The Property Voice

Series 4 PropTech: Construction Technology Part 3 – Joining the dots

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Over the past couple of weeks, we have heard from a small builder about what they are doing particularly with self-build and sustainable building materials, as I chatted to Malcolm and Richard from Greenheart Sustainable Building. Then, last time, I was joined by Matt Gough from Mace Group, on of the UK’s top contractors and an international construction and consulting company. Matt was clearly aware of and monitoring several technological developments in the construction sector, such as factory-built, modular methods, robot bricklayers and the Government drive behind Industry 4.0 with productivity at the heart. Today, I want to draw together some of the trends, not only as my guests saw them, but also from some of my own research and observations.

Resources mentioned:

Most of the resources are in the show notes this week.

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Transcription of the show

Hello, and welcome to another episode of The Property Voice podcast. My name is Richard Brown and it’s a pleasure to have you join me on the show again today.

Over the past couple of weeks, we have heard from a small builder about what they are doing particularly with self-build and sustainable building materials, as I chatted to Malcolm and Richard from Greenheart Sustainable Building. Then, last time, I was joined by Matt Gough from Mace Group, on of the UK’s top contractors and an international construction and consulting company. Matt was clearly aware of and monitoring several technological developments in the construction sector, such as factory-built, modular methods, robot bricklayers and the Government drive behind Industry 4.0 with productivity at the heart.

Today, I want to draw together some of the trends, not only as my guests saw them, but also from some of my own research and observation.

So, let’s join the dots up a little with the common themes, trends and future developments in construction technology right now.

