The age of digitalisation can feel like a crashing wave, with new innovations within the real estate technology scene emerging at every corner, disruption seems imminent. Many multi-billion dollar industries have learned to roll with the punches and embraced the ever-changing landscape by adapting and embracing fast-growing real estate technology. The real estate industry, in particular, is fueling the proliferation of smart technology – shaping and creating inevitable real estate trends that are necessary for building a more sustainable future.
With the surge in smart consumers, the use of tools like Property Guru or 99.co enables users to compare house prices, area trends and financials; Google Maps allows for real estate buyers to conduct primary level research, checking out neighbourhoods and surrounding facilities before arranging a viewing. Especially with apps like JLL’s Virtual Tour where virtual viewing is now possible, making visiting a property physically no longer a necessity, thus allowing real estate agents the ability to showcase properties in volumes, and with more convenience and ease – saving on cost and time spent on travelling.
It is inevitable that new real estate technologies, also known as Proptech innovations, are slowly eclipsing conventional processes.
Increasing Popularity of Co-working spaces
The emergence of co-working spaces has increased traction as this sector gains fast-growing popularity today. There are an estimated 32,000 flexible workspaces worldwide with a market value of about $26 billion, alongside an estimated growth of 240% over the last 3 years, due to the rising demand of a younger workforce seeking to engage in creative and comfortable workspaces.
Previously, SMEs and freelancers worked from home or cafes which hindered business growth opportunities. With the rapid emergence of co-working spaces, networking opportunities are made more prevalent these days. Not to mention the flexibility such arrangement brings, allowing real estate tenants to indulge in cost-sharing schemes to increase the affordability of such spaces.
Larger firms are also looking to establish stronger corporate relationships with co-working spaces such as top global players like Wework, IWG, and Servcorp, dominating the co-working scene globally, revolutionising the real estate market.
Adoption of newer Real Estate Technology (Proptech)
The advancement in real estate tools will also play a significant role in influencing the dynamics of the real estate industry. According to Forbes, a whopping $5 billion was invested in real estate technology in 2017, which is a significant leap from the $33 million invested in 2010. As the focus of investors shifts, we can expect to see more investments in such avant-garde real estate technology to reduce labour