New technology often creates financial winners and losers. Typically, the more disruptive the technology, the bigger the monetary hit. Which is why Credit Suisse has reflected on the impact that driverless cars might have on the value of our homes1.
In the past, robots have assembled passenger cars, yet someday soon they could actually be driving them. One of the more interesting concept cars at the recent Geneva Car Show, was an autonomous BMWi3 developed by Rinspeed, the Swiss automotive think tank which has been on the cutting edge of futuristic mobility since 1994 when they pioneered the concept of the mobile office.
Rinspeed’s Budii project2 is for those who see cars as simply a conveyance from A to B. Initially, their driverless car has a configuration phase in which it records and learns the preferences of your daily commute. When you’re ready, it takes the helm, armed with a high-resolution camera to map the terrain ahead; a laser-active guidance system; and the ability to monitor the behaviour of the cars around you. And passengers get to recline in a utopian bubble that’s reminiscent of a private jet.
Google is the leader in autonomous cars, with their modified version of the Lexus RX. They have now logged more than 11,000km of incident-free neighbourhood driving, and are waiting for regulators to approve their launch of 100 similar cars in California. Google’s internal controls are also impressive. Each time they release a software update, they run about 18,000 simulations of real life situations which each car has to pass before its upgrade is completed.
Of course the end-goal of driverless cars is more ambitious than simply freeing up the driver’s time. Given the tendency for commuters to spend their travelling time playing Candy Crush Saga, this gain hardly seems worthwhile! The big prize is about environmental conservation and easing urban congestion.
The idea is that, a decade from now, you’ll be able to relay your transport needs to a cloud-based server, which will identify which one of the many ‘RoboCars’ out there has scheduled the route that best overlaps with yours and has available space. You’ll simply be able to hop-in and any charges will automatically be settled via the wireless NFC feature of your smart phone. Efficient programming will work to keep the cars full, ensure they never get lost, and avoid the need for them to park (or it could pre-book a parking space if necessary). Add to this the game-changing prospects for shopping, as customers stay home and parcels are autonomously despatched to their homes.
According to Credit Suisse, futuristic mobility may impact on real estate prices in four ways. Firstly the convenience and reliability of driverless cars may reverse the prevailing trend for urban living. Urban property prices may fall and rural ones rise as families move to attractive suburbs that previously had infrequent public transport services.
Secondly, house prices may be less dependent on their proximity to reliable public transport links. The premium that currently exists for homes conveniently near to metros or suburban rail systems will slowly erode as door-to-door mobility provides a seamless alternative.
Thirdly, RoboCars can remain in circulation once they’ve dropped off their passengers (rather like taxis do today) reducing the need for inner-city parking. In that case, future developers may be able to reallocate parking space to other purposes, so diluting the ‘scarcity value’ of urban real estate.
Fourthly, driverless transport is less expensive, so businesses will be able to ship their products more cost effectively. Today the rule of thumb is that road transport becomes un-economic beyond 300km but as this changes, manufacturers may need fewer regional factories and depots – reducing the demand for metropolitan industrial property.
Of course there’s no guarantee that driverless cars will prevail in the future, or that they will have the anticipated effects on property prices. In fact the most likely starting point for robotic vehicles is public transport. Lausanne already has an autonomous metro, and the EPFL is conducting tests on driverless minibuses. Ironically our waning love for cars and more streamlined public transport may encourage future generations to use less private transport, driver or not.
Many observers remain sceptical about the potential of driverless cars. The first line of doubt is usually related to the safety of artificial intelligence – that there will always be a scenario that falls outside its programming, or a chain of events that its circuit-board cannot process. Likewise, questions may be asked about how safely human drivers can respond to a sudden unexpected manoeuvre by the RoboCar in front.
More practically, there are real-world logistical challenges which even the smartest computer cannot resolve. The theory of constraints explains how traffic congestion will prevent all cars from progressing, even if they have already filed their flight path in the cloud.
There are special cases for whom autonomous cars will clearly be liberating, particularly for old or impaired drivers. Also the development work on driverless cars requires auto designers to think through our future mobility needs and frustrations more clearly.
Private cars will take-up an import role in the ‘Internet of everything’, where the spectrum of tangible objects may be networked and communicate with one another. This could allow us to pool vehicles and coordinate the transport logistics of regular cars.
And for homeowners, the current assessment is that your best solution is to live where you chose to, regardless of any potential price disruption by driverless cars. And if they do catch on one day, you’ll still have the potential gain from converting your garage into an additional room!
Google’s self-driving car – BBC News
Tech Crunch discussion on driverless cars
1Credit Suisse, Real Estate Market 2015, Structures and Prospects, March 2015 PDF
By James Cullinan
James Cullinan writes articles on his blog Mind Behind and recently published his first lifestyle book, Flitting – A Beautiful Choice. In his principal role, he specialises in business modelling as a process for empowering business decision-makers and unlocking hidden business value.