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Big Data, Smart Cities, and the Future of Real Estate

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Big Data, Smart Cities, and the Future of Real Estate

Despite previous studies suggesting that the public isn't convinced of the potential of smart city tech to better their life, the authors of this research are optimistic.

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The technology hype cycle has proven a pretty robust model for analyzing the impact of new technologies, and it helps us to better distinguish hype from reality. Smart cities are ripe for this, as they are a confluence of so many buzzwords, from big data to the Internet of Things. A recent paper from MIT and the CBRE attempts to provide a grounded overview of the state of the market and the impact new technologies are having on real estate markets.

Despite previous studies suggesting that the public is not yet convinced about the potential of smart city technologies to change their life for the better, it's something the authors are broadly optimistic about.

"The extent and shape of the implementation of smart city initiatives will have impacts on land use patterns, real estate markets and the quality of life, " the authors say.

Solutions in Search of Problems

The report does identify a number of problems that are holding us back however, not least of which is a disconnect between the technologies being developed by companies and the problems cities have.

The report reveals that vendors seldom spend enough time understanding the specific problems a city has, and indeed how they are unique and distinct from other cities around the world. Instead, it's too often the case that technology is seen as the silver bullet for every problem.

It's a challenge compounded by a lack of real awareness among city planners as to what is out there. A recent study by the University of Reading found that cities don't really have a clear strategy for becoming smarter.

"With directly elected mayors in large cities such as London, Liverpool and Bristol, and more to follow in six large city regions today, city heads need to consider how big and open data would enrich the lives of their populations," the authors say. "In particular, those newly elected city mayors need to work hard to promote increased collaboration between authorities, the built environment sector, and technology companies, to harness the power of built environment data."

The report reveals that precious few cities in the UK have any real grasp of smart cities and what they offer. Less than half have an established definition of a smart city, with just 22% having any kind of action plan in place.

Follow the Money

Perhaps unsurprisingly, the MIT paper suggests that most headway has been made in areas such as real estate, where the use of big data has clear commercial potential.

It does, however, highlight a collection of early adopter cities that the authors refer to as consumer cities. These are cities with a high concentration of people working in creative industries, with both a tech-savvy market and a strong desire to make the city attractive to such people a potent combination.

The authors believe that these cities are more likely to emerge in smaller places, such as Tallinn or Austin. These cities don't have the severe barriers to entry that exist in larger cities such as London.

Despite there being a very real risk of over-hype, the authors are nonetheless confident that change will eventually happen, and the promise of smart cities will be realized.

"We expect innovations that substantially reduce operating and capital costs to be the first widely adopted. Technologies with clear, immediate benefits in terms of quality of life will follow. Finally, technologies that improve quality of life and the productivity of cities over the long run will progressively expand as localized demonstration projects prove their benefits to outweigh costs," the authors conclude.

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Topics:
smart cities ,iot ,big data ,real estate

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