China’s largest insurer is backing the nation’s ambitious smart city program with investment in technology, panelists said during the ULI Asia Pacific Leadership Convivium, held in Shenzhen, China.
Wei Baisong, chief technical officer and chief product officer at Ping An Capital, the venture arm of one of China’s largest insurance companies, said China has plans for 500 smart cities, compared with about 80 in Europe and 40 in the United States.
China has one-third of the world’s cities with a population over 1 million, and an additional 350 million people are set to move into cities over the next decade, said Wei, so improving the nation’s urban areas is crucial. Across China, 300 cities have failed to meet required standards for clean air, public health, and traffic, he said.
Ping An has invested $7 million in new technology and plans to double that, he said. “We invest a lot in technology because we think technology will be the game-changing option for some of the challenges we are facing,” he said.
The core technologies Ping An is investing in are artificial intelligence (AI), blockchain, and cloud computing, and it will apply those to a number of business ecosystems, including real estate and smart cities.
“We use AI for health care, transportation, elderly care, and government services,” he said. “We use blockchain in payment management, energy management, and waste management, and we use cloud computing to integrate those elements with internet-of-things infrastructure to make us better understand the city.”
Ping An has contracts with 80 municipalities for smart-city initiatives and 30 pilot projects underway in cities such as Shenzhen, Wuxi, and Nanning. In Shenzhen, the group has created a traffic-control system that has reduced both congestion and accidents, and has saved state-owned enterprises in Nanning RMB129 million (US$19.2 million) in financing costs using smart fiscal management.
As part of its multimillion-dollar investment, Ping An is bringing technology to bear on all aspects of real estate, from building information modeling (BIM) to blockchain-backed transactions. Use of blockchain for real estate transactions could dramatically reduce completion time from five days to one hour, Wei said.
Rather than leave citizens behind, technology will “empower people as the center of everything in the city,” he said.
Read #UrbanLand article: “Backing China’s Big Bet on Smart Cities” where Bai Song Wei of @pingan_group Urban Tech discusses research projects that demonstrate how big data can aid real estate decision-making https://t.co/pBKoFCejyk #SmartCities pic.twitter.com/sbzAoJYY5A
— ULI Asia Pacific (@ULI_AsiaPac) March 19, 2019
How AI and big data can work in real estate was further explored by Bing Wang, associate professor at the Graduate School of Design, Harvard University. She noted that real estate, despite accounting for 13 percent of global gross domestic product, shows low productivity growth due to a lack of innovation. Indeed, property technology (proptech) as a sector has only taken off since 2017, she said. However, “big players are now catching up with the startups, and technology is starting to become integrated with real estate,” she said.
Wang outlined two research projects that demonstrate how big data can aid real estate decision-making.
The first used data modeling to predict the performance of resort community developments in China.
Researchers identified 23 characteristics of such developments and asked people to rank them. The rankings were compared to a number of existing developments to come up with a formula that could be applied to predicting price movements. This formula was applied to another set of existing developments and predicted price movements accurately.
The second study tracked street footfall using mobile phone signals in order to assess use of several urban areas and compare that to theoretical models.
“Big data and AI can dramatically facilitate our capacity to predict what would happen to real estate values,” said Wang. “It can also predict how tenants or users would respond to the changes in the physical environment.”
It is not enough to simply collect data, she said. “Interpretation is going to be the key.”
More real estate companies will employ technology officers or analysts as the industry gets a grasp on tech, she said. Some companies are already ahead of the game: Wang highlighted a New York City landlord that can track real-time energy use at every building in its portfolio.
As part of audience involvement, an essential element of the convivium experience, two groups of delegates discussed the issues raised by the panelists and reported back to the conference. Concerns were raised about data ownership and privacy, although the audience concluded that people in China are less worried about matters of data privacy than are people in western countries.
Delegates also said they believe real estate companies already have a lot of data but do not have the capability to use it—though this observation to more likely to apply in developed markets. In emerging markets, real estate owners do not always have the means to capture data.
Use of technology to promote wellness is going to gain importance for the real estate industry in the future, the delegates said. Autonomous cars were also cited as a technology that the real estate industry needs to come to grips with.