Smart cities and green buildings will be the hallmark of real estate in the future…
It has been anticipated that by 2050, almost 70% of the world’s population will be living within cities. As cities expand, so will the demand for smart buildings and smart housing. According to IDC Energy Insights, companies worldwide spent USD5.5bil on intelligent buildings in 2012, and this figure is expected to rise to USD18.1bil by 2017 – a 27.1% compound annual growth rate. In the commercial real estate industry, it is observed that developers and architects are integrating smart technology into their buildings as there is immense pressure from home owners to differentiate their properties and increase in ROI. Commercial buildings are high-energy consumers in Asia Pacific, and efforts to reduce associated costs effectively is ongoing. So what makes a building smart, how does it bring about a competitive edge to the real estate industry and having the right solution for a smart building? As the Director of Smart Cities in Asia for Schneider Electric, Mr. Gordon Falconer brings in more than two decades of experience in urban innovation, smart city consulting, innovation cluster creation, smart city pilots, urban development, sustainable property development, utility and infrastructure development. What are the key market forces influencing the adoption of energy-efficient building solutions in Asia-Pacific? What does it take for real estate developers to ensure properties appeal to buyers and investors? Homefinder magazine would like to thank essence Burson-Marsteller for the special invitation to an interview session with Mr. Falconer. Incidentally, Gordon also gave a talk or lecture during the Future Cities Asia 2015 conference, which was held at Le Meridien, Kuala Lumpur. The following is a gist or brief of the interview.
First and foremost, could you tell us briefly a little about Schneider Electric and what does the company stand for or represent?
Schneider Electic is one of the oldest multi-national companies based out of France originally that basically specialises in energy management, as it gradually moved into other ancillary businesses. Schneider Electric have all sorts of software and products that help operate everything from buildings to hotels & hospitals, to oil refineries and big manufacturing plants. In Australia, it owns Clipsal, a company which makes light switches and home automation. Schneider Electric currently has over 150,000 employees and they are spread across the globe.
What can we expect in the development of future smart housing in Asia, especially in the areas of green buildings and energy-efficient developments?
Well, we can expect that, in most countries worldwide, all buildings will be green to some extent. National green initiatives are generally led by governments, but sometimes by the private sector. Driven by the public’s demand for green buildings has made the green initiative more worthwhile and increasingly making sense. The green movement actually started as a non-mandatory movement in the United States, whilst in countries such as Singapore, they are run by the government itself. Every country in the world has now some form of green building council that sets the standards for green development. On the contrary, future homes need not always be green, and green buildings need not necessarily be futuristic. On the other hand, smart homes typically utilises automation controls and intelligent devices to make them smart.
What sort of impact can Malaysians expect from smart building initiatives, specifically with regard to energy-saving and environmentally-friendly residential developments?
Most of the local Malaysian developers are all trying to be both green and smart at the present moment. Whether it is Iskandar City, Putrajaya or Kuala Lumpur, one will find major developers a-tuned to other developers within the country and all around the world. And being world-class developers themselves, they will need to build green quality homes which adhere or comply to international standards. This is done in order to sell their homes more quickly and efficiently, since the market is the ultimate judge of quality and affordability. Apart from the various green building and smart home developments by property players, smart cities are also another upcoming major initiative on a global scale which are currently being proposed and planned, and will be implemented in most developing countries in the nearby future. There are currently no real standards yet for smart buildings, unlike green buildings which are governed by the GBI (green building index) standard. It is actually up to property developers to take their own initiative to forge ahead and propose developments which are both green and smart. In fact, many developers in Malaysia are beginning to go green & smart, with an obvious benefit being an unparalleled competitive edge or advantage gained from such high value-added initiatives.
With regard to property investors, if they are buying “cutting edge” properties, that will surely send signals to the market to build more such ‘state-of-the-art’ properties. To a certain extent, there will always be an inter-play between the government and private sector in terms of what is built. So the government announces policies or regulations, as well as various incentives to stimulate the market to sway it in a specific direction. The Malaysian government is well-known to favour a pro-smart cities initiative, and they are relaying those messages and signals to local developers. Meanwhile, local developers themselves are stepping up to the plate, and they are making their respective developments more futuristic or rather ‘future-proof’. For instance, at Iskandar City in Johor, most developers situated there are trying to stay ahead of the curve. As a matter of fact, developers there are appealing to Singaporeans to come buy their properties.
In a competitive industry such as building and housing, ROI and profitability are key issues to real estate developers. What can Schneider Electric offer to property investors in terms of viable solutions and long-term sustainability?
