The Philippines economic development has always been closely tied to infrastructure development and Duterte’s Build, Build, Build increased infrastructure spending to 6% of GDP from 2017 to 2019, with a total of 932 Billion Pesos allocated to flagship infrastructure projects.
With a third of companies listed on the Philippines Stock Exchange Composite Index having a direct or indirect relationship with the real estate and infrastructure development in the country, we had to start off AIBP Insights Philippines last week with a closer look at how greater value can be derived from this core sector through data insights and application of digital technologies.
This was a continuation of some of the key themes we have seen in our enterprise discussions this year – how data collaboration could yield exponential value to industries that have been impacted by COVID19. The discussion on real estate and infrastructure development is especially timely with the sector braving pressures from multiple fronts: halting of construction, closure of malls, the changing face of retail, growing demands from tenants, the need for offices being questioned as work from home becomes the norm – the list goes on and on.
The question was: how can city planning and real estate development move away from only looking at space and functional use and begin to explore developments from the end-user perspective to create memorable experiences – perhaps even Real-Estate-as-a-Service.
An Overview of Philippine’s Build, Build, Build and Current Technology Use in Philippines Built Environment
We had Aileen Zosa, EVP and COO of Bases Conversion and Development Authority share about the current projects by the administration and the upcoming developments they are working on to spur economic growth and jobs creation in the Philippines. Theresa B Deyto, Senior Project Manager from Maynilad, also shared about how they are using digital twin technologies to better manage Maynilad’s water plants to meet consumer demands. She mentioned that their implementation of BIM and DCS technologies came in especially useful during this COVID19 period where the team had reduced mobility but increased demand and they were able to address operational requirements remotely.
The Impact of COVID19 – Building Resiliency, Community and Changing Needs
Theresa’s point highlighted an example of how technology has enabled her firm to weather the stress of the pandemic a little better and we asked Ivan his thoughts on how his firm is addressing the brunt of office space demand. Ivan said that the current crisis is unlike what he has experienced before and with demand and supply both impacted, City Developments had to look into how they can better address the change that the new world will present which includes interacting with the more digitally connected customer. In their discussions with the tenants, they have improved their smart building platform, CityNexus, in preparation for the tenants returning to work. New features like the self-service air quality check are highly rated by the tenants who want to have a safe return to work.
The importance of addressing changing needs is echoed by Aileen Neoh, CEO and Founder of Aecus Asia who mentioned that in the midst of major real estate tenants recalibrating their real estate footprint, they are also looking at coordinating multiple data points to better address the safe return to work. Overlaying crowd data with air quality data could, for example, create a more accurate picture of the safety of a particular location.
In the end, it still boils down to communication with the client and users, especially in a time like this, the sense of community will need to be created through digital means. Pat Bunsongsikul, Commercial Property Development Lead for Hitachi’s Digital Smart CIty Solution Division, echoed what Ivan said and added that in their work with real estate developer clients to enhance resiliency, they embark on co-creation projects that help to identify a road map of digital services from the design stage. These digital services allow the developer to build a more sustainable business model that can better withstand the shocks of demand and supply of real estate through new services that provide value to the end-user. Through a data-driven design, they have been able to run proof of concepts and pilot programs on existing brownfield developments, further future-proofing planned real estate developments.
Data Insights for More Effective Urban Planning
Data-driven design is also important to urban planners of a city, perhaps even more so. Mr. Tran Ngoc Linh from Vietnam’s Urban Development Agency, Ministry of Construction shared about how they have to coordinate multiple points of data and the need to collect more accurate information in order to achieve the right data insights. A challenge that he highlighted for Vietnam was its rapid urbanisation. Often, population information is collected at a much slower rate than what is actually happening and therefore, cannot accurately inform on the population density, resulting in difficulty in land use and road system planning. In order to better address these issues, an inter-ministry task force has been set up to coordinate a new urban data lake but it has faced some difficulties around collaboration.
Ai Ling, Head of Urban Planning and Design, Keep Urban Solutions agreed that a common data lake can help spur innovation but what is important is also to define the problem, especially when there is not a one size fits all solution in urban planning. She highlighted a case study of congestion that would typically mean a widening of roads as a solution. However, under further scrutiny, it was found that the traffic was due to drivers looking for parking lots and the simple solution was to direct drivers to an available parking lot instead of the more costly way of widening the roads. As urban planners, it is often important for her to engage multiple stakeholders and understand holistically the problems. Technology is a way for her to address these problems rather than being the end in itself.
From Arnie who leads the Estate Management for Megaworld, the digital transformation of Megaworld started 2 to 3 years back with the iTownship initiative. They realised that their different properties, from the hotels to malls to residential properties and office buildings, could very likely be serving the same customer and there is value to provide a more cohesive service offering. Despite the differing digital maturity of the groups, there is a coordinated effort to involve the leaders of the different companies within a committee which sets the direction for Megaworld’s future.
Exploring The Future of Real Estate
“The real estate space will change – trends will not stop, nor will it revert. There is a need for agile transformation of space, to be able to turnaround the space in terms of usage, occupancy or even new amenities for occupants. Data can give us insights and technology can then enable us to transform the space.” This view by Ai Ling nicely sums up why there is a need to rethink the future of real estate.
For Ivan, it is important to view digital transformation as a journey instead of a destination. For City Developments, Ivan is looking to constantly get feedback from the customers and coordinating the various data sources to provide a relevant solution, even as customer expectations change. By focusing on improving each iteration rather than trying to get to a final perfect product, he is looking to create an open culture that is responsive to feedback and willing to embrace new ideas.
The panelists brought up a few challenges that currently inhibit this shift. Arnie mentioned that there is often a stubbornness that causes technology teams to stick to obsolete technology especially if the project has been going on and has yet to reach completion after a couple of years. Aileen from Aecus Asia mentioned that the culture of real estate tend to be a very traditional one and in transforming “dinosaurs to chameleons”, real estate and facilities managers have to gain a new set of IT skills which may not be easy. Issues around cybersecurity and data transfers may not have been issues that were common for traditional real estate managers but it is now part and parcel of the job.
When looking at new business models, the need to create partnerships and collaborate with stakeholders is echoed by several panelists. Yolanda Lucas, VP and Head of Program Management, said that without support from internal stakeholders like Dr. Kiko, it would be difficult for her team to come up with the best designs to meet the client’s expectations. For Ai Ling, it is about having a shared responsibility across the different real estate stakeholders to innovate the business model. The traditional real estate developer has to shoulder a lot of risks, but if there is a move to performance driven contracting, or in Dr. Kiko’s example – a shift from CAPEX to OPEX costs, this will help to lower the entry barrier to drive innovation in the real estate industry.
At the end of the day, with data and technology and the cooperation of the multiple real estate stakeholders, we hope to achieve what Pat summed up as, an increase in the quality of life for every individual – and that is a future we can all look forward to.
If you are keen to participate in the future focus group discussions, feel free to get in touch with us at [email protected].
18 October 2020