Members of ULI’s Asia Pacific Tech Council discuss the potential long-term impact of the coronavirus pandemic on the real estate industry, its effects on the workplace and the sharing economy, new business models rising to meet the challenges of the post-COVID world, and other trends.
This is the third in a three-part series on the outlook for technology and the built environment around the globe.
Outlook for Technology: Americas | Outlook for Technology: Europe
What lasting changes do you think the COVID-19 pandemic will have on the intersection of the real estate industry and technology?
Bill Lee:
COVID-19 has accelerated the evolution that the real estate industry was already under-going in terms of technology. Many tech companies were already having people work from home before the pandemic, and now it has become the norm in many kinds of workplaces. The pandemic forced companies to upgrade their hardware, software, and data infrastructure to support the flexible workplace. Without COVID-19, I’m not sure we would have arrived at that point for another five, 10, or even 20 years. But today’s pandemic workforce experienced the flexible workplace, and in the post-pandemic world, I believe this flexibility is expected and is here to stay. The retail sector has undergone a lasting change. If you weren’t into shopping online and relying on food delivery before COVID, you definitely are used to it now. For large office campuses, the food delivery aspect has to be rethought. We used to want employees to congregate for meals, and now the design is heading toward making it easier for individual orders to be delivered to people to eat at their desks.
James Wong: Some technology trends have accelerated because of COVID, and some have slowed. For example, in our hotels, many of our guests require that we make contactless check-in and checkout available. They won’t come otherwise. At the same time, during the pandemic we are trying not to let employees go, so we have paused many of the automation initiatives we had planned for front-of-house and back-of-house operations, such as initiatives to automate laundry service and use robots for cleaning. On the construction side, here in Hong Kong the labor force has long relied on cross-border and casual labor, but because of COVID that labor force has not been as available. The drop in manpower has accelerated investment in automation and robotics. For example, instead of having a construction worker drill holes to install wiring in false ceilings, we have invested in a startup that makes a robot that can drill at six times the speed of a human, 24 hours a day if necessary. Of course, robots are not cheap. We are running numbers to compare the costs of human labor with the costs of a robot and the depreciation to see if it is worth it or not.
Akinori Kanayama: At the moment, the pandemic is less severe in Asia than in the United States or Europe. In Japan, commuting is very serious. My company operates railways conveying 4 million passengers per day. The number of passengers decreased to 50 percent in the spring of 2020. Since then, ridership has returned to 80 percent of its 2019 level. We expect 85 percent will return in the long run. But many white-collar workers won’t return to commuting even after the pandemic is over, so that will be a significant change. Also, the population of Tokyo has started to decrease in the coronavirus era. This geographic dispersal may continue in the future because people want more space to live in, which they can have in rural areas and smaller cities if they can work remotely. The medical field will also change because medical examinations can take place online.
What aspects of life do you think will return to pre-COVID conditions?
Wong: In the travel industry, I believe there has been an overly pessimistic view of air travel. Right now, airlines and airports are in bad shape because of the drop in travel. But I think that the volumes of air travel we’ve seen in the past are definitely coming back. People are tired of being stuck in one place. If anything, airports will see a 110 percent increase in capacity, and I don’t think anybody is ready for that. Logistics has taken up some of the airline capacity during the pandemic as cargo shipments are up, but as passenger travel returns, the demand for cargo will not go down. That will have to be figured out.
Kanayama: Humans are social animals. They like to gather at parties, meet people, laugh, and talk with each other. So everything based on human nature will return. I also think the sharing economy will return. Right now, it has paused because people don’t want to be in other people’s cars or homes. But as people change their lifestyle and disperse geographically, they will want more flexible use of space and with new technologies that can restart once COVID is over.
Lee: COVID-19 has made a major habitual change in hygiene and cleanliness in the workplace. I recently worked in Seoul for two months during the height of the pandemic, and people wore masks and didn’t stay in close quarters. There were air purifiers with UV-C filters, and the designs of lobbies had shifted to facilitate testing people. But the design and layout of the physical workplace hadn’t changed much. Also, because of the pandemic, we have been relying on screens to interact. But people need direct human contact, and therefore office work environments will return. Interaction and spontaneous discussions in a physical setting create the potential for innovative thought. I do think when everyone returns to the “semi-office,” there will be fewer individual assigned seating areas and more touchdown space and flexible spaces that can serve multiple uses, such as all-hands meetings.
Are there ways that Asia is ahead of the curve in employing technology compared with other parts of the world?
