The popularity of Pokemon Go has plateaued somewhat after the mobile game’s shattering launch in July in Asia Pacific. Still, thousands stampeded through the streets in Taiwan in search of ‘Snorlax.’ As this augmented reality (AR) game with animated monsters led many to venture afar in the real world, does this footfall bring any value to real estate?
According to Article 86 of the Civil Code in Japan, Pokemon’s birthplace and Asia’s biggest real estate market by sales volume, real estate refers specifically to “the land and the fixture” of the area under scrutiny, indicating that it is up to the landlord, in the context of profitability, to appropriately “dress” the property to attract as many people as possible, according to Takeshi Akagi, Head of Research, JLL Japan.
By collaborating with Google Maps, Nianti’s use of AR has drawn attention to its utilization of GPS and locational services technology as a key driver of the game’s real-time features. Niantic has a major stake in Pokemon Go. Specifically, the technology is used for “Pokestops” and “Gyms” that appear in the app’s internal map, which are essential for users to train their Pokemon, as well as progressing through various levels by beating Gym leaders.
“The details of the gameplay relates to real estate due to the nature of the real estate industry’s valuation and business models,” says Akagi. Because the tangible side of real estate is physically rooted in the land, any sort of additional value attached (i.e. proximity to train stations, aesthetics of the building, adequate utilities, etc.) is inherently part of its overall property valuation, he explains.
The impact on land values
“While it remains far-fetch to consider that placing Pokestops and Gyms will add any asset value, the increased footfall and traffic allow property owners and developers a chance to cash in,” says Akagi. Not only will it further attract people to these checkpoints, the popularity of the game could influence land values by making them hot-spot landmarks for gamers. Business establishments surrounding these destinations will also become exposed to the increased traffic of gamers to reap its potential benefits, he adds.
McDonald’s sponsorship deal with Pokemon GO during its launch in Japan saw the conversion of 2,800 plus McDonald’s locations into Pokestops and Gyms, which helped to increase sales and boost the fast-food restaurant’s branding.
There are also successes in Tokyo and parts of Asia. For example, Shibuya, one of Tokyo’s biggest city centers, has its Gyms located in iconic places such as the “Hachiko Exit” next to the famous Shibuya crossing. In even bigger retail markets, Ginza and Omotesando, Gyms are located at Ginza’s Cartier and Omotesando’s Hugo Boss locations. On top of the heavy traffic these prime real estate markets already have, this new wave of traffic could be a movement that puts retail sales through the roof. In Singapore, at least 16 malls have participated in the mobile game by placing Gyms and Pokestops. The media in the region has helped to generate further interest by listing hotspots for Pokemons.
“Still, it is much too early to quantify the app’s true impact and its ambitions. Its soaring popularity should still be scrutinized from every angle to draw conclusions for the economy’s residual opportunities,” says Akagi. However, this AR gaming has shown to become a real societal phenomenon. As more of these economic and social impacts of the game come into full realisation, Pokemon GO may have just started something monumental in revolutionizing the residual effects of the simple pleasure in gaming, he adds.
Property-technology taking shape?
Similar to the concept of fin-tech (financial-technology) in the broader world, the implementation of technological innovation in real estate may lead to the expansion of the industry and the birth of a new phenomenon, “prop-tech”, or property-technology, speculates Akagi.
Upon Prime Minister Abe’s announcement regarding the new stimulus package, along with Bank of Japan’s (BOJ) latest monetary policy meeting on July 29th, it was revealed that two of three fundamental “arrows” of Abenomics will be revamped by: 1) The BOJ supporting further monetary easing by increasing purchases of exchange-traded-funds, and 2) the government funding a new 28 trillion JPY stimulus package. However, the new initiatives are missing the third fundamental, yet crucial, ‘arrow’ of the original Abenomics: supporting long-term growth strategies of emerging industries via innovation and structural reforms.
“The Pokemon Go phenomenon shows that technology could bring about transformational changes. Japan, with its aging population, must consider new growth strategies to further encourage innovation,” says Akagi. “The growth of such emerging innovation and the influence of technology on the economy should shed light on the efficacy of the Third arrow.”