Written by Dr. Kyle Wong, Ph.D. and CFA, Project Director at ACH Worldwide Limited
Everyone complains about how unaffordable housing is around the world. Indeed, the rise in house price exceeds that of salary in most places. One culprit is the macro environment: the persistently low-interest rate is an important factor driving up real estate prices. The low-interest-rate explains the high price from the demand side. The other side of the equation is the supply side. Building construction is simply becoming more and more expensive. Not only is the price of land rising all over the world, labour and material cost is also rising. It is estimated that 25% to 35% to build a property comes from labour cost (1). In interior design projects, the labour required is intensive and the tasks take longer and have to be carried out by highly skilled workmen. Such works usually have a 50% ratio between labour and materials. So any technology to reduce labour cost in the construction process will make housing more affordable for everyone.
There are two major factors driving up labour cost. Young people complain about the tough and hazardous working environments and so they avoid entering the construction profession at reduces the supply of workers. Secondly, governments are increasing the protection and benefits to workers by legislating more rest breaks and more safety gear. These have improved the working environment of construction workers but also increased the labour cost. In many countries like Singapore, many developers have trouble finding skilled workers and start to import foreign workers. But as the COVID-19 crisis shows, it can create other problems.
OKIBO, an Israeli startup, wants to deploy smart robots in construction sites. Their first generation of robots focuses on dry-wall plastering. The advantages are speed, quality, reliability, and of course cost. Their core technologies are 3D scanning for accurate environment mapping, AI for autonomous work, advanced sensors for autonomous path planner and precision engineering to improve the accuracy of the robotic arm. Currently they let construction companies in Israel try out their robots so they can receive valuable feedback to improve their prototypes.
Even though plastering is only a part of the construction process. It is currently a 220B USD market and is expected to reach 400B in 2025 (Grandview Research, May 2019). Once the technology in plastering is mastered, OKIBO believes their robots can apply the same technology to wall painting. OKIBO’s goal is not to use robots to totally replace humans, but to enhance the workers’ productivity and safety.