Digital

Smart cities

New technologies that would once have seemed the stuff of science fiction fantasy are quickly becoming reality.

Tower 42 was the City of London’s first skyscraper. Plans for the building, formerly known as the Natwest Tower, were first unveiled in 1964. But the prospect of such an edifice piercing London’s skyline proved so controversial that the foundations were not laid until 1970 and construction took a further 10 years.

New technologies are transforming cities and creating investment opportunities

Today, the City’s gleaming pillars of enterprise shoot upwards at an astonishing pace. They have grown in such numbers that anyone returning after a few years’ away would be amazed by the change.

A time traveller from 50 years ago, when bowler hats and pinstripes were commonplace and St Paul’s Cathedral had only recently been replaced as London’s tallest building, would think they were in an alien land.

The pace of change is likely to quicken. But we have a good idea of how cities of the future will look. That’s because many of the revolutionary technologies that will influence their development are already in use.

Self-driving and electrical vehicles (EVs), for example, are likely to have a major impact and will change city dwellers’ attitude to cars.

Many won’t bother to learn to drive or own a car but will simply rely on Uber-like apps to get from A to B. Those who do own cars will regard them chiefly as a means of earning money, either by feeding energy back in the grid at times of peak demand or by renting them out.
Isaac Vaz, associate director, infrastructure equity at Aviva Investors

In other words, EVs can absorb electricity produced when demand is low and store it in their batteries. They then discharge it back into the grid when demand rises.

If Vaz is right, this trend will change the way cities look. Parking spaces, car parks and petrol stations could disappear. They will be replaced by green areas, housing and shops. The air should be far cleaner as the petrol engine is phased out and wind and solar energy power tomorrow’s world.

Stepping ahead

The smart cities of the future could have new ways of generating power. These include capturing the energy from footsteps. This may sound futuristic, but the technology has already been developed by Pavegen of the UK. One footstep generates around five watts of electrical power, according to the company.1

Tiles could be placed in Bank Station using the energy from tens of thousands of marching commuters to power street lighting. 
Isaac Vaz, associate director, infrastructure equity at Aviva Investors

The footfall data produced by the “smart streets” in which the tiles are installed can also provide major insights into consumer behaviour in shopping centres, for example.

“Retailers could use this intelligence to gauge the effectiveness of advertising or maximise the efficient use of signs to influence where people go,” adds Vaz.

Similarly, EVs could be charged as they drive around the city’s streets. Qualcomm, the US IT giant, has already shown the technology at a test track in Versailles, France.2

These roads will produce a large amount of “Big Data” that could prove useful in a number of ways, including the development of self-driving cars.

Vaz accepts there are some drawbacks. They include the cost and inconvenience of installing charging systems under roads. But there are many pluses too.

“These cars could in theory run forever. So batteries could be smaller and lighter, and cars could be cheaper to run. Users would not need to regularly plug in their cars, cutting out the need for hundreds of thousands of charging points in Europe alone,” Vaz adds.

The BIM effect

It may take years before these technological wonders become commonplace. But cities are already being designed and built in a completely different manner from just 10 years ago.

New ways to design and build cities

Planners, architects and investors no longer need to pore over rolls of complex blueprints. They can use virtual reality created by laser scanning to see how the final building will look.

They can also watch construction develop in 3D alongside projections of when the building will be completed and its final cost. This is thanks to Building Information Modelling (BIM), which produces a digital representation of a construction project.

BIM helps cut out errors, sometimes only discovered once construction is underway, speeding up the building process. It also cuts construction and operational costs and shows how a project should perform when built.

Finally, it helps manage the building far better than is the case today, says Dan Bentley, a partner at construction and property consultancy Core Five.

Expanding on this, Lee Coates, BIM manager at Core Five, believes BIM “has effectively modernised the construction industry and is providing a significant increase in efficiency”.

It can also de-risk a project, according to Bentley. “BIM coordinates the different disciplines that supply services to a building, such as architects, structural and electrical engineers,” he says.

“This ‘clash detection‘ could be done previously but took time and was subject to human error. Contractors would add a premium to take on the cost of any risk, inflating the overall cost of a project.”

The potential for cost savings is so great that the UK government now requires BIM be used in any public sector-funded project as a means of reducing capital costs by 20 per cent.3

Vaz believes the use of BIM brings major advantages throughout a building’s life, including at the design phase. 

"If you are planning a new underground line or a new building in a city such as London, you have to take account of the position of existing infrastructure on the ‘as built’ drawings.

These are the original design drawings, which have been revised to reflect any changes made in the field. Yet often they are not updated, so a building may actually be 10 metres to the left of where it is supposed to be. Such a deviation can have a major impact on where a new development should be sited."

Isaac Vaz, associate director, infrastructure equity at Aviva Investors

By contrast, BIM provides an accurate guide that designers and architects can use for new projects. Vaz cites the £4 billion-plus Thames Tideway Tunnel as an example of how BIM can save money. The tunnel, a ‘super sewer’ built under the tidal section of the River Thames, will stop sewage overflowing into the river. To create the tunnel, a large amount of soil must be removed by barge.

Timing when the barges can dock is critical given the tide moves by around two metres. Vaz says that BIM allows the planners to know exactly when the barges should arrive. This boosts efficiency and avoids project delays.

Eye in the sky

New technology is also changing the way asset management firms monitor their investments in physical assets, such as infrastructure and commercial property. Vaz points to the growing use of drones as an example.

“Most of our asset managers are based in London, but we have projects all over the country,” he says. “Drones with cameras can provide a wealth of data that could only otherwise be accessed by flying in one of our managers.

We can use drones to check how a project is developing, comparing real-time images with the construction plans. We could use a drone to check for rust on turbines, or see whether panels in a solar park are operating efficiently.”

Escape from the country

The rise of smart, green cities

In 2016, around 54.5 per cent of the world’s population lived in urban areas, according to the UN. It projects that by 2030 urban areas will house 60 per cent of people4, which means over a billion more people will be living in cities than today.

The rise of smart, green cities that can deliver quality of life benefits could make a major contribution to human progress and well being. Moreover, just as new technology allows us to see what a future building will look like; we can already model the outlines of the cities of the future.

Enquiries

Rob Davies                   Rob.davies@avivainvestors.com

James Whiteman          James.whiteman@avivainvestors.com

Notes

1 'The next big thing in energy might be people power', Bloomberg, August 2017

2 'Qualcomm demonstrates dynamic electric vehicle charging’, Qualcomm, May 2017

3 'How does BIM benefit facilities managers?’, Service Works Group, January 2018

4 'The world’s cities in 2016’, United Nations, 2016