PROPTECH IN REAL ESTATE: Opportunity or Threat

It is no news that when pandemic struck, way of life was quite detestably altered, not much to everyone's liking. Given the virulent nature of the pandemic, physical interactions and travel were strictly monitored and restricted. It is noteworthy to decipher here, that this had led to unprecedent contraction in the economic activities, especially in contact intensive sector like beauty, aviation and hospitality sector. But it is to benoted that other sectors like manufacturing, real estate and construction too took a hugehit due to stringent lockdown that were placed in the economy to curb the virulent nature of the virus.

Due to the aforementioned detestable circumstances, the adoption of property technology solutions accelerated through the year. This was due to the fact that many companies and consumers continued their activities under restricted travel and physical interactions amidst the odious second wave. Though the adoption of property technology during the adverse times of the pandemic can be termed as innovation at its pinnacle, it cannot be denied that with smarter, more innovative technology comes risk.

As the world turned virtual as the pandemic struck, online mode became the new normal. But given the huge cyber security risk that comes with the increased usage of technology and given the incompetent cyber security laws in the country, the real estate owners must consider the risks, and therefore strengthen their resilience against an increasing threat.

A newfound resolution?

The above description gives rise to an inquisitive, pertinent question, that is the usage of technology in the retail sector a newfound life altering resolution? Certainly not. Technology, as we know, has long been in use across the retail sector. The technology has been in greater use in certain areas like in footfall metrics and in catchment area analysis. Other innovative technology that is used by the real estate sector to get deeper insight into the consumer behaviour within malls is Big Data and the Internet of Things (IoT). Interestingly, such technologies even go beyond a certain geographical restriction to track where people go after leaving the mall. But why are such insights so crucial? This is due to a pertinent fact that physical retail has become more experience-based, with many product purchases shifting online. Thus, such insights are crucial for the business.

But again, as aforementioned, this effectively presents numerous opportunities for cybercriminals to exploit. Cyber risks are insurmountable due to lower detection and new proliferating techniques. Additionally, another bigger threat is the huge ransom that is asked for retrieving your data. Given the new proliferation technique and the incompetent and weak cyber security laws, the threat becomes inevitable for the technology adopters to identify these risks, mitigate them, or transfer them where appropriate.

But not everything is as glim as might have been recently described. Technology also promises greater efficiency and sustainability in modern office buildings. This efficiency of the technology can emphatically lead to faster delivering of both operational savings for owners and an improved user experience for office tenants.

Additionally, it is to be noted that other than price and location being the only creative and competitive features of the real estate sector, technology too is now an important consideration for a building's resilience.

Technology: curse or a boon in disguise?

Given innumerable pros and cons of the contentious technology, one can effectively argue that technology is something which cannot be abandoned even though cyber security breaches may cost dearly to a business. In fact, in the case of the real estate sector, consequences of such technology breaches can be aversive for Real Estate owners and users. But rather than terming it as an IT problem, this should be treated as a notable business risks.

Why does security breaches in real estate sector pose greatest and most aversive risks? This is due to the fact that the proliferation of Internet of Things (IoT) devices offers numerous cyber security breach potential for a cyber-
attack due to the nature of the mammoth business. The IoT can lead the cyber bully to gain access to a building's ecosystem and infrastructure and this can potentially lead to business interruption, a ransom ware demand, which can be a hefty one, or significant health and safety concerns.

What poses as a real challenge in the effective mitigation of disaster of such a threat is that a complex industry such as real estate cannot effectively implement data protection controls into daily operating procedures. Close alignment is required across people, technology and processes to enable controls across all the three pillars. Here, it is also interesting to note that that 90% of cyber attacks and breaches result from general human errors or social engineering account. Then how can such an odious enemy of cyber threat be conquered? The threat can be mitigated through cyber advisory and risk transfer solutions, including the identification of cyber threats and evaluation of appropriate insurance limits. Additionally, making clients aware of the humongous financial risk can be a start. But in the long run, robust cybersecurity laws and mitigation policy are required. But how fast it is delivered, is yet to be seen.

Sonam Chandwani

Managing Partner, KS Legal & Associates

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