HOW “PROPTECH” IS CHANGING REAL ESTATE
Technology sure has a way of changing industries, markets, and mindsets. The past decade witnessed a rapid and continuous evolution in consumption methods where customers surf websites to validate their consumption choices, and in most cases, complete the purchase digitally after reading reviews and watching “how-to” videos. The real estate sector is no exception; 80% of homebuyers in the United States search for their future homes online, expectant to see pictures, and know details before viewing the site in person.
The impact of technology on the real estate area is slow in comparison to other industries. However, the following years promise to bring substantial changes to the sector, driven by immersive technologies and the rising trends evolving around efficiency and customer-centricity.
The Rise of PropTech
Wealthy investors and executives in suits have traditionally dominated the real estate sector; but with the global value of $280.6 trillion and forecasts of $4,263.7 billion worth of revenues by 2025, technology firms and innovative startups realized the enormous area of opportunity and stepped in the territory through investing in the least exploited tool: technology.
PropTech is an acronym used to describe the use of technology in real estate to create and improve services. The term is primarily associated with startups offering digital platforms to facilitate the purchasing as well as well as innovative products and new business models for the real estate markets, whether commercial or residential.
The first generation, PropTech 1.0, emerged at the beginning of the 21st century, with the rise of online property search engines (like Zillow and Rightmove) that disrupted the traditional agency models. We are now witnessing the second wave, or PropTech 2.0, driven by advanced technologies like cloud computing, data analytics, smartphone devices, and increased connectivity, to deliver innovative services for buyers and sellers like virtual tours, estimations, 24/7 customer support, chatbots, and many more. The current PropTech platform is intersected with shared economy, ConTech (construction startups), smart city real estate (smart cities and buildings), and real estate FinTech (finance startups).
The future promises to hold the real breakthrough and change the real estate business: Technologies like deep learning, artificial intelligence (AI), 3D printing, and big data analytics will be harnessed to optimize efficiency and maximize gains.
This report by Deloitte predicts that future real estate will evolve around wellness, the need for smart buildings, and the rise of co-working and tech-enabled space. The advanced technologies will also prompt changes in the decision making and establish a new business landscape with “networks of teams taking decisions rather than a few at the top of a hierarchy”. The new model “will lead to a fresh approach to leadership and should aim to promote more, inclusivity, employee engagement and working practices”.
- BlockchainBlockchain will potentially redefine the transaction making in the same way that the internet revolutionized communication and information sharing, which can eventually restructure the real estate business. Blockchain is the technology solution underlying cryptocurrencies, but it can be used in multiple industries. This Oxford-Said research by Andrew Baum defines blockchain as “a shared ledger where a consensus of replicated, shared, and synchronized digital data is spread across multiple sites, countries, and institutions”. The essence of the technology is built on the fact that “there is no central administrator nor centralized data storage”, it is a business practice that relies on “peer to peer transactions with the ability to create a historical and permanent ledger of transaction details”. The solution also provides “trust-based interactions”; trust is established through an encrypted consensus rather than third parties.
Despite PropTech innovations, the market of real estate is still mostly dependent on intermediaries and transactions that require time and proximity. Blockchain can add various benefits to the process like disintermediation, transparency, faster transactions, lower costs, and smart contracts. Security and fraud, however, are still a significant concern for many businesses who are evaluating the adoption of blockchain into their operations.
- Augmented Reality (AR)Augmented reality is the layering of digitally generated images, videos, texts and layered on top of the physical view. When AR is applied to the real estate business, online digital catalogs, videos, and text will be a thing from the past. The technology allows users to interact with the digital environment through smartphone applications, tablets or AR headsets.
AR real estate apps like “Commercial Real Estate” and “Realar places” offer new marketing options and advertising possibilities. They provide a clearer understanding of products and increase interest and engagement of customers, who can explore their options through the AR mobile app and make decisions before going to the agency or the site, which saves time and resources.
- Big Data AnalyticsThe data generated from mobile devices used across the city can unlock unprecedented insight into buyers’ interests and preferences. The analytics reveal to realtors and agents the buying and selling trends in a specific area, home pricing and value trends, and a comprehensive view of the housing market in general. Real Estate agencies will need big data analytics to predict future trends, make informed decisions, enhance community planning, and improve targeted marketing. Also, customers can benefit from open data to access information on available housing and make better purchasing decisions.
- AI Chatbots
Chatbots powered by AI technology can advance a real estate business. For example, this real estate chatbot helped sell three apartments in ten days. They can answer frequent questions, engage with clients in real time, and guide potential buyers through home searches. They offer simple, fast and convenient service that can convert customer inquiries into appointments and potentially contribute to a deal. Chatbots also reduce the workload on agents and allow them to focus on productive activities.
The increased digitization and rise of smart living (smart homes, smart buildings, smart cities) will further push the real estate industry into the realms of technology. PropTech is gaining momentum; in 2017 alone, venture capital firms invested $12.6 billion in the sector, and these figures are expected to rise in the coming years. The advancement of technologies is expected to revolutionize further the sector and blend boundaries between different industries interrelating with real estates, like finance and construction.