Housing
CHAPTER 3:
DISCOVER MORE
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No one in the property industry would claim that technology is the main driver behind the mass of changes we have seen in recent years in residential, particularly the rise of service driven assets like Build-to-Rent.
Yet, 5G will impact Britain’s homes, whether it is simply improved downloading times or through developers behind service assets like Build to Rent offering it as part of the  lifestyle package to their residents.
EXECUTIVE SUMMARY
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Peter Hardy
partner - Adddleshaw Goddard
Peter is the lead of Addleshaw Goddard’s Housing Sector group and has a large practice in the residential development sector, primarily acting for developers and funders. He is heavily involved in developments in the build to rent sector
Facilities management - Trend towards smart buildings which better manage their energy consumption, lighting, safety systems. Autonomous systems will make life easier for managers and users

Smart homes - The Internet of Things within homes will mean the benefits cities will gain in terms of reduced energy usage can be replicated at the domestic level

Consumer tech revolution - 5G’s greater capacity and speed could accelerate consumer tech revolution Mass market AR and VR can trigger a home entertainment revolution

Virtual assistants - The Alexa and Google Home of tomorrow will be able to do so much more as developers will be unshackled from today’s speed restrictions
Main impacts of 5G on Residential
Within the residential sphere, it is important to separate out the benefits for consumers: Capacity and speed will accelerate consumer tech revolution
New smart home technology will enable intelligent facilities management
Mass market AR and VR can trigger a home entertainment revolution
Autonomous systems will make life easier for managers and users
BIGGEST OPPORTUNITIES OF 5G
More devices will increase cyber-security risks
Potential for greater isolation and societal withdrawal if games get too real
Consumer backlash against ‘creepy’ tech
Big Tech hearing, seeing and using too much of your private life
CHALLENGES
INTRODUCTION
HOW WILL THE HOME CHANGE?
WHAT DOES IT MEAN FOR DEVELOPERS AND OPERATORS?
IMPACT OF 5G BY SECTOR
WHO’S ALREADY OUT THERE?
People have been building rented housing for years, long before electricity or mobile connectivity shifted the tectonic plates of how our lives work. Indeed, many of the buildings we study, work and live in have been around for decades and in some cases, centuries. The innate ability to regenerate and reinterpret buildings and spaces sits at the core of cities. Our ambition with Moda Living is not to “raise the public consciousness” or anything silly, it’s very simple: to provide a great living experience. As with any service industry – whether it’s aviation, dining or a sports event – this begins and ends with frictionless service and must include little touches along the way to excite and delight the customer. While we don’t claim to be futurists and cannot imagine all of the many amazing innovations that may come online thanks to 5G, what we know is this: creating a brand and using long-term, institutional capital to fund housing means we have to take a long-term approach. We need to future-proof the assets we create and enable tomorrow’s wizardry to fly unaided.  At the core of this is fibre. The attitude any proper owner has to take is that connectivity is as vital as water, heat and power. While we may try to block it out, anyone who’s gone through Britain’s university system will recall that it was often possible to survive for a few days at a time without any of those three things. Trying to get by without access to social media or email nowadays would be impossible.
THE LANDLORD’S PERSPECTIVE - MODA
5G will revolutionise residents’ experience of BTR
Enabling buildings to monitor, in real time, information around footfall can optimise lifts or regulate temperature or lighting, which in turn could impact residents’ overall mood and wellbeing – a key focus for us. While respecting privacy at all times, the use of geofencing and smart home tech will empower residents to personalise their apartments and control more and more things using voice commands – rather than needing to open apps on phones as we do today. There will of course be design and technical challenges, particularly with dense, tall buildings. But Moda’s approach is always to collaborate and partner with best-in-class suppliers. And while some tension exists between parts of the property and telecoms industries, ultimately, our customers will demand 5G. And with a £2bn pipeline of 7,500 apartments, we have a responsibility to enable this to happen. Our strategy has been to focus on being in the best location in any city and creating highly amenitised buildings that offer residents a better living experience by providing, on tap, all the things they would otherwise have to pay for or organise. We’re prepared to try things and are realistic enough to know that no everything will fly. But by investing heavily in the right infrastructure, we’ll easily be able to adapt spaces and move with the times. Crucially, we view technology infrastructure as an operational expenditure – not simply a capital cost. Like buildings themselves, technology will evolve and whether customers want to be able order an Uber to work using a voice command or to play video games on a smart wall, then our job is to enable that. Saying all that, while a hologram Tupac rapping at Coachella is pretty cool, I don’t foresee a future with hologram concierges offering local dining tips just yet.
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Make no mistake though, the wonder of 5G won’t be about uploading holiday snaps a bit quicker to Instagram. The potential for fully flexible spaces – flipping from wellbeing and relaxation to immersive gaming – are huge.
