The world is benefiting from the fastest spinning revolution
in the history of mankind. It’s affecting everything from the way we socialise
to the way we shop, how we work, and where we live. The rate of change means
presumptions about the future are becoming redundant faster and the business
and investment life-cycle is becoming much shorter.
Those who are able to pick
the trends can make an unimaginable amount of money very quickly, while those
who are blind to the changes will find the value of their investments eroded -
and very quickly. Property investors can no longer rest assured that their
investment is “as safe as houses”.
Last week the NZ
Herald reported a good news story about a struggling university student from
the Waikato who started an e-commerce clothing business aimed at men.
Within six months he has turned over $1.5m in sales. “He puts a 50% mark-up on
the clothing he buys and said the quality was comparable to menswear chain
Hallensteins but he would never open a physical shop.”
His main costs are the cost of the goods he sells, and marketing on
Facebook. Not a single cent is spent on rent - the landlord is shut out of the
game. That is becoming an all too frequent scenario and it is now not uncommon
to see windows signs in vacant retail shops saying “We have shifted to www…”
There’s something pretty attractive about buying stuff online. A vast
product range is just a click of the mouse away - and you don’t even need to
get changed out of your pyjamas or get the car out of the garage. Bricks and
Mortar retailers are already feeling the effects of online shopping, and if
retailers are then landlords are too.
Technology will also change the way real estate will be sold.
The latest innovation in video marketing is wearable technology. Leading the
way is Google Glass,
an interactive device that is worn like a pair of spectacles that can take
pictures and videos (among other things). It’s the interactive capability of the device that may be a game
changer. An agent wearing the glasses can literally take a virtual guided tour
of a property in Paihia while communicating with prospective buyers sitting in
a café in Sydney. The glasses work by projecting a web page onto the inside of
the lenses which become a screen. For example, a tourist walking through London
could say, “best local attractions” and their screen would display the top
attractions within walking distance, including entry costs, visitor reviews,
etc. Or they could say, “Take me on a guided tour” and they would be navigated
to a nearby local attraction and given a narrative of its special features. Mass
production of these devices is about to begin and will be common-place within
the next couple of years. Google has recently announced an alliance with Ray-Ban
and Oakley, so soon the glasses will go from geeky to cool.
This concept of
wearable applications is already progressing beyond Google Glass. Last week
Facebook purchased Oculus for US$2b, a company that has developed a 3D goggle
headset. It has been developed for virtual gaming to immerse the player into
the game itself, but the technology is likely to have much wider appeal that will
impact on property investors.
It’s a small step
from virtual gaming to a virtual workplace. Workmates will no longer need to be
in the same office – they will simply need to be connected via a headset. As
soon as business people en masse realise it is technically feasible to have a
virtual office (the early adopters already have) the movement away from bricks
and mortar will gain momentum for the specific purpose of eliminating rental
costs. It is probably only a few decades down the track that the slow and late
adopters will switch and virtual offices will become the norm rather than
bricks and mortar, but the impact of such a seismic change in the way we work
will impact investor returns much sooner.
“But people will
still need a place to live”, residential property investors will say, and
that’s very true. But they will no longer need to live near their place of
work. Their workplace will be virtual and someone living in idyllic Tutukaka
for example can be in touch with clients in Auckland or London – the only
constraint is the speed of their internet connection. It may be migration
patterns in the future will reflect more where people want to live rather than where they need to live – and that will impact residential property prices
over the next generation.
3 comments:
Frank, I too have read the future...with a backward glance or two!!!
Technology is exciting and one can but wonder if Mankind itself is actually ready for it...in a social sense? Certainly humans can adapt, although very reluctantly it seems at times.
I recall as a boy, the state of the art were Steam Engines, sitting on embankments collecting their names as they raced up to Scotland. It was a hobby among us all.
At my age however I only can drink to the future; but notice that the whiskey I consume a 25 yr old Islay Malt actually improves with age.
Regretfully this does not apply to us humans, nevertheless I raise my glass in the expectation not of just the future.
But more importantly of the future of the future.
Brian
Like to see how you can run a Medical clinic, Veterinary and so on without bricks and mortar.
High level professions need to be up front and seen. Everything I buy on Internet has been crock.
True what you say, I can imagine in 5 to 10 years our CBDs will be largely empty retail and office spaces, its happening now. The only saving factor is that actual window shopping or visiting the mall is still for the majority the number 1 leisure activity and until some bright spark comes up with a way to actually touch and feel fabric for example, then many will still prefer the traditional old way of shopping.
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