The UK and European real estate industry was relatively slow to recognise the potential of e-commerce, compared with other professions. In some ways this is surprising. As long ago as the mid-1980s, real estate had access to several online data services that might have alerted it to the potential that arrived when the World Wide Web developed. That the industry largely failed to spot the potential is, however, relatively easy to explain.

These early services, such as Focus from Property Intelligence, (essentially a real estate related press cuttings service) Provision and Pride, backed by a consortium of UK advisory and brokerage firms (two early listing services) and Applied Property Research (a development and potential mover database), were advanced for their time, but suffered significant limitations.

First, they were dial-up subscription services; second, there were no agreed standards so they often used proprietary operating systems and third they were relatively expensive. Critically, they existed in the context of an industry that has only recently shed attitudes that could be described as cautious towards new ideas. Perhaps significantly, in those days, many real estate advisers had yet to realise that it is the intelligent use of data, rather than merely storing it, that gives competitive edge. Many UK real estate advisers invested heavily in their own proprietary databases, rather than recognising the benefits of pooling resources.

So, although the large firms took up the online services with some gusto, they were largely priced out of the reach of smaller and specialist practices. This is changing, and changing rapidly. Especially in the UK & Sweden, the industry has moved from playing catch-up, to matching and in some areas surpassing other industries and has done so very quickly.

There are several possible reasons for this. First, from the mid-1990s the industry emerged from a long and harrowing recession. This enabled the industry to make proper plans for the future for the first time since 1990, and the recession had taught the advisers & agents that data hoarding was inappropriate. Second, many of the major European real estate advisers formed alliances � and eventually merged � with US firms with much greater sophistication in the use of data. These include Jones Lang Wootton (now Jones Lang LaSalle), Richard Ellis International and Hillier Parker (now CB Richard Ellis outside the UK and CB Hillier Parker within the UK) and Richard Ellis UK (now CB Richard Ellis.

Third, of course, the Web arrived, providing a more-or-less consistent platform and interface, forcing suppliers of proprietary systems to adapt. Finally, the advent of broadband technology has led the industry to realise that intelligent use of technology adds value. It is perhaps worth noting that those conservative attitudes described above may have helped European real estate avoid the worst excesses of the dotcom bubble of the last 18 months.

There are three major areas in which the application of e-business technology is being felt: web-based listing & Information services, with various add-ons, exploiting the potential of broad band technology and the creation of industry specific portals and vortals that are perhaps the truest expression of e-business in the European real estate industry.

Listings & Information Services

Listing services in the UK began to develop relatively soon after the Web became established, led by the residential sector keen to find a cost-effective way to offer real estate to overseas buyers. Large residential brokers offered general listing services, while developers such as Regalian used the Web to promote specific projects, such as its Point West project in west London. Largely it has stayed like this, with no clear market leader emerging, perhaps reflecting the extremely fragmented nature of residential brokerage. The situation is broadly similar in continental Europe with most development in France, Germany, Sweden and Belgium.

In the commercial real estate sector things have developed rather differently. One of the most important developments came with the creation of PropertyLink (now EGPropertyLink), a UK listing service which changed the paradigm of commercial services. Early efforts had replicated the old online systems and were subscription-based. The consortium of real estate agency firms that backed PropertyLink recognised the Web as an advertising medium � so it was free to the end user, with the information provider paying for space. The model was powerful enough for Estates Gazette, the leading UK real estate journal, to invest in it � hence it became EGPropertyLink.

Progress in continental Europe has been slower � probably reflecting not only the less transparent nature of its real estate markets generally, but also the greater level of owner occupation, which stands at around 70% in some European markets, compared with around 30% in the UK. Jones Lang LaSalle, CB Richard Ellis, August Thouard and Bourdais back WEBIMM, covering Paris. Plans are for it to move both to cover the whole of France and to expand into data provision.

Perhaps a key development was the launch four years ago of Estates Gazette Interactive, an online version of the UK journal. The arrival of EGI was fundamental in shaking up the real estate industry�s attitudes towards � perhaps even awareness of - the Web.

Listing and news services have also prompted more sophisticated thinking about e-business. EGI, for example, now offers a host of add-on services. This will be returned to shortly. But it is now appropriate to consider the hardware � for this is the platform on which the future will be built.

Broadband

The implementation of new broadband technology allows landlords to provide occupiers with very high capacity and very high speed Internet connection at relatively low cost. First implementations were in the US nearly two years ago. In recent weeks the share prices of companies supplying the technology have struggled, but it seems likely that they have simply been tarred with the brush of more extravagant dotcom ventures, largely in the consumer sector, that were founded on weak business plans.

