 million records were exposed in breach incidents reported in May this year alone.
The International Association of IT Asset Managers have declared that the huge spike in the number of data breaches associated with remote working are significantly worse than expected. This can partly be explained by the surge in unprotected corporate assets and the lack of knowledge amongst staff using them. In order to avoid the fall-out from data leakage, organisations have been advised to understand the various pathways a company’s data network can be accessed and to avoid deliberately making devices less secure to simplify remote working. Examples include eliminating admin rights so staff members can finish a task with minimum approval levels, allowing employees the use of unpatched company devices and private devices with low-end or no VPN. Companies are advised to prioritise due diligence and carry out background checks on prospective service providers.
Compared to last year, the insurer, Beazley, reportedly saw a 25 per cent spike in customers being hit by ransomware in the first quarter of 2020. Household names tackling ransomware and hacking incidents during the global Covid-19 pandemic include Zoom, Honda and EasyJet to name a few. The latter revealed that the details of nine million customers were accessed in the first quarter of 2020. SecurityMetrics disclosed they had seen up to 65,000+ Google-branded impersonation attacks. Microsoft was used in 13 per cent of attacks.
Digitising real estate portfolios
For commercial real estate companies in particular, a move towards digital can offer long-term risk mitigation, increase confidence amongst stakeholders and support strategic objectives by making reliable information more accessible. In many organisations, hundreds of projects are running across different functions and geographies and managed via a variety of approaches causing chaos, continued poor return on investment and/or failure to unlock full investment value. Success depends on discovering where all existing data lies and filling in the gaps where information is missing. Simplifying access to data by collecting and standardising information before uploading it to a secure, reputable and highly functional online platform, such as a virtual data room, is advisable. To ensure reliability of data, assessing its source and cross-referencing where needed is important.
Role of legal and benefits of technology
Focusing on providing excellent client services and embracing game-changing technologies will be essential in enabling law firms to ride the tides of digital transformation. Making changes to internal processes within law firms and educating lawyers on digital transformation are needed to reap the benefits of technology. To differentiate themselves from competitors, lawyers and other legal professionals (legal departments, corporates and advisers) ought to proactively reach out to clients and offer solutions that help them save time and money. With the abundance of technology now available to law firms, it can be difficult for them to make the right decisions. They must identify their pain points and plan for a successful implementation and widespread adoption, pairing the right teams to the appropriate technology. But most importantly, law firms must ensure that technology is embedded with precision to achieve the best results for clients.
The benefits of digitising assets and optimising legal processes are clear to those law firms that have already begun to embrace digital transformation. These benefits include reduced paper consumption and greater efficiency generally around processes such as creating and reviewing contracts, mining documents, raising red flags and performing due diligence. In particular, the latter of these processes is profoundly improved by the application of Artificial Intelligence within centralised digital platforms like VDRs, whereby authorised personnel are given controlled, online access to confidential data and documents that are stored remotely. The goal, whatever the software used, should enable a variety of business processes to be conducted securely, transparently and efficiently.