Property Chatter

Talking Points

  1. Construction & building methods
    • Modular & Prefab – 68% of construction firms are investing in modular housing and 56% in construction with panels, source: https://www.mortgageintroducer.com/firms-investing-modular-housing/ The emergence of the custom-build trend will also help us to move away from the identikit square boxes that we have become used to in mass-housing projects. People like to be unique and so the addition of options and alterations that can personalise or customise a home will no doubt be a driver going forward.
    • New Build Vs. Retrofit – As Richard & Malcolm from Greenheart highlighted, retrofit or refurbishment can be a particular challenge with materials, site access, design, water & condensation, etc. all proving problematic.
    • Mechanisation ‘Manufacturing of construction’ – factory assembly, built in a factory in 20 days and erected on site on half a day, several house builders and setting up factories to develop offsite construction and then shipped to site to build, including Berkeley homes who plan to build a factory in Kent capable of building 1,000 homes per year or 25% of its annual output, source: https://www.theguardian.com/business/2017/dec/31/uk-housebuilders-factories-prefabricating-homes
    • Robots (Hadrian X) & 3D printing enables on site construction to take place, sometimes in remote conditions and using locally sourced materials. It is already being seen as a solution in disaster relief, converting slums and even colonisation of the Moon and Mars! A robot bricklayer called Hadrian can lay 1,000 bricks per hour. When I interviewed Andy Hubbard for YPN Magazine, he said that when he was an award-winning bricklayer he would pay around 800 bricks per day. Hadrian can build a house in 48 hours, without rest…at least in theory. Source: http://www.jamesdearsley.co.uk/3d-property-technology-printing-houses/ In the UK, a 3D printer built a house in Highgate. By all accounts its went smoothly and cost around £222 per square meter to build a fairly high-spec house. That’s not particularly cheap and so far the other solutions have not been particularly cost-effective either, which gives rise to one of the problems holding scaling these technologies up. Another challenge is regulation and as Matt Gough mentioned last week, so too is client pull or client demand. But, that is now starting to change it seems. For example, the United Arab Emirates government has said it wants 25 per cent of buildings to be 3D-printed by 2030. Whilst this is a far-away land, it spells out a trend of Governments and public bodies setting targets and driving demand for alternative technologies in the building methods adopted.
    • The other issue that we do need to tackle is skills shortages, with the estimated loss of 25% of technical skills from the construction industry over the next 10 years.
      1. Alternative Building Materials
        • New materials – Nano technology & graphene, mycelium ‘fungus’ bricks and a new take on older materials such as straw bale, bamboo, wood, rammed earth and even self-healing concrete are making progress. So, too is the incidence of ‘wave bending’ technology, which allows materials to let sonic waves pass through it leaving the building in place. Useful in areas of high seismic activity for example.
        • Modular or interlocking materials – structural insulated panels and insulated concrete framework becoming more widespread. They allow less time on site, quicker construction and often better energy efficiency too.
        • Timber frame is becoming more mainstream as it is in other countries, such as the USA for example, where you find lots of timber frame homes.
        • Perhaps a very small and more everyday application that I recently became aware of was when I spoke with a contractor friend of mine. He has recently bought an airless paint gun which allows him to paint an entire house in less than a day, one hour per room including preparation potentially saves an immense amount of time on a project. He tells me the finish is better than with a traditional roller as well. Of course, he had to buy additional equipment and learn how to use it, but he also says it is allowing him to increase his productivity at a staggering level as a result.
        • Finally, in my own case, I have been using durable paints in my rental properties. They cost more due to the added technology within the paint, but they main benefit is that the walls are then washable. This saves me from repainting my properties quite as quickly and so reduces my maintenance costs as a result.
        • There will no doubt be countless examples of these more everyday technological breakthroughs, either with us today or emerging in the very near future I am sure.
          1. Design & Build
            • Build to Rent & growth of PRS – PWC say 60% of Londoners will be living in rented accommodation by 2025, the Wembley Park development has permission to build 5,000 purpose-built rental properties and will eventually house up to 15,000 residents across 85 acres. London is leading the way with around 56,000 BTR units to date. Other major cities, such as Birmingham & Manchester are likely to follow. Source: http://www.ldevents.net/news/how-build-rent-changing-london-property-narrative/
            • Self-build & custom-build – If you remember, Matt Gough mentioned something about policy changes around custom build last week. Well, after the show, I did a bit of digging and located the Self-build and Custom Housebuilding Act 2015 (subsequently amended by the Housing and Planning Act 2016). This sets out a few points, including the requirement for local authorities to measure the local demand for self-build and custom-build, which it also defines. Apart from a requirement to maintain a register and to take into consideration self-build and custom-build requirements into consideration with future planning policy, I did not see a definite requirement or target to be met. So, it strikes me as measuring demand and raising awareness in the short-term at least. Source: https://www.gov.uk/guidance/self-build-and-custom-housebuilding
            • With my guests over the past couple of weeks, I didn’t really get to discuss to of the following topics, which mainly centre on changes in how we need to design and use properties. There are definitely emerging trends with Co-living, assisted living & community living, which are all variations on the theme of supported social housing. Think of old-peoples’ homes centred around medical and nursing services, or a co-operative community taking it turns to cook for one another, or young Millennials living in studios in an apartment complex and then sharing large communal spaces and facilities, such as cafes, cimenas and so on.
            • It is then, not so much of a stretch to consider the blurring of use in some properties to convert them into multi-function, where work, rest & play meet…just look at WeWork’s move into WeLive for an example of this. The rise of the digital nomad is also giving rise to a whole new type of property demand. They want a property in Bali, that has superfast broadband, print facilities, a comfortable bed and a large kitchen-diner where they can intermingle with their peers and brainstorm start-up ideas…all before switching to Sydney or New York for a few months.
            • There is and indeed needs to be a rethink in how we use space in a home. We have Micro-homes cropping up in high-density urban areas, such as London, the multi-generational home allows up to 3 generations of the same family to co-habit, but all with very different needs & easy access & mobility homes such as bungalows are favoured by the elderly, whilst in short supply right now.
            • Then, the emergence of the Sharing Economy is bringing about changes in how we use properties and also their economic models too. Just look at what Airbnb has done for short-term rentals and the previously mentioned WeWork with hotdesk office space as two such examples. Other technological developments are making the emergence of new business models increasingly more viable and within reach of even the smallest property investor now. Open you smartphone, download an app and upload a short-term rental listing in minutes…who would have thought of that just 5-10 years ago?
              1. Energy Efficiency
                • The first thing to say about energy, is that we don’t have enough of it…well, certainly not enough of the carbon variety at least! By some estimations, we will run out of carbon fuels by 2050 and perhaps more worryingly, if we delay the point in time when we decide to switch to non-carbon fuels, it might be too late. I might not be around come 2050, but I have children who will be, so we have a responsibility to the next generations to do something before it’s too late.
                • New Build Vs. Retrofit – that said, there is a difference between installing energy-efficient systems in new developments compared to the existing housing stock. But ease does not absolve our responsibility. Smart home technology enabled by the Internet of Things will help with the roll out of energy-efficient homes for sure, but I don’t want to spoil the surprise over the next couple of weeks, so I will leave it at that for now.
                • Even if we don’t take ownership of the planet’s precious resources personally, the Government is helping us to take notice. For example, with laws affecting landlords around energy efficiency. Did you know that From 1st April 2018, all new lets and renewals in the private rented sector will need to have an energy efficiency (EPC) rating of E or better? This will affect all private rented properties and tenancies from 1st April 2020. If your rental property does not have an EPC rating of at least E, then you will not be allowed to rent it out. If you do try and rent an F or G rated property out, you could be fined £4,000 for doing so. That’s quite a big incentive to look at upgrading the heating system wouldn’t you say? Source: https://www.rla.org.uk/landlord/guides/minimum-energy-efficiency-standards.shtml
                • UK Green Building Council Report – suggests the average cost of bringing a property up to Band E level would be around £1,400, with 70 per cent of landlords facing a bill of around £1,000. Source: https://www.businessgreen.com/bg/news/3015003/new-rules-could-let-landlords-off-the-hook-for-energy-efficiency-improvements
                • If the minimum energy ratings that prevent us from letting properties, or even serving a Section 21 Notice along with the fines for landlords are the stick, the Domestic Renewable Heat Incentive or RHI might be the carrot instead. The RHI is a grant available to property owners to install sustainable energy systems instead of the old carbon-fuel systems of gas and grid-electricity that we have become accustomed to. Source: https://www.ofgem.gov.uk/environmental-programmes/domestic-rhi/about-domestic-rhi
                • As came out of my discussion with Richard & Malcolm from Greenheart, Sustainable Building can marry the two worlds of the green, ecological agenda to the property investor’s commercial agenda…there is often a business case that supports the drive as well as purely environmental considerations.