The longer term prospects for broadband are sounder because the emerging technology will improve and there is undoubted demand for it. As a result, Europe has started to follow the US lead.

In the UK two consortia, one led by Morgan Stanley Dean Witter, the other by Goldman Sachs, and which between them include many of the major UK real estate companies and many investing institutions, propose to wire up building stock equivalent to more than the entire office stock of central London .The Morgan Stanley Dean Witter consortium has already issued Request for Proposals to IT providers. The object is to have the equipment installed within six to nine months.

But all of this activity is of academic interest unless it is understood what the projects will lead to. The landlords are carrying out this work because they see opportunities to add value to their investments. The way in which a vast amount of real estate can be managed, and the services that are available in it, is set to change forever.

The Internet, combined with the driving down of communication costs, means it is possible to have permanently open links. There is no longer a need for dial-up connections or expensive leased lines. With lines open all the time, landlords can have remote monitoring and substitute permanent on-site staff with mobile teams, for example via a WAP phone.

For instance, when a problem arises with a building system, it triggers an alarm at a control centre, possibly several miles away. The control centre can then dispatch mobile teams where they are needed, creating significant efficiency gains.

Also, all of the investors� customers (that is, their tenants) can track job requests through a link to the service desk. If, say, a tenant has requested repair work, it can log on to an Intranet and sees a job progress report. Another possibility is being explored. Arlington, a specialist developer of business parks, for example, is considering Web portals offering services not only to business customers but also to their staff. And it may yet go further.

The technology allows the provision of additional services, such as inexpensive hire of video conference or Internet based voice communication because the provider � whether the owner or its agent, is able to aggregate spending power to negotiate discounts. If real estate managers can bulk buy they can offer products and services that tenants may have previously thought were not available or were uneconomic.

One of the most exciting services is ASP or Application Service Provider. There is an element of Back To The Future here. Until the late 1970s even very large European firms could not justify the cost of buying a huge mainframe computer, so rented space on them instead. The microprocessor came and allowed the PC. Computer power moved into the office.

But increasing business complexity and the need for more sophisticated systems is bringing back a variant on the old �we can�t afford to computerise� refrain. So why not lease (say) the most sophisticated payroll package managed by a company you trust and access it over the net?

Another dimension to broadband is mobile communication. UK Technology consultant Paull [correct] Robathan has said: �Large multi-national companies will be assuming that their executives are always connected.� New mobile technology means that full time, ISDN standard connections to mobiles are possible. WAP is merely the first hint at this and will soon be superseded, he believes. What this creates is the era of hyper-mobility.(1)

The economics of broadband require large buildings but could bring high technology to small and medium enterprises. This has implications for both real estate ownership and management. Expect security staff to become more akin to PRs. With all this mobility people don�t want feel they are being watched but do want to feel they are being protected.

Robathan adds �The important thing is protecting intellectual property.� In short it matters less if your Palm Organiser is stolen, since household insurance protects the equipment, but you do need to know the data held on it is secure and retrievable. This imposes new demands on real estate management, which seems set to move from a �gatekeeper� model to an �escort� model.

Fred Guscott head of facilities management at UK real estate service provider Eurica says: �In a couple of years time everything we�ve wanted to do will be possible because there will be no technological barriers. It�s a fundamental change in our industry.� Workplaces will be run like hotels.

But exactly who will be doing the running? Will it be the real estate firms themselves, or will it be the technology providers. This is the great � as yet unresolved � debate about the implementation of broadband and its associated potential in Europe.

The key issue for real estate owners is whether they give away the provision of services or take a direct stake in the service provision ventures and move from being bricks and mortar firms to clicks-and-bricks firms. In short: who owns the brand? There are very few UK equivalents, for example, of the branding associated with the retail malls of the Simon real estate group in North America.

It seems likely that different approaches will emerge. Arlington, the UK business park developer, sees the potential of broadband as part of its brand. When its broadband system is up and running, the facilities and real estate management potential outlined above will be complemented by Arlington portals offering services to their direct clients � tenants � and their staff.

Another approach is where a broadband service provider fits out buildings at no cost to the owner and acts as the service operator, with the owner receiving a percentage of the revenue stream, in effect as payment for supplying customers. This approach, commonplace in the US, is being increasingly seen in Europe, particularly as those US broadband operators expand into the region. Whatever model is used, portals are fundamental to what can be achieved.

