The rapid growth of technology has changed the world we live in over the last decade. Today it is intertwined in almost every aspect of our lives; from how we communicate with people, order a taxi or takeaway, to how we shop.
As technology develops, its impact on both our personal and professional lives will only continue to grow, all at an exponential rate of growth. To get a better idea of what is coming over the horizon from the tech world, this year’s Knight Frank “Global Cities Report” had an interview with Elon Musk. The founder of Tesla has made colossal bets on car-charging networks, reusable rockets that can deliver satellites to orbit then land backwards on barges floating hundreds of miles offshore, rooftop solar power, electric lorries, lithium-ion batteries and driverless technology.
The changes envisioned by Musk could reshape the landscape of real estate. New investment opportunities should emerge as a result, while assets on the wrong side of the trends will change use — and perhaps rise in value as a result. First, I will explain the predictions and then assign the implications to property demand.
The predictions
* Going electric and the rise of driverless cars
* Solar power: Your home will become part of the grid
* Super commuting: From Abu Dhabi to Dubai in 12 minutes
It is perhaps unsurprising that Musk is predicting the end of the internal combustion engine. It is logical — oil is quite simply running out and eventually so will gas. So instead of converting around two billion cars around the world, Musk argues that we may as well go straight to electric.
As many of you will have heard from the raft of announcements in the summer, governments and industry giants agree with Musk. From the Indian government setting 2030 as the target to stop selling gas-powered cars or the UK’s 2040 deadline to stop selling both diesel and petrol cars, and carmakers pledging to switch their ranges to electric or at least hybrid over the next decade or so.
For the power hungry drivers of Dubai, fear not, Tesla’s all-electric SUV can out-accelerate a Bugatti Veyron. Practically, going driverless makes sense. If you remove humans from the driving seat makes sense, you don’t get two motorists stopped at the lights having an argument while traffic backs up behind them. Or those last minute lane changes.
Our road systems can become more efficient. Instead of building more roads or widening existing ones, we can go the other way and start pedestrianising.
Musk also believes that apart from a wealthy minority, in the future most of us will not own cars, we will whistle up a driverless taxi via our smartphones. Again, this is underpinned by practical logic.
Today we drive our cars for probably 30 minutes to work, park them for eight hours, and then drive them home for 30 minutes where they are likely to remain until the next day. A huge waste of resource. In a world of driverless taxis, when you jump out at work, the next passenger jumps in — thus we can travel more miles but with fewer vehicles.
This means in the future there will be less need for car parks, shopping malls will only require a taxi rank for driverless cars, meaning the car park can be redeveloped, probably as leisure property to complement the retail.
Basement parking in office buildings could house data centres, gyms or cinemas. Some city centre car parks will become apartments or hotels. Others will be drop-in stations, where driverless vehicles go for charging, minor repairs and cleaning.
Going solar
The potential problem with Musk’s all-electric future is that it will all require a lot of electricity. Of course, Musk has an answer for this too.
He has invested significantly in solar energy and the batteries needed to store the power. In particular, his photovoltaics are being developed to look like building materials. The roof on your home in the future might look like tiles, but it will be entirely solar panels, selling power into the grid.
The technology is getting there to be able to do this on a longer term basis. Last year Portugal had a day where they ran their national grid purely off solar power.
Musk’s faith in renewables looks more justified as each year goes on. More so, Dubai plans to have 25 per cent of its power from clean resources by 2030 and 75 per cent from 2050.
Across global cities, property developers are under pressure from government, communities and occupiers to ensure their buildings are as sustainable as possible.
In a future world of very efficient photovoltaics, coloured to match the exterior cladding, which are feeding power to batteries for local storage, modern buildings could become more self-sufficient in their energy use.
Super commuting
One part of this is Musk’s plan to build a tunnel form downtown Los Angeles which stretches to the Airport. Cars will drive onto an “electric skate”, which is then lowered into the tunnel and then propelled at 120mph to the airport.
This second idea is more interesting, at least for the fact if it happens anywhere it is likely to happen in the UAE first. Imagine the 80-minute drive time from Abu Dhabi to Dubai or vice versa being cut to 12 minutes.
While a distant horizon project, Musk’s tunnelling scheme could extend the commuter belts around cities. Vehicles riding at high speed under the congestion would allow those seeking affordable homes to look much further afield. This would extend the economic influence of a global city over a much wider area, leading to the development of new suburbs.
Dubai is consistently at the forefront of innovation and with an ambition to become the world’s smartest city by 2021, it is setting itself up for a lot of changes to be applicable here before anywhere else. Real estate owners of all calibre must start to understand how they can embrace technological change and how their long-term plans and profitability might be disrupted by the tech revolution.
The writer is Senior Analyst — Research at Knight Frank.