                  • Conclusions

                  There are some breakthroughs that are already with us and others that may be a way off yet still. I don’t see us colonising Mars with 3D printed homes anytime soon, but I can see the reality of factory-built homes or at least parts for homes emerging to meet the housing supply shortage we currently have.

                  Some new materials really do seem to be space-age, but as science progresses, so too does the discovery of new applications or improvements to some older materials too. So, if not Hempcrete, then perhaps that self-healing concrete that Matt referred to could be hitting specifiers radars pretty soon.

                  I have absolutely no doubt that Build to Rent will see a massive push over the coming years. Developments will be required for all tenures, including rental, so the development of homes where the original buyer has a vested interest in the long-term operating costs of that building will surely produce a drive towards higher quality and greater sustainability.

                  The energy agenda cannot be understated, it is one of the most significant problems that this generation will have to tackle in my opinion. Expect more carrots and sticks, as incentives do tend to work. However, also expect to see enhancements n technology that will enable the more widespread adoption of more energy-efficient homes to meet the increased demand that these incentives will drive.

                  Personally speaking, I see some overlap in some of these technologies, policies and trends. We need more homes and so factory-built housing or on-site 3D printing just seems to make sense to help with that. We are losing skills in the construction industry, so technological advancements can help to plug the gap, allow a reallocation of skills and jobs, whilst also offering the potential to increase productivity. Collectively, we also need to fix the increasing energy crisis that is brewing, so the emergence of sustainable energy alternatives, designed in a Passive House and built using a timber frame with panel-based units just seems to make sense to me.

                  I see opportunities for us investors and developers, but also some threats as well. We cannot continue to bury our heads in the sand and just wait until we have no choice but to comply. We might be extinct by then if we do!

                  Joining the dots in all this construction technological development is going to be interesting to say the least…So, I suggest you keep a close eye on developments over the coming months and years. One such resource that you might be interested in comes from James Dearsley, who is well know in PropTech circles. He produces a Sunday review, which you can subscribe to receive. In fact, James placed a shout out to last week’s episode in his most recent review too, so that’s all good Subscribe at his website www.jamesdearsley.co.uk to stay abreast of developments in the sector.

                  OK, that almost all from me this week. Just a brief moment for you last minute people who can get to Kings Cross on the first evening this episode is released. I am hosting a working-social, where we will aim to ‘crowd-solve’ some of your biggest property investment challenges over dinner and drinks. Check The Property Voice Meet Up Page or search Eventbrite for events to find out more…or just email me instead and I will tell you. In fact, you might want to join my Meet Up group in any event, as I upload live events there first.

                  As usual, the show notes can be found over at www.thepropertyvoice.net or if you want to talk about anything from today’s show, receive an intro into one of my guests or just talk property investing, email me at [email protected], I would be happy to hear from you!

                  But for now, all I want to say is thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao-ciao.

                  The post Series 4 PropTech: Construction Technology Part 3 – Joining the dots appeared first on The Property Voice.

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                  The Property VoiceBy Richard W J Brown from www.thepropertyvoice.net