5G is coming, but real estate needs to understand it better

02 April, 2019

To some excited tech pundits, 5G will transform how we, our belongings and our properties can communicate with each other. By improving the speed and connectivity of not just smartphones but just about any object you can connect to digitally, we will be able to do more, at greater speed, from any location.  

But the real estate sector’s knowledge is patchy when it comes to this next wave of connectivity, according to research from Cluttons, and tenants are even less aware. The overall lack of preparedness for 5G across the UK presents a wide range of opportunities for developers, landlords and occupiers.

Coming to you in 2019

A 5G connection is set to be between 100 and 1,000 times faster than 4G. Downloading an HD movie could take about 10 seconds. On top of that, the much faster capability for data transmission will allow millions of devices to be connected simultaneously, which takes the benefits of 5G way beyond the realm of smartphones. A building could connect thousands of devices at the same time, for example, while driverless cars could connect with traffic systems, other cars, buildings and more.

Deloitte predicts that although adoption of 5G will be slower than that of 4G, it will land in the UK this year. The company predicts that about 20 vendors will launch 5G-ready handsets globally in 2019, shipping about 1 million 5G handsets out of a total 1.5 billion handsets sold. In the UK, shipments could total about 50,000 handsets, growing to 2 million to 3 million in 2020. EE/BT, Vodafone, O2 and 3 UK are planning to launch their 5G offerings at some point between 2019 and 2020, though a full rollout will take several years.

Intel’s Next 50 study found that 95% of ‘tech elites’ believe 5G will be one of the most important technologies to emerge in the next 50 years. However, it seems that those outside the tech spheres don’t really know it’s coming. 

Cluttons found that just 39% of office landlords know what 5G is and how it works on a practical level. A further 29% know what it is, but not how it works, while 10% haven’t heard of it at all. Office tenants presented an even greater lack of knowledge: only 15% of those surveyed know what 5G is and how it works while 52% have either limited or no understanding.

The opportunities in infrastructure

The immediate opportunity for the real estate sector is that it’s not just people who are unprepared for the arrival of 5G, it is our infrastructure.

“London badly needs new infrastructure if it is to improve its connectivity compared to other European cities,” Cluttons Head of Real Estate Management John Gravett said.

To make meaningful use of the new technology, the UK needs to make considerable infrastructure improvements in terms of towers, antennas and small cell solutions that are hitting the market. However, getting the UK’s cities to the infrastructure level required is not only a technical challenge, but will require “collaboration and consensual negotiation between telecoms operators and landlords in the built environment,” Gravett said.

There is real opportunity for landlords and property owners to rent space for masts to telecoms operators, an opportunity that is only going to grow once use of 5G becomes more widespread. The more devices there are that need to be connected, the more masts will be needed.  

Connectivity boosts the bottom line Revenue from renting space for masts won’t be huge, but the financial benefits of better connectivity across real estate should be a real reason to collaborate. Cluttons’ connectivity research found that employees are more satisfied with their roles if their office is better connected and 48% are willing to pay more for better digital connectivity at their place of work.

Many landlords already recognise this. The majority (65%) of the UK’s commercial landlords have already undertaken work to improve the connectivity of their buildings. Of the 200 landlords surveyed, 76% have increased rental yields by making improvements to the digital infrastructure of their buildings. 

“Landlords need to recognise that 5G and improved connectivity will benefit them by increasing the overall value of their property assets,” Gravett said. “The commercial value of a well-connected property thanks to increased rental revenues, minimising voids and having happy tenants due to higher staff retention and the ability to work more efficiently, should not be underestimated.”

Along with the gradual infiltration of artificial intelligence, 5G could provide very different experiences for many aspects of real estate in the next decade. Smart cities will become less of an experiment and more of a reality. In the logistics sector, driverless lorries could communicate with each other with minute accuracy. A bit of future-gazing from landlords now could lead to much greater resilience and more profitable buildings when the time comes.

This feature was produced in collaboration between Bisnow Branded Content and Cluttons.