Just as the board game now comes in startlingly modern variations, real estate itself has evolved to match our changing world.

he property board game Monopoly has been around since 1935, though it was based on an older educational game. Just in case you have never played Monopoly, it works like this: players move around a board, buying and trading properties and developing houses and hotels. One player is nominated as the banker and handles the cash (the famous ‘Monopoly money’), as well as the title deeds, mortgages and other trappings of property investment. 

Players collect rent from their opponents, trying to force them into bankruptcy, and the winner emerges when all opponents are broke. That’s the theory, at least. My childhood memory is that the game ends when one player flips the board and storms off in a shower of miniature plastic houses.

The game originated in the US, and when it crossed the Atlantic the names of the properties were changed to well-known streets in London. It is currently published in at least 47 languages and sold in 114 countries. The Monopoly board has been localised countless times. For example, the Dutch version features Kalverstraat in Amsterdam as the most expensive location, replacing Mayfair. 

However, despite multiple local and novelty versions, the game remained the same for decades – or at least it did until the Revolution. Monopoly Revolution was a special edition released in 2010 to celebrate the game’s 75th anniversary. It features electronic banking and a striking circular board. No paper money is used. Instead it uses a credit card set-up with an electronic device that produces sound effects and music. 

Despite the considerable changes in appearance and technology, the kit still contained title deeds and miniature plastic houses and hotels. The banker’s role endured. There was just one rule change: for a quicker game, play could end when the first player went bankrupt. Then all other players would add up their money and properties and the richest player would be the winner.

An even bigger change came in 2013 when Monopoly Empire was introduced. In this version, the players collect brands and billboards displaying those brands, rather than properties. Inspired by high-rise advertising seen in the world’s biggest cities, players showcase their brands on a miniature tower, and the first player to fill their tower with brands wins. The objects of desire are no longer posh addresses but icons of the tech-driven, 21st-century lifestyle such as Spotify, Xbox and Samsung. Imagine Samsung replacing Park Lane! 

No one goes bankrupt in Monopoly Empire, and the game moves much faster than traditional Monopoly. Since there is no need to collect property groups or to build houses or hotels, the game can last less than 30 minutes. With Empire, the game moved from a marathon between locally based landlords and developers to a sprint between global investors in a tech-driven lifestyle.  

Just as Monopoly has evolved to reflect social change, real estate has evolved to match the user-experience (UX) economy. The end user – a term that includes the growing number of individuals working in the freelance or gig economy – now expects flexibility, experience and convenience in everything including real estate space. Technology has risen to the occasion, enabling co-working offices, home-sharing platforms and online shopping – all examples of real estate’s evolution. 

This evolution can be called operational real estate or ‘space as a service’. Space as a service marks the change from real estate as asset ownership towards the monetisation of physical space and related services. In this new world, the previous hands-off relationship between landlord and tenant gives way to a closer involvement. 

The focus shifts to more personal, flexible and tech-centric services to the end user, who may not be the tenant but rather the tenant’s client. This is the big change. Traditionally, the space that tenants occupy is not core to their business. It is simply the shelter they need for their people, equipment or goods. With operational real estate, the opposite is true – the space is integral to the end user’s experience and therefore to the success of the tenant’s business. 

Space is something to be repackaged and branded. This often involves technology-driven disruptions to an existing market, such as Airbnb in hotels and WeWork in offices. Monopoly Empire marks the board game’s transition to the new, user-centric world; space as a service marks the same transition for real estate. 

Original Monopoly and traditional real estate concentrate on the physical aspects of real estate and the landlord/tenant relationship. In contrast, both Monopoly Empire and space as a service look beyond the physical to focus on the user’s experience. 

This new world of space as a service or operational real estate, which Didobi has examined for the Investment Property Forum, is as different from conventionally defined real estate as Monopoly Empire is from the original 1930s Monopoly. We believe that operational real estate cuts across the familiar traditional labels (such as office, retail and industrial). In certain sectors it will become the norm. 

Monopoly Empire marks the board game’s transition to the new, user-centric world; space as a service marks the same transition for real estate

What does it all mean for investors? Operational real estate is a relatively new concept. For investors, the key distinguishing feature is the variability of the underlying revenue stream when compared with the income streams derived from traditional real estate. The certainty associated with institutional leases is gone. Into its place steps a 21st-century real estate investment where the return is directly and deliberately linked to the fortunes of the business conducted on the investor’s premises. Assessing the riskiness of such an investment needs new tools, which are described in Didobi’s report. 

Just as Monopoly has evolved in ways unthinkable to its original promoters, an equally fundamental change is happening in some parts of the real estate market. And though it is currently labelled operational real estate or space as a service, eventually (for those parts of the economy where it works best), the term will morph to just ‘real estate’ or possibly ‘space’.

Stephen Ryan is a research associate at Didobi, specialist advisers to the real estate industry. He has worked in the real estate and wider financial services industry since 1988, most recently with INREV in Amsterdam, concentrating on real estate research, corporate governance and liquidity, and prior to that was at Mercer where he advised institutional investors.