Smart cities will fundamentally change the way we live in, move around and use the space within our urban environment. They will also change the way in which real estate deals are transacted with creative solutions being required for the changing face of building design and demand.
On a macro level, new real estate trends will emerge, radically affecting building design, planning and occupiers’ requirements. Demand for traditional office space will reduce as remote and flexible working become more prevalent and shared workspaces become the new norm. Artificial intelligence will also change the requirements for space in many sectors.
New types of retail floorspace will be required as more sales are concluded online, with retail becoming more about the experience and the interaction between brands and customers. In addition, there will be a shift to more click and collect points.
At the same time the need for dedicated parking infrastructure is likely to decline in prime urban locations. With greater use of driverless cars and car sharing reducing both the requirement for parking in urban centres and out of town shopping centres, this will free up space that can be put to alternative uses.
On a micro level, the traditional transaction process associated with the property industry will also see changes – from the way participants make commercial decisions, to the nature of the deals and how they are executed. Smart cities will put a wealth of information into the hands of buyers, tenants and investors. Property “consumers” will be able to compare real-time information on a wide range of variables affecting property assets – for example, energy efficiency, connectivity and traffic noise. Banks will no longer be the only source of funds, with fast availability of internet peer-to-peer lending speeding up the time taken to put a deal together.
Blockchain or distributed ledger technology raises a number of opportunities in this field, from mortgage valuations, to rental and service charge payment systems. Smart contracts will replace the traditional approach to conveyancing – the main incentives being that the technology will expedite the process, reduce fraud and offer total transparency.
Blockchain technology is an idea that is gaining traction in the public sector as well as with start-ups, with the Land Registry recently announcing its intention to test a so-called “Digital Street” to enable ownership to be transferred almost instantly using blockchain technology.
Whilst legislation is evolving to meet the changing needs of urban dwellers we expect that smarter cities will require legal solutions that are as smart as the smart cities of the 21st Century.