Even though the technologies that are driving PropTech are evolving all the time, it is worth indicating several of the key applications which underpin the PropTech strands to better understand the transformation of the real estate sector and its legal challenges of security and privacy.
Photo: Emmanuelle Ragot, Avocat à la Court and Founder of eragotlaw.lu / Image Credits: Mich Jacoby
Technologies in Real Estate
IoT (Internet of Things) relates to any device connected to the internet and making a building “smart” i.e. sensors collecting data subject to advanced analytics using AI and machine learning. A fully integrated building management system means the optimization of the environmental performance of the building and possible adjustement of operating systems automatically based on actual or predicted use.
AI and its related multiple technologies such as machine learning, deep learning, natural language processing and computer vision provide with the ability to process substantial volumes of data (big data) and to understand better as to how to exploit both technology and data.
Key benefits of AI are automating processes, market insight through digital analysis of big data, personalization of the services and products by enhancing customers engagement. AI is a powerful technology for the real estate sector for its many uses from online brokerage platforms to automated asset valuation methods, it helps to improve the transparency of information, the valuation methods and consequently to speed up transaction times.
AI is enabling in the real estate investment market as well as the owner – occupier market as it enables asset managers to gain a better insight into the performance of a real estate portfolio, to identify investment opportunities and improve the tenant experience by keeping track on their data.
Blockchain and Distributed Ledger Technology Blockchain is a technology that enables the secure and permanent storage of digital ledger of transactions, contracts and other information, collectively by a network of users.
The automated execution of a transaction using the technology and creating fractional ownership in real estate assets using tokens which can be traded on a blockchain – based exchange is opening – up investment opportunities in the real estate market.
With blockchain technology, all the information can be assembled into one distributed ledger. Each member of the network would be able to provide with a digital confirmation of their element of the transaction so that the transaction could proceed seamlessly to the next phase until its completion.
Many types of blockchain based applications use tokens as a currency to use the application or complete transactions using the application or allow tokens to be created and traded within the application. The most well – known types of tokens are cryptocurrencies. Tokenization of real assets not only increase the liquidity of traditionally illiquid assets but will make possible to fractionalize interests in those assets and then trade them.
Legal challenges mainly relate to security and privacy
– Data protection and Intellectual property legal advice will be required in relation to the origins and ownership of datasets used or created by tech such as AI. How the data was collected, processed, transferred is to be considered to ensure legal and regulatory compliance. Data may need protection as confidential information / trade secrets. Many legal issues will be specific to the technology i.e. storing irreversibly v. principles of data protection.
– Security to ensure that the information is stored securely will be instrumental to real estate organizations otherwise companies will face fines, regulatory investigation and will damage their reputation in case of data breaches and ransomware attacks in the real estate industry.
The first step for companies is to understand who is processing and storing data especially when that data contains personal information or sensitive business information to avoid the proliferation of data processing and extensive storage. If a company does not know where its data is located, then it cannot properly assess and mitigate the risk of third parties gaining unauthorized access to that data.
How and Where
– Companies should then assess the risk of how that data is being protected and where it is located.
– A company should ask before contracting with a third-party technology provider, about the provider’s data storage solution. Where is the data stored? Is it stored in the cloud, and if so, can the provider commit to the data being isolated in specific cloud geographies? Is the data being encrypted? What other safeguards are in place to secure the data? Without asking these questions, companies risk significant financial and regulatory fallout.
What, Why and How as data collection is operationally overwhelming
A real estate company could be tempted to collect everything and figure out what to do with it later.
– What will be collected, why is it being collected, and how will the data be used must underpin every conversation about analytics.
New areas of corporate liability associated to the use of technologies i.e., drones on construction site, for maintenance, monitoring purposes and for transport of goods raise data & new legal issues (use of air corridors, insurance) for which companies should choose high standard in their legal data’s management.
This article was first published in Silicon Luxembourg magazine. Get your copy.