Energy prices are soaring at a substantial rate and becoming a cause of concern for global corporations. Not only developing nations, but even developed nations of the European Economic Area and North America are facing the brunt of rising energy prices. The energy prices in Sweden and Norway increased between 20-25%. Denmark, Belgium, and Germany are not far behind. The prices for household electricity were around €30 per 100 kWh in all three EU nations in the second half of 2019. There was an overall increase of 1.7% in the EU in 2019 compared to the previous year.
The energy prices remain fair in UAE due to the massive subsidies offered by the government. However, these subsidies are costing a fortune to the region and are slowing down the pace of its economic growth. According to the leading consulting firm, Strategy& Middle East, in the last two decades, the Gulf States have spent over US $120 billion on energy subsidies, while in the UAE, the accumulated figure stands between US $7-10 billion. The current pricing structure is not sustainable in the Gulf region and if it continues, the region will incur an extra cost of US $150 billion on energy subsidies.
The energy prices won’t bring any relief and will continue to surge in the coming days. The efforts are being laid to explore novel solutions for conserving energy and reduce extortionate energy bills. One such solution is PropTech.
PropTech: Meaning and Significance
PropTech is a widely used term for property technology. It commonly refers to leveraging information technology infrastructure to assist corporates and individuals in buying, selling, and managing real estate. PropTech streamlines the real estate sector processes by connecting buyers, brokers, sellers, lenders, and all the parties involved using virtual reality to walk through properties and funding upcoming real-estate projects. PropTech is transforming the small property management firms or businesses in UAE through technology, by changing the way individuals buy, rent, sell, design, construct, and manage residential and commercial properties. The evolution of PropTech is to continue, with several new PropTech initiatives leading the way in UAE such as – smart cities and buildings (Smart Real Estate), the sharing economy, the home building industry (ConTech), and the finance industry (FinTech). ConTech and FinTech are considered to have close ties with the real estate industry.
The Need for PropTech
A vast majority of energy is consumed in office space and they have emerged as a new colossal ecosystem of energy consumptions. According to Green in Future, the buildings account for approximately 40% of global energy consumption. The urge for PropTech can be realized from the fact that around 60% of buildings in the world’s fastest-growing cities are yet to be built by 2050. This will further increase energy consumption by several folds.
Offices are quite infamous for inefficient use of energy which leads to the wastage of millions of hours of monthly usage and also escalates the energy prices. Extreme climatic conditions are also responsible for raising the consumption of electricity at offices. However, it is crucial to create an environment to monitor the energy consumption of the buildings and undoubtedly, PropTech can play a decisive role in making this happen. The implementation of PropTech is facilitating modern architects in creating eco-friendly buildings and in maximizing the usage of their materials through unique construction designs. PropTech has been instrumental in the development of Green Buildings which minimizes the consumption of energy and also reduces the overall energy cost.
PropTech is a win-win game for the corporate as well as the developer. It enables the firm to cut the cost and create a brand image of an environment-friendly company. The implementation of green technologies will result in developers gaining ‘Green building certifications’ without hassles, which will assist real-estate firms in targeting elite clients with deeper pockets.
PropTech in Energy Conservation & Cost-reduction
PropTech plays a decisive role in the creation of smart buildings. Smart buildings are the structure that uses technology to automate a building’s operations including lighting, heating, and security. Smart buildings increase efficiency to minimize energy waste. PropTech has also paved the way for the ‘smart city’. The concept of the smart city refers to urban development that integrates information and communication technology (ICT) with IoT solutions to manage a city’s assets such as information systems, schools, transportation, water, and law enforcement, etc. PropTech also facilitates the collection of data to improve the efficiency of urban informatics and technology and in minimizing the energy and operational cost.
PropTech conserves energy by automatically adjusting the lighting, temperature, and ventilation based on the requirements at a particular time. The research suggests the energy expenditure accounts for almost 19% of the total operational cost of a building. For most of the small-scale and medium-size companies, a 10% reduction in energy can positively impact their profitability by 1.5%.
PropTech also curtails building operation costs by almost 18% by fluctuating the ventilation level depending on the number of occupants at a particular time. The retail firms use sensor-based footpath tracking to assist their store managers in effectively planning the staff at a particular time based on the customer flow, adjusting product placements, and managing inventory as per the demand.
Dubai is indeed a perfect example of a smart city where PropTech has worked wonders in reducing the extensive usage of energy, water, and other important natural resources. Dubai planners have leveraged smart-city technology to redesign the flow of the city. They have closely monitored the noise and air quality by making use of sensors, smart parking, and smart streetlights. Dubai planners have used advanced smart systems to conserve energy and have also partnered with emerging PropTech startups to harvest and conserve energy and data. PropTech solutions available today in Dubai are equipped with agile wireless sensors that are transforming the face and fate of the smart building sector.
KAIZEN Asset Management Services – a Dubai based, top five property management firm in UAE, leverages its decades of collective industry experience in executing energy conservation methods for its clients. We propose unconventional energy-saving initiatives to the clients and ensure that the property operates at the highest level of efficiency to curb operational expenses.
Capitalizing on its unique capability, energy conservation, and sustainability initiatives, KAIZEN has won the trust vote of the biggest names in the industry such as – Emirates REIT, Meraas Estates, Emaar Properties, Nakheel Properties, Mazaya, Tamniyat, and Constellation Holdings. We ensure the building meets the strict energy regulations as part of a comprehensive sustainability initiative.
Routine Maintenance through IoT
PropTech is backed by advanced Internet of Things (IoT) technology which automatically performs routine maintenance checks to detect malfunctions before they become critical and also alerts the engineering team on the issue. PropTech exercises automated control on the buildings to ensure optimum utilization of energy and space to ensure minimal energy bills.
Minimizes CO2 Emissions
A wide range of newfangled software on PropTech has been launched to assist industry head honchos in efficiently addressing their energy needs and in minimizing the impact of CO2 emissions. The quality of materials used while constructing the building majorly determines the level of CO2 emissions. The PropTech software uses advanced Artificial Intelligence (AI) during the building design stage to quickly produce the best and most environment-friendly building design which consumes the least energy and reduces energy bills. The PropTech software also tracks the energy wastage and the impact of the operations on the air quality using agile cloud-based platforms. It delivers quick information to the engineering team when the building exceeds the set environment benchmarks which can also increase its energy consumption and fluctuate the organization’s energy bills.
PropTech is the key factor in minimizing the environmental impact of the building. With rising emission levels and deteriorating environment quality, international governments and environment-safety bodies are incorporating PropTech in their economic decision making. PropTech has not only enabled global corporations in curtailing their energy bills but in avoiding extortionate financial penalties levied by the government for excessive consumption of energy. The effective implementation of PropTech will lead to the development of eco-friendly buildings and minimize the energy consumption of a building by 50-60%. It also assists in combating the retarding effects of global warming. There is an urge for the industry to create accurate value metrics to measure and evaluate the impact of PropTech on energy savings and cost. This will encourage several other firms irrespective of the size, to adopt and embrace it.