Portals, Vortals and disintermediation

In Europe the terms portal and vortal tend to have somewhat imprecise definitions. Here a portal is defined as a web-based service that provides a suite of services to a narrowly defined client group, be it the tenants of a building or a specific group of professionals. A vortal develops this by offering a suite of services to a wider set of clients, possibly all of those within an industry.

The thinking that is developing alongside the growth of listing and information services, designed to broaden their appeal, combined with the development of broadband technology is creating synergies that promise to offer previously unheard of levels of service to European real estate firms and their occupiers.

Building portals offer a potentially invaluable management tool for real estate owners. For corporate occupiers of a portfolio of properties, the internet offers the ability for critical portfolio data to be held in one place, offering global data consistency, to be viewed and updated instantaneously by any number of users. A number of such systems are available. One such system, Jones Lang LaSalle�s CREDOnet, won the 1999 IDRC/NACORE International Innovation in Corporate Real Estate Award.

CREDOnet is used at Berkeley Square House is a large multi-tenanted building on Berkeley Square, in the heart of London�s West End. Berkeleysquarehouse.com is its portal. It offers a concierge service, able to arrange deliveries of many services � from flowers to sandwiches, arrange appointments with hairdressers and nail bars, arrange car hire and many others.

It also includes a Procurement Club enabling tenants to take advantage of managing agent Jones Lang LaSalle�s bulk buying capability.

Systems in which procurement is a key function highlight one of the most significant developments to come out of the rise of e-business. Already evident in the US and increasingly so in Europe, the costs and benefits of such ventures create new collaborative opportunities.

In the US Jones Lang LaSalle, CB Richard Ellis, Insignia and Trammell Crow have established Project Octane, which aims to establish an industry standard for online transactions. It will be a market place, communication, collaboration and process management system� in short a transaction management system.

It is doubtful whether a pan-European version of Octane could be developed because of the huge diversity of practices and regulatory requirements in Europe. However, there is no reason why elements of its philosophy cannot be implemented at a country or city level. The potential is certainly there.

The basis may come with Project Pathway. This is a collaboration between three international real estate advisers �Jones Lang LaSalle, DTZ and CB Richard Ellis - and Reed Business Information, the publisher of Estates Gazette. Pathway has a long term vision of creating a pan-European transaction system. Initially it will provide listings, with data and news following fairly quickly. But with an estimated �30m of funding available over 2-3 years an industry standard transaction exchange is the vision, with UK, Belgium, France, Germany, Ireland, Holland and Spain the initial target markets. It will be a vortal rather than a portal.

Finally, groundbreaker.net is an interesting variation. Established with $1.5 million of venture funding from the partners of UK surveying firm Drivers Jonas, groundbreaker.net, a subscription system, operates on a very simple proposition. Much of a real estate adviser�s work � whether as a pure real estate advisor, lawyer or accountant � is repetitive, takes a disproportionate amount of time and delivers no significant margin. This basic �groundwork� must be done for every single non-expert client, every single time. It can include items as fundamental as explaining terminology, but also includes more complex matters such as clearly stating legal positions.

So why not pool the information that is the core of this �bottom slice� of work? The site offers free plain English briefing notes on many aspects of UK real estate, with many more planned. Then there is fee-based basic advice and, should that not be sufficient for initial needs, click-through links to a range of �duty experts�are available. The theory is that before a prospective client directly contacts a real estate adviser, it will already know the fundamentals, releasing the advisers themselves to focus on higher level and therefore higher margin work.

This highlights perhaps the fundamental issue facing real estate advisers developing e-business solutions. In common with many other industries, it has become a core assumption that the presence of Internet-based solutions will lead to a degree of disintermediation.

However, it seems unlikely that such systems will remove the need for some form of brokerage adviser. It does seem very likely that brokers and agents will need to develop a wider range of advisory skills. It is possible that some of their day-to-day work will be, in effect, automated. However it would be a very imprudent client that bought an investment without, first, a physical inspection, but more crucially without taking proper advice to ensure that it is being acquired on the best possible terms and within the most appropriate contractual structure.

Europe offers a wide variety of leasing and purchasing packages for both occupiers and investors. What the developments outlined here � many of which are still in their infancy � offer is the potential to give advice that is more sophisticated in the knowledge that clients will have the tools to do the basics for themselves. This is, perhaps, the key challenge for European real estate firms over the next five years.

Quoted in Get Connected, by Ian Cundell, published in The Facilities Business, August 2000, pp18-20. Published by The Builder Group (London)