In an ageing society and where home affordability is an almost unbearable burden for young people, will the digital devaluation of dwellings affect the intergenerational transference of wealth and be a black swan scenario for economies?
Hands up if you are worried about the resale value of your non-electric non-driverless vehicle!
Yep, that’s most of us. The media likes to use the term “digital disruption” but if you are on the losing side of that disruption its pure “digital devaluation”!
Now, if you own a condominium or apartment put your other hand up, and your feet, and anything else that is handy.
The same innovations devaluing non-digital vehicles can massively devalue non-digital dwellings — houses, townhouses, condominiums, apartments and so on.
And, let’s face it, the financial impact on us from this will be much greater than that from our “soon to be old school” SUVs.
Some of the digital technologies creeping into existing dwellings are familiar to many of us now. Artificial Intelligence (AI) already controls some home systems — lighting for example, electric vehicle (EV) charging points in the garage, and ‘smart’ fridges that will order your groceries. Separately, each can be very useful, but if added to the dwelling in a non-integrated non-human centred way, their potential is limited.
It’s a bit like the difference between an internal combustion (IC) vehicle with a ‘bolted on’ hybrid system and a Tesla. The hybrid system might let you travel a handful of miles or kilometres on electric but after that you are back to burning fossil fuels with the promise of slightly lower consumption. Compare that to a Tesla that is designed and built from the ground up to be fully electric, fully digital and “autonomous ready”.
And this comparison brings us to the root cause of the digital devaluation of dwellings.
There are rapidly evolving digital technologies starting to appear in multi-tenanted dwellings and it is the novel combination of these technologies that will by design or default be the catalyst for the exponential change of digital devaluation:
Innovative products and improved service levels with a mix of prestige and price that drive FOMO (fear of missing out) and market share.
I’ll talk about overall “integration” or combination of these exponential technologies in a moment, and the significant implications for social policy, but here are just two of the rapidly emerging digital dwelling exponential technologies now making an appearance.
AI powered digital humans as concierges
Artificial Intelligent (AI) powered digital humans are ideal as public facing concierges in banks, retail stores, drugstores and so on and initial deployments have already started. In multi-tenanted dwellings digital humans can fulfil any number of informational roles typically provided by a concierge where one isn’t available or lacks bandwidth for busy times. This could include booking facilities within the complex.
For example, Soul Machines has developed Mia for Madera Residential in the USA, and UneeQ has developed Mel for the Pace Development Group in Australia. The use cases are far reaching but not into the far off future. AI powered digital human concierges or community companions in the near future will be seen in retirement apartments and supported accommodation, working in combination with smart sensors.
Smart home sensing for health, safety and independent living
Smart home sensing is the installation of sensors that can monitor daily activities in the home and then send this information to a system to trigger alerts and provide data for analysis that can detect and forecast health or safety problems. A great example is the University of South Florida HomeSense System.
The HomeSense System can monitor activities like large and small appliance use; accessing rooms, food storage and wet areas; flushing toilets, opening medicine cabinets, time spent on chairs or in bed and entering/leaving the home. The HomeSense system provides reassurance and support for continued independent living for the resident, and also reassurance for their family who lives elsewhere.
The “Copernicus Moment”
Each of these existing and emerging digital innovations for the home has a value proposition but each also carries its own risks and costs. Some have infrastructure requirements that would need homeowner corporation and/or regulatory approval, and some don’t make sense economically unless everyone in the building shares usage and installation/operating costs.
It can all look a bit fragmented at first, but what if we look at it through the same lens Lucien Engelen uses to examine digital disruption on the health care sector. Engelen’s ground-breaking book Augmented Health(Care): the End of the Beginning looks at all of the possible digital disruptions in healthcare from the “patient in the centre” perspective, what he calls the “Copernicus Moment” for healthcare.
If we place the resident at the centre of the digital dwelling possibilities perhaps we can start to create “augmented living”.
Baking these into the design of the property at the start means we get a “Tesla” building not a “hybrid” building. One where the software and hardware are optimised for ease of use, effectiveness and future “over the wire” software upgrades as new or improved technologies are introduced. A seamless and truly natural experience where we just take what we can do for granted rather than be constantly mystified as to what we can and can’t do.
A note of caution here, and one I constantly bang the drum about. This requires comprehensive codesign, not just a dash of resident “consultation” and user testing.