Kanayama: We need new ways to move goods to stores. In Japan, freight companies are using new technologies to be more efficient. Because Japan has greater population densities than the United States, it may be easier for us to be efficient. But even in more-remote cities, we are trying to upgrade delivery systems. In Japan, robotics are also becoming more common—in every field. Many people are adopting robots to provide physical services because we are losing population and have a labor shortage; we need robots to help us. There are many robots in the home here, performing actions such as cleaning. I was very surprised to learn there are devices that can respond to people’s thoughts. That kind of technology means people can enjoy talking with robots now.
Lee: The Asian countries embodied the use of technology in almost every aspect of their lives. With everything from payment systems to operating systems and user interfaces in new cars, I’ve directly witnessed an adoption of technology for efficiency and broader human comfort that went beyond the Western markets. Recently, the Asian countries have proven—at least in the first phase of the pandemic—to be more responsive, and the citizens were willing to give up some personal data so that collectively society as a whole could do better. Korea identified its first coronavirus case the same day as the United States, and yet per capita, they have done much better and are now living a much more normal life. They used technology for contact tracing and for issuing constant alerts and safety reminders. There is little excuse not to use the technology that is out there, except for fear of trusting the government to use your personal data responsibly. The Edward Snowden and WikiLeaks data leaks have stayed on people’s minds, especially in the Western world.
What new business models are emerging in response to the pandemic?
Wong: We are seeing greater integration of automation in new areas, such as building inspections. Hong Kong currently has restrictions on drone flights in urban areas, but I believe that next year the government will allow drone inspections of buildings in certain places, especially for new construction. Drones can also perform thermal imaging to test a building’s insulation and identify energy leaks.
Lee: Denser urban areas in China and other Asian cities have experienced the rise of “ghost kitchens” that serve five or six restaurants for delivery only. I see that as likely to be a permanent change. It’s an example of taking what Amazon and Alibaba are doing for e-commerce and applying it to many aspects of our life. Through data mining and assessment, many of the e-commerce companies understand what you want before you want it. In Asia, some of the more inventive and state-of-the-art home appliances have sensors that monitor the stock of, say, your refrigerator, and you can have items automatically sent to you just before you run out. There is also a lot more efficiency happening because of the rise of the sharing economy—not just ghost kitchens, but also other service providers that can take care of your household, your transportation, your food, or any of your other needs in life. There is an enormous amount of pressure for some of these corporations to deliver almost in real time to people, so we are seeing more mini-satellite warehouses with specific inventories.
What other trends are you seeing?
Kanayama: Shopping malls are challenged to compete with e-commerce. It may be that shopping malls will change into places to have experiences, not to shop. In Shibuya, we operate four malls, and we are working with fashion designers to make a new ecosystem with the help of technology. We provide space for their products and a platform for shoppers to buy their products easily. Malls can be more like virtual museums for people to enjoy. So we are changing the value chain to provide our tenants with not only space, but also new functions. Also, as a company that relies on commuters, we are trying to monetize passenger data. In the future, people will not commute as much as they used to, so we need other sources of revenue. Big data is very important in Japan.
Wong: The rollout of 5G is happening. That is going to have a massive impact on the internet of things [IoT]. In hospitality, all of the back-of-house robotics and automation will be controlled using 5G and IoT technologies. However, COVID has probably delayed the rollout of 5G another year. Because 5G has a shorter range than 4G, it requires installation of many transmitters in a building, and because office buildings are virtually empty due to COVID, installation has not been moving forward. Another property technology issue is the management of cold storage. With the distribution of vaccines, for example, cold storage is essential. In Hong Kong, two doses per person for a population of 7.5 million adds up to 15 million doses that need storing. Management of cold storage is much more technically complex than managing conventional warehouses because of the need to monitor temperature and ensure that shipments are received and stored quickly. So we need better management software.
Lee: As companies adopt more technological tools, the important thing in the design of the workplace and other kinds of spaces is to focus on the emotional qualities of people. The technology-supported workplace of the future isn’t going to look like Tokyo in the 1980s, with blinking neon and technology flashes everywhere. Technology will operate in the background. Technology is now so much a part of humanity that the design focus should be on humanity. Well-crafted user interfaces with hardware and software have made it much easier for people to use and interact with high-tech devices: you voice a command and your favorite music fills the room. With this continued trend, people will have easy access to machine-driven solutions more quickly. Also, mass data will fuel AI [artificial intelligence] algorithms, which will give rise to predictability. In a world where everyone will have access to solutions and greater predictability of outcomes, I believe people will need to have a fair amount of EQ [emotional quotient] to be effective. The shift out of the IQ-oriented world will focus us to value characteristics that drive better EQ. The surrounding spaces will need to support direct human interaction and the emotional qualities of people. It is exciting for real estate: we can truly design for people now.
RON NYREN is a freelance architecture, urban planning, and real estate writer based in the San Francisco Bay area.
