Retail sector has most to gain from disruptive technology

Real estate investors ranked the retail sector as offering the most potential for value creation through disruptive technology ahead of the logistics and office sectors, all of which can benefit from technologies such as smart buildings, according to Intertrust, a provider of administrative services to clients operating and investing in the international business environment.

The firm interviewed real estate investors across Europe, North America, the Middle East and Asia to identify the value-add delivered by new technologies now and in the future.

According to the research, 81 percent of real estate professionals identified retail as the most target-rich sector to generate returns through applying innovative technologies such as AI, blockchain and big data to create omnichannel models to compete with online ecommerce vendors.

The report highlights how the increasing use of technology in the design, monitoring and maintenance of assets has introduced a new set of challenges for real estate investors. When assessing real estate assets, almost half (44 percent) believe the biggest risks are cybersecurity of asset IT systems and the cost of upgrading IT infrastructure as well as assets becoming obsolete due to disruptive technology.

Respondents believe that digital innovation is currently delivering the biggest positives around improving back office systems but by 2024 they expect it derive the biggest benefits in completing quicker due diligence on transactions and making improved investment decisions.

One-in-six (16 percent) respondents predict that by 2024 drones will play a much larger role in carrying out external asset inspections, while a quarter (23 percent) expect virtual reality to be far more widely used in demonstrating assets to investors.

Real estate professionals are bullish about how blockchain technology will give rise to the growing popularity of smart contracts. On average, respondents believe it will take five years for manual processes around legal agreements to be replaced by smart contracts or similar technology.

Jon Barratt, managing director at Intertrust, said, “Real estate investors are mostly bullish about how they can benefit from disruptive technology and early adopters already reaping benefits by digitizing back office systems. From an investment perspective, they see the retail sector as having the most to gain from digital innovation as the pressure mounts from the online channel. The findings suggest that the biggest benefits have yet to come as investors are looking to new technologies to produce better investment returns.”