Far-reaching influence of digital technology on the real estate sector set to continue

Aviva Investors has commented on the impact digital technology in all its forms is having on real estate from an investment perspective.

According to Aviva, technology is affecting the drivers of real estate demand and supply and also influencing the form, function and management of real estate. Richard Levis of the global real estate research team at Aviva Investors said that the boundary between traditional services and technology sectors will become blurred, more human tasks will become automated, and the use of digital devices and cloud computing systems will enable more potentially-disruptive business models to emerge. He added: “Together, these developments can lead to changes in the underlying occupier demand for real estate. But while the need for flexibility and efficiency from business space will grow, technological developments could also improve the ability of buildings to respond.”

In the office sector, Levis said: “Office markets should be the main beneficiaries of these expected developments. We expect this to favour existing tech clusters and core office markets in the major city centres of advanced economies.” But cloud computing could change traditional IT infrastructure, leading to new and innovative architectural and design solutions for offices.

Online shopping has had a profound effect on the retail sector and Levis commented: “Although online shopping will continue to grow in importance, we believe physical property will remain critical to retail as the physical distribution, collection, return and ‘show rooming’ of goods will go on.” Levis added that technology will give more information on the use of buildings. “This should lead to improved energy, water, waste and space-use efficiency leading to increased demand for adaptable buildings that can integrate the appropriate technology.” he said. Levis concluded: “The ongoing development of digital technology will continue to have significant impact on commercial real estate across the globe. There will be both opportunities and risks, and we recommend real estate investors assess their exposure in the light of changes expected to occur.”