For example, an AI powered digital human is not just an avatar. It is a carefully co-designed amalgam of avatar and AI. There are a lot of “avatars with pretty faces” out there at the moment that don’t represent broader society.
Also, the media confuses everything from Chinese news reading avatars to government chatbots with digital humans; they are nothing of the sort.
The same is true for home sensing. It is one thing to add voice control to a few lights. It is another thing altogether to add sensing and control systems that augment resident health and safety to support independent living, rather than just add convenience.
Sensors built into a property’s reticulated systems — power, gas, water, sewage, HVAC and so on — and then connected into a single wireless digital control system will function as an augmented ecosystem creating and sustaining value. Add-ons to individual taps, light switches, power outlets and so on, while delivering convenience for the period these add-ons are in place, will likely achieve less sustained added value.
Who will want these features you ask? In reality, the answer is everyone regardless of life stage. In particular however, people planning to retire into a multi-tenanted dwelling (or their families who want to know they are ok). These exponential technologies are one of the single biggest enablers for helping people safely and confidently live independent and productive lives.
And then there is the prestige and FOMO factor. Who will want to live in a “dumb” building! Interested property developers might start by reading Rene Bleeker’s insightful vignette on “The Impact of the Fourth Industrial Revolution on Healthcare Real Estate” in Engelen’s Augmented Health Care.
Who will be affected?
Which brings me to the problem of digital devaluation of existing multi-tenanted properties.
If you own your own stand-alone (detached) single residence property you can make the digital changes that make economic sense to “augment your living” and retain or even enhance your property’s value.
If you own a home in an existing multi-tenanted dwelling (like I do) well, all I can say is bad luck.
Digital innovations such as monitored electric vehicle charging points in the building’s garage or basement will require costly construction work which won’t fit within the homeowner corporation’s existing budget. Individual owners who are likely to sell in the next 5 years or so won’t support a separate lien for the work.
Wireless communication from room to room might be patchy because of the wall materials or room layout. You can’t dig or drill into engineered concrete floors in your own place without expensive engineering appraisals approved by the homeowner’s corporation.
Existing common property power, plumbing and communications infrastructure might not be up to the task and access will be strictly controlled. Local government multi-dwelling regulations can be an issue: far more so than for the owners of detached homes.
We can all point to the person at work responsible for delivering or avoiding digital disruption, but most condominium and apartment buildings don’t have a Chief Information or Digital Officer and, as they say, “failing to plan is planning to fail”.
Who will help the millions of home owners facing digital devaluation in the near future?
Should we be worried now, or is this a problem we can ‘kick down the road’?
According to Ross McIntyre of Wattblock:
“EV Ready” buildings alone may attract a premium property valuation on market. There is some case study evidence from San Francisco, such as the Lumina building, which shows there is a strong demand for EV charging facilities in apartments. Australian developers like Sasco are now marketing “EV Ready” buildings.”
And according to Zion Market Research the global market for home healthcare services was valued at $229 billion in 2015 and that number should reach $391 billion by 2021. Technologies like HomeSense and Digital Human Health Coaches can capture a big part of that market.
All it needs is for investors and developers to “connect the dots” with the other digital dwelling technologies in new property developments and I believe that the value of legacy buildings will start to show a relative decline.
Is it all just about ‘show me the money’?
As motivating as a hit to our bank balances can be, this is much, much, more than a personal financial issue.
I have written and spoken many times about how I see the 4th industrial revolution as the 1st humanitarian revolution.
Exponential technologies, whether installed in a single owned home or multi-tenanted dwelling, can help many of us live powerful and independent lives. For many, these exponential technologies and servicing models will help defer or even avoid the need to move into supported accommodation or an aged care facility. For the aged, infirmed and people with disability it can mean the difference between independence and reliance.
Do the policy makers truly understand the positive potential of exponential technologies to up-end decades-old servicing models? I doubt it.
Notwithstanding the significant social and economic upside, there are many facets to this challenge.
Most significantly, for the young, the digital devaluation of properties could potentially affect future wealth and financial stability. The intergenerational transference of wealth may not occur as envisaged.
These are not issues that property developers, building managers and individual homeowners can solve.
We need policy makers — across social policy, health policy, infrastructure policy, fiscal policy — think tanks and academic institutions — to work creatively and strategically to avoid this black swan scenario.
This is one of the greatest challenge since the rise of the information platforms.