One example is that it will enable seamless interaction between people thousands of miles apart, with no lag, no cut out, no fuzzy images or blurred lines. The possibilities are that we will have networks so pervasive that two people will really feel they are in the same space when are connected through the 5G network.  Let that sink in: because it means with the right supportive tech we will remove the need for actual physical meetings. 5G is going to completely change human experience and the way we live in the future. 
In terms of real world examples, this means as many as our imagination will allow. A lot has already been written about assisted living in instrumented homes, which will help people to stay at home longer. Heartbeat, blood pressure and other important biometrics can be measured remotely, reliably, and collected and measured effectively through new 5G enabled tech.
The personal touch of 5G
Creepiness vs Convenience
This “convenience factor” is starting to grow in importance; from systems that can monitor and water plants, to filling fridges automatically, to taking deliveries.  While this will present issues in terms of data, security and hacking (see box below), industry professionals have the view that consumers will exchange their data more willingly if there is a demonstrable convenience. This has knock on social effects for how we spend our day.
To date, consumers have willingly given up their data at the cost of free services from the internet giants.  However, this is not guaranteed to remain the case and it is an area that is ripe for government regulation, which has already started with the imposition of GDPR.
Given that automation is key to 5G, it will also become increasingly important to automate the manner in which 5G systems comply with the security and privacy requirements of 5G. And given the vast pools of data devices will throw off - and the potential to catch all manner of willing or unwilling actors in the flow - caution may be advised.
While most people are well aware that CCTV is watching us always, they are less likely to be happy with the use of facial recognition identifying people going about their day to day business. Recent news items concern facial recognition in Britain and in other parts of the world on private property and through police body cameras has generated a host of media storms. The EU is very hot on this and there seems no reason why the UK post Brexit, would take a massively different view.
Consumers may also have concerns about everything being located in the cloud and the fairly regular instances of hacking causing major data breaches. They may also be concerned if they believe they are capable of being individually identified by facial recognition with this being monetised or (worse) hacked and used against them.
The consumer undoubtedly benefits from the services now offered by the likes of Amazon, Google and the rest. But it is a moot point as to whether the balance on the use of their data is right, whether consumers have the means to protect themselves (and the extent to which they could rebel) – as otherwise, data users might find themselves regulated in its use.
Data-use scepticism
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Professor Dimitra Simeonidou ,
Director - Smart Internet Lab, University of Bristol
So much of the discussion around 5G focuses on technology development: automation, AI, machine learning.  But perhaps it is important to focus on its potential transformational effect on our lives and society.
5G connectivity will be fundamental for addressing problems like exclusion, access to health services, barriers in education, opening new opportunities for skills development. Children could be taught music by teachers they would otherwise never have access to, brilliant school teachers could reach everyone. 
Then there is the impact on socialising: two people speaking to each other, but also being able to read the expressions on their faces without delay. A child would be able to touch their parent in another country, in real time, with emerging haptic technologies. Friends could live thousands of miles apart but enjoy the same football match.  Clearly, the effects on automation and connectivity will be huge. But how it is going to reach our lives and the spaces in which we live, breaking the barriers of space between people. That is the most important thing that can happen.  Simply: it is going to break the human and digital space.
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But more crucially, we can also address other important issues such as loneliness and social interaction.
Polling suggests despite the media and political controversy around data rights, the general public may be unbothered. A recent survey by the Data and Marketing Association revealed almost two-thirds of UK consumers are happy with the amount of personal information they share, as well as falling concern about online privacy. However, research by the RSA revealed a generational gap when it came to comfort with data-sharing, as well as cross-cultural differences, with the USA being far more accepting than European countries.  Then there is of course the difference between what economists call revealed and stated preferences, or what people say they want and what they actually do. Consumers may claim to care about how their data is used but in reality do little about controlling what they share.
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“It’s going to give us more time, as we automate more aspects of our lives,” says Phillipa Wagner, Director of 23Lab, Ennismore's innovation lab.  “We have already outsourced our transactive memory, and we are going to outsource more and more – so how can we use that leisure time for the community?”
Watkin Jones PLC has evolved over its 200 years plus of history, and is now one of the leading Developers of Student Accommodation, having developed over 46,000 student beds. The Group is now applying its skills and experience to the build to rent sector, with an additional pipeline of over 2,000 units. The group’s management business Fresh Property Group operates over 17,000 student and BTR apartments all over the country.
GRADUATING TO 5G
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Alex Pease,
Group Investment Director, Watkin Jones
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Rebecca Hopewell,
CEO, Fresh Property Group
Alex Pease, group investment director for Watkin Jones and Rebecca Hopewell, CEO  of Fresh Property Group, discuss what it's been like catering to the most data intensive generation ever, and how they’re preparing for the new world of 5G.
Interview
Q. Will 5G help create new value in terms of how you report your performance as an operator?
RH. Yes we believe it will, enabling the business to utilize   more sophisticated data sets to prove that particular strategies deliver better value.
AP. A good example is heat and energy usage analysis. The capacity of smart meeting allows real time data on a building performance providing instant feedback on a building's performing driving operational efficiencies into buildings and influencing future design, construction methodologies and costs...The advent of 5G will better enable the collection of building and customer usage data informing both development and management strategies.
Q. As people have become more reliant on their online network, how have you seen this become a factor when planning new buildings?
AP. Internet provision and capacity in building is as essential to customers as the standard utilities. PBSA has been a market leader in high speed, high capacity managed internet solutions for customers. Standard provision in PBSA is cat6 cabling and 250mb broadband, this has historically been significantly ahead of the PRS market. Given our experience in the sector we fully understand the importance of this provision for customers, but are aware of schemes that have not had the expected level of provision, which has impacted on letting and incurred significant retro fitting costs.
Q. Did you see that the international students had additional expectations on top of your UK students?
RH. International students have high requirements in respect of internet provision, but this is a factor across the whole student population not just international students. In recognition of ever increasing demand and 5G roll out we’ve started to introduce an element of Fiber into some of our new building to future proof and further boost capacity. I suspect we're one of the earlier movers in that space because there's still not that many people future proofing with fiber due to the cost.
Q. What is the cost difference on a technical level? How do you explain to the board how much this is costing?
AP. the cost will vary depending on the size and design of building. On our most recent project there was an additional cost of circa £300,000. However we would not expect that differential will remain forever. There is also a question of cost vs value and if the fiber capacity improves value to the customer then this also needs to be factored in to the equation.
Q. When you're planning something that'll be finished in the next year, what infrastructure considerations are you taking into account to prepare for 5G?
AP. As a manager we work very closely with the Owners and developers of new buildings as well as the market leading internet providers to ensure that there is surplus infrastructure capacity to accommodate a road map of enhanced provision. Whilst it is difficult to get clarity about the roll out program for 5G.  It is going to come, and it will be a key marketing feature for enabled buildings.
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The Investor's Perspective
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Ted Orf,
Investor, Revolt Ventures
Interview
Q. What is the role of 5G in supporting new uses of technology across property and construction?
A. The majority of proptech businesses have largely been improving or speeding up existing services or applications. There’s clearly immense value in processing big data, enabling greater levels of communications or speeding up analysis. But incoming 5G technology will change the game in ways no one has yet defined. Smart businesses focus on identifying genuine problems and find ways to use technology to create a better answer. One of our recent investments was to flatfair, a fintech business using payment technology to replace rental deposits. Tenants swipe their debit card – as they would do checking in to a hotel – and the platform’s technology securely enables them to pay what they owe when they depart, while the landlord or agent also benefits from financial protection. By tokenising a tenant’s debit card, there is no need for them to buy insurance products – which is what other deposit replacement firms sell. Far more within the B2B space, another of our recent investments was to Disperse, an automated construction site monitoring business. It helps construction companies automatically capture and process visual data from construction sites, and is one of a number of startups setting out to disrupt the trillion-dollar construction industry, a sector not renowned for much efficiency.
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A lot is written about drones delivering consumer goods and electrics, but as with much of the disruption 5G will cause, many of the more profound benefits will be across the B2B – rather than B2C – landscape.
Q. How do you measure the obsolescence risk of real estate with tech which is so fast changing?
A. Smart developers have recognised that, when developing a building, it isn’t the CFO making the final call on design and specification – it’s the company’s staff. While there will always be a market for economically-priced buildings, anything being newly created will have to meet the very highest standards of sustainability and connectivity. And in many regards, both of these things are highly complementary. No one will be able to predict what applications and technologies we will have over the next decade, or even five years, but provided buildings are adaptable and possess the right critical infrastructure, evolving to meet needs will be less painful. The benchmarking provided by the likes of Wiredscore will provided a crucial way to score a building’s performance. But whatever scoring we apply to design – everything will depend on operational performance.
Q. Where do you draw the line between tech style valuations and more tangible real estate valuations when looking at protect businesses?
A. The fundamentals of real estate investment have certainly shifted far more towards operationalized investment, but the underlying objective - generating income – won’t change.  Some are clearly attempting to game the system by masquerading as tech businesses but markets are smart and will see through this. There is certainly scope for technology to support profit-generation, whether it’s through smart management or audience engagement. And being able to accurately measure the productivity or wellbeing benefits of particular assets could similarly create value. But it has to be tangible.
Q. What could real estate learn from other verticals and how it supports and integrates innovation within its core business activity?
A. Aviation has been ahead of the curve for decades, particularly when compared to construction. But it benefits from a much tighter supply chain and far more generous government subsidies on all sides of the Atlantic. That said, even retail – not always recognized for being ahead of the game – has led the way, particularly with early 5G-style systems. Ocado’s much-lauded logistics set up is one example of this.
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