ASEAN nations told: Smart cities are the next big thing in real estate

The United Nations reports that 55% of the world’s population currently lives in urban areas, and that number is expected to rise to 68% by 2050. In Asia, India’s urban population is expected to grow by 416 million and China’s is expected to grow by 255 million during that period. The Association of Southeast Asian Nations (ASEAN), expects that 90 million people will move into urban environments by 2030.

“Busy cross roads at rush hour. Night shot. Long Exposure, Light streaks.”

This expected population growth in urban areas around the world has prompted a staggering number of governments declaring their intention to make their capital and major cities “smart”.

Demand higher to make cities “smarter”

JLL, one of the leading property advisors in the Philippines, defines a “smart city” as an urban area that uses a set of policies and strategies using technology and data to deliver initiatives that improve inclusiveness, services and quality of life for the people who live there; drive efficiency, sustainability and improved decision-making for government; and, create a transparent, efficient and competitive environment for businesses.

More than 1,000 cities worldwide have begun deploying smart city initiatives.

In the Philippines, the urban setting is likewise starting to make cities “smarter”.

Makati is making its first steps to become a smart city. It has several initiatives lined up including the Makatizen Card, an all-purpose card that consolidates all benefits for residents; the Makatizen App, which allows users to report crimes and emergencies; the Makati Subway; and the free Makati Public Wi-Fi System.

Pasig is also making waves after its public safety project has been named one of the most outstanding smart city projects by the IDC Asia/Pacific (International Data Corporation). The project includes a system that allows real-time sending of incident reports, a transport network for better traffic flow, a flood awareness simulation tool, and solar-powered sirens aided by emergency calls and SMS for city-wide broadcasts during calamities.

Caloocan City has partnered with IvedaAI, a worldwide enabler of cloud-based video surveillance, data management and artificial intelligence-based video analytics, to improve its safety and security monitoring systems. The partnership includes capabilities such as license plate recognition and vehicle wrong direction functions in major intersections and roads, as well as facial recognition, people counting and intrusion detection capabilities in the city hall’s entry and exit points, street markets and crowded areas.

Moreover, megacities Manila, Cebu and Davao were among the 26 cities in the Southeast Asian region chosen to serve as pilot cities for the ASEAN Smart Cities Network.

According to market intelligence firm IDC, cities spent US$81 billion in 2018 on their smart city initiatives, and this figure will nearly double to US$158 billion by 2022.

Real estate at the heart of smart cities

Amidst the complexity of building smart cities, one of the often-overlooked aspects is real estate. It includes the homes we live in, the offices we work in and the places where we spend our free time. Although it has been viewed as a technology laggard, the real estate industry is catching up fast.

Based on “Growing Influence of Proptech”, a collaborative report by JLL and technology news website Tech in Asia, 179 proptech start-ups in the Asia Pacific region raised about US$4.8 billion of the US$7.8 billion invested globally from 2013 to 2017. The increasing prominence of proptech-covering technology hardware, software and services has a bearing on the investment, construction, management and sale or lease phases of a building’s life cycle.

These impacts are being felt from the time of a building’s construction to how a building and its utilities are managed and its spaces optimized. Proptech in real estate also offers tools to better track, collect and analyze data; drives sustainability—especially those of cities which manage large real estate portfolios, including government buildings, industrial parks and public spaces. It can also improve inclusivity, services and quality of life for people and can redefine cities through economic growth.

Identifying challenges to make solutions possible

While the promise of a smart city is attractive, delivering it is a challenge. To deliver true value, the smart cities ecosystem needs to address the following six key challenges:

  1. Cities are complicated – The size and scale of cities create many organizational challenges. Different authorities often have significantly different requirements and preferences regarding IT projects.
  2. Cultural change is difficult – Dealing with cities involves bureaucracy. Many government agencies have not adapted their business and operating models in years, which can make them risk-averse and resistant to new ideas.
  3. Governance is essential – Smart city governance uses technology to facilitate better decision making; plan, deliver and support smart city implementations; and share real-time data among governments, businesses and citizens.
  4. Solutions are complex – After overcoming the organizational challenges, cities are left with their biggest challenge yet: identifying and deploying a solution that can be scaled successfully.
  5. The vendor ecosystem needs to be re-examined – cities must identify products or solutions that deliver their promised value. No one entity is capable of doing everything that is needed in smart cities, so consortiums are key.
  6. Funding is limited – While smart city market opportunities are very attractive to technology vendors, their complexities and high levels of risk can inhibit further development.

A smart city has hundreds of solutions deployed across a diverse range of government agencies, making it difficult to grasp where and which solutions are applicable. To simplify this complex solution landscape, JLL has grouped applications into the following seven categories:

  1. Property – Cities own and manage various types of property, such as residential and commercial buildings, and recreational and agricultural land. Wearables for construction site safety; AR/VR for site and office build-outs; predictive maintenance for building management systems; drones for site inspections; fingerprint or facial biometric access.
  2. Environmental – Tracking air quality, waste water and noise pollution, combined with green initiatives, can help cities secure a smarter, livable and sustainable future. This includes real-time air and water quality monitoring; smart recycling initiatives; smart streetlights and sustainability measuring.
  3. Utilities – It will be necessary to transform the method of operation and support for major utilities, including energy, gas and water.
  4. Healthcare – New technologies can improve patient care though in- and out- patient diagnostics and treatment. This includes telemedicine; wearables for remote patient diagnostics and electronic health records.
  5. Mobility – Smart technologies can enhance public transportation, vehicle sharing and uptake of autonomous vehicles. This includes real-time information on public transportation and traffic; digital payments for public transport; shared vehicle services (e.g. cars, bikes, scooters) and intelligent traffic signals.
  6. Safety and security – Using surveillance and analytics to monitor the safety of government sites can help ensure public safety and reduce crime.
  7. Citizen services – Digital platforms can increase inclusiveness by better engaging citizens in politics, society and government. This includes citizen engagement through social media channels; digital services (e.g. tax filing, retirement planning); AR/VR sightseeing applications; career centers and digital training and education.

Through extensive research and consultations with experts to better understand where the Asia Pacific region is in the development curve with regards to smart cities, JLL has the following key findings:

First, people, not technologies, make a city smart. It is the people that enable smart cities to reach their potential. Resourcing and implementation are key factors holding back the development of smart cities. City ecosystems must learn to collaborate.

Second, we need to ignore the hype and focus on what’s real today. While it’s important to plan for the future, the main effort should focus on delivering solutions in the near future that benefit existing cities, the businesses operating in them, and the people living, working and playing in them.

Most importantly, JLL believes that real estate is at the heart of any smart city. The industry should work closely with cities to create special interest groups and identify new use cases and technologies that will influence the built environment. It should also look to liaise between cities and the technology vendor ecosystem in all matters related to property.

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Introvert, wanderer, blogger, foodie, a hip-hop music writer, and one of the co-founders of a tech start-up company called GigsManila.