No circular economy in real estate without proptech

Proptech holds the key

Circular economy holds many promises in making real estate and construction climate neutral. But it is also quite a tough nut to crack. In PropTech Denmark we are often asked what proptech and circular economy has to do with each other – if anything at all. The simple answer is: quite a lot! Actually, I would say that proptech holds some of the key unlocking tools in creating a truly circular economy in real estate.

Jakob Stoumann, former Network Director of PropTech Denmark.

New regulation & incentives will call for proptech

I fully reckon that proptech alone will not fuel a full-fledged circularity in real estate and construction. Clearly, we also need much more ambitious regulation and clearer economic incentives to really get the ball rolling and getting beyond pilot projects and the inevitable ‘30% of the floor is made of recycled concrete from the building we just demolished’. However, when (yes – I did not write ‘if’, since this will happen) regulation on circularity really starts hitting real estate, we will be in strong need of proptech solutions if we are to succeed in getting a true circular real estate economy running.

Key PropTech solutions for the circular economy

Examples of digital proptech solutions that will be key pillars in circular economy in real estate include:

• Digital building passports giving property buyers, owners, and operators insights and an overview of the type, quality, and circularity of the building materials enabling ‘circularity aspects to be part of decision processes around acquisitions, new build, renovation, and refurbishing processes. Madaster has already paved some ground here and has quite some buildings registered in their online material passport solution.

• Digital marketplaces enabling critical mass in the market and give us better, easier, and faster access to source and sell circular construction materials as well as easier price comparisons. We still miss seeing a true functioning online marketplace for circular building materials and structures, but Lendager Group and their spinout A:GAIN are good examples of some serious work being done to kickstart the circular marketplace.

• Digital certification and labeling schemes help give transparency and certainty to the types, quality, reusability, and circularity of buildings, structures, elements, and materials. While not circular material certifications per se, schemes like DGNB, Well, and Smart Building Certifications have shown the power and usability of certifications in supporting and fuelling large structural changes in the real estate industry related to sustainability, human health, and digitization.

• Automated and AI-enabled CO2 accounting tools that can help benchmark and compare CO2 emissions in different scenarios i.e. whether it is best to renew, reuse, recycle or upcycle a certain building, structure, element, or construction material. Though maybe not ready to use in a circular material economy yet, startups like Legacy and Normative have with their solutions already shown the power of automating CO2 accounting in and beyond real estate.

• Digital business models enabling circularity in real estate furbishing and inventory. A good example is the startup Stykka that designs and manufactures sustainable built-in furniture for commercial real estate. All of Stykka's products come with a digital twin, which makes it easy to maintain, refurbish, or upgrade and hence lower the TCO for its owners. Another example is the company Nornorm that by their digital managed ‘furniture on subscription’ model, prolongs the lifespan of office furniture by refurbishing and circulating them between businesses.

Finally, there are also some really interesting perspectives in using blockchain technology in ensuring international traceability and trackability of circular building materials and structures as well as enabling efficient and transparent digital marketplaces. We are still far from the goal – but luckily quite some circular thinking is sprouting in the propetch ecosystem.

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