Since Schneider Electric comes from the control side or aspect of things, it provides pretty much of the infrastructure for property developers and property owners to manage their building portfolios, more effectively and efficiently, whether they are residential or commercial. They not only save money, they also improve the environment and the quality of living within those domains. There are truly clear benefits and advantages to integrating automation and control systems in buildings, making them smarter and greener. Such smart & green buildings often use or consume less energy, water and other utilities. Ultimately, this is something which will translate to a better quality of life, and people who purchase such properties often demand relatively high living standards naturally.
What are the many challenges faced by Schneider Electric in introducing the latest green trends to developers and consumers, as well as advocating and adopting an environmentally-conscious business model?
For different property developers, they have differing timeframes within each and every development. For short-term developers, they may be less “incentivized” to spend money on equipment as well as design features of the building that might benefit the long-term. With governments dealing with developers who have a short-term mentality, hence from Schneider Electric’s point-of-view in asking developer to do a ‘hard-sell’ (or sell their properties quickly) can sometimes be quite challenging. This is a classic case of short-term ‘profiteering’ mentality or syndrome which real estate developers are often accustomed to. Schneider Electric’s real challenge with any builder or developer is actually informing them (i.e. making them aware and empowering them) about such smart developments – both long-term and short-term benefits. Buildings with added-on green features and the latest smart equipment installed will always appeal to buyers as they often appear as some kind of trend-setter or a fad for consumers.
Schneider Electric also explores numerous possibilities with developers by forming smart partnerships including engaging in case studies, pilot concepts and test projects. Schneider Electric also works closely with green building councils in their respective nations to inform and make aware their members (i.e. builders and developers) about the beneficial aspects of smart buildings and smart cities. In addition, the comprehensive research & development that Schneider Electric also invests in, represents the cutting-edge inventions and breakthrough technologies which most developers seek dearly and crave greatly. After all, modern developers must keep abreast of the latest trends and scientific innovations which are most probably applicable within any smart housing and green development.
We are definitely going to see or witness more or greater interaction between buildings and the spaces between buildings. The spaces between buildings are usually where people reside or move about. We have got buildings where people live and work, and they move around within and between these buildings. In the future, the technology available then will somehow make the journey or transition between buildings much simpler and more comfortable. In major Asian cities such as Singapore and Kuala Lumpur, mobility issues are self-evident in such close & compact built-up spaces within a dense metropolitan area. Even in an over-crowded and overly-congested city like Jakarta in Indonesia, mobility becomes a serious issue. Mobility challenges are pretty much a “self-fulfilling prophecy” to begin with, where saturated and densely populated cities are concerned. With greater or increased interaction between buildings and built-up surrounding spaces, moving about anywhere around buildings and cities will be a breeze. People living in smart cities and smart buildings of the future will most probably expect and experience a better & improved quality as well as a holistic way of life.
Gordon Falconer, AAPI MRICS
Director, Smart Cities
Gordon is Director of Smart Cities for Schneider Electric, based in Singapore, and is a former Director of Cisco, Urban Innovation and also the former Head of Masdar City Real Estate & Strategy. He is a smart city expert, city consultant, global thought leader in cities, technology clusters, property & infrastructure developer, city developer, and chartered surveyor. He has more than 20 years of experience in urban innovation, smart city consulting, innovation cluster creation, smart city pilots, urban development, sustainable property development, utility and infrastructure development. Gordon has worked heavily in the urban environment on cities and city scale projects globally for the last 4 years with Cisco Systems as a trusted advisor to both the public and private sectors, NGO’s, government leaders with including World Bank and European Commission. In Singapore, he is an advisor to Government agencies and R&D panels, and in the UK he is an advisory board member of University College London’s City Leaders programme. He is also on the Advisory Board for the Barcelona Institute of Technology & Habitat.
Gordon brings a strategic understanding and economic development perspective to smart cities and urban development given his background in property development and city & urban development. He was formerly head of strategy and real estate for Masdar City, one of the world’s most innovative greenfields and sustainable city projects in Abu Dhabi. During this time, he was heavily involved with strategy for both sustainable real estate and sustainable utility integration in the areas of clean energy, water, infrastructure, information & communications technology, (ICT) and ICT financing. In particular, he was involved with the development of Masdar City as an economic cluster to drive foreign direct investment and economic diversification. Gordon was also Vice President, Asset Management Real Estate, at The National Investor, a leading Abu Dhabi Investment Bank. He also held executive positions at Jones Lang Lasalle and CB Richard Ellis in Australia. In 2013 he was ranked No.47 by UBM Future Cities in their Top 100 City Innovators index. Gordon also has engagements with cities, governments, and corporations worldwide specifically in South-East Asia, India, etc. He also holds several professional memberships from the Australia Property Institute and the Royal Institute of Chartered Surveyors.