Buildings of the future: the challenges of embracing smart technologies

3 minute read  28.10.2021 Cameron Charlton, Danielle le Poidevin

While investment in smart technology is increasingly becoming the key to staying competitive in the real estate market, adopting these technologies introduces challenges for property developers.


Key takeouts


  • Smart buildings are at the cutting edge of innovation in the property development sector, as they incorporate technologies that control and improve a building's systems.
  • Investment in smart technologies not only increases the efficiency and value of a building, but the health and enjoyment of the people who occupy it.
  • As smart buildings become increasingly intelligent, there are several challenges and issues that property developers need to be mindful of.

A building's success is linked with its ability to compete in the real estate market. This is especially true for high-rise developments. Given changing consumer habits, increasing competition and the demand for healthy, cost-effective buildings, it is becoming clear to developers and the real estate industry at large that the future of competitive buildings is smart. According to MarketsandMarkets, the smart building market is expected to grow from USD 60.7 billion in 2019, to USD 105.8 billion by 2024.

What are smart buildings?

'Smart buildings' invest in technologies, such as sensor networks and automation software, that gather, manage and act on data to enhance building performance. The goal of this is promoting comfort, productivity, health and sustainability. Successful smart buildings should not only increase the value of the building as an asset, but the health and enjoyment of the people who occupy it.

Smart buildings use technologies such as the 'Internet of things' (IoT), IoT is a smart technology that connects devices, such as sensors, lighting and security, to the internet using embedded software and sensors to communicate with one another. By communicating with one another devices can help monitor themselves and act when necessary.

Examples of this technology include:

  • water supply systems that can detect leaks, monitor quality and automate heating and cooling;
  • air-conditioning and heating systems that can turn on and off based on the occupancy of a room;
  • sensors that can check for room occupancy and match patterns to energy use throughout the day;
  • multiple internal systems like lighting, air-conditioning, water and ventilation can be connected to see how they affect each other throughout the day and optimise for efficiency; and
  • data collection which maintains optimal comfort settings for residents in the building, while also reducing waste.

The smart building landscape

Completed in 2015, The Edge in Amsterdam, Netherlands has been referred to as 'the most intelligent and sustainable building in the world'. The building, which houses law firm AKD and Deloitte, boasts an impressive range of smart technologies including IoT-based and building management systems. These technologies not only reduce its carbon footprint, but also enhance the user experience. Supporting this technology is a mobile app developed to connect employees to the building. This app enables users to:

  • assign daily workspaces that best fit their preferences;
  • adjust the climate and lighting of their work areas;
  • get directions to meeting locations, by accessing the details from their online calendar; and
  • be directed to a parking spot by recognising their car upon arrival.

Another example can be found closer to home. Scheduled for completion in 2022, Sydney's Quay Quarter Tower (QQT) is already being heralded as one of the city's greenest and most innovative office buildings. The development 'upcycles' an existing skyscraper from the 1970's into stacked 'vertical villages' positioned around a central atrium. This is designed to maximise light and foster interaction among the building's occupants. The QQT will incorporate digital technologies, including enterprise-grade wireless and embedded smart systems, creating an experience-rich environment for users.

Challenges and considerations for developers

While the smart building future is bright, the ever-changing nature of the technology landscape means that developing and managing smart buildings is not without challenges.

Staying up-to-date

The timescale for the construction and the lifespan of developments, whether it be a high-rise building or a low-rise community title precinct development, is out of step with the rapidly developing nature of technology. For example, while the main agreement for lease for the QQT development was signed back in 2016, the development itself will not reach practical completion until 2022. This not only creates a planning challenge to ensure that smart developments incorporate the most up-to-date technology, but the challenge of remaining competitive and profitable in the fast-moving technology market.

The solution is making technology more open and adaptable. This includes writing specifications to ensure technology can be updated at minimal expense as new features and services become available. It also highlights the need to speak with your legal team as early as possible for any new developments. This will help to ensure that legal contracts are structured and drafted to provide maximum flexibility for accommodating future technology upgrades.

Legal considerations

  • As with any technology, its use in smart developments is not without risk. These risks include:
    IoT and data collection technologies give rise to data protection and privacy concerns. Similarly, cybersecurity is a notable concern, where increased connectivity and the collection of building and employee data could leave buildings vulnerable to cyber-attacks. The use of smart devices may activate state and territory-based legislation that governs the use of surveillance devices.
  • Harnessing sustainable energy sources, such as solar energy, must include key considerations, such as electricity licence requirements and possible licence exemptions.
  • Accelerating the deployment of 5G wireless networks is front-of-mind for most smart cities developments. However, the tenure rights that the technology companies need in order to co-locate on the building site will also require consideration.

It is important for property developers and building owners to consider these risks and to seek advice before embarking on a smart building development. If you would like further information on the issues raised above, please contact a member of our Infrastructure, Construction and Projects team.

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https://www.minterellison.com/articles/buildings-of-the-future-the-challenges-of-embracing-smart-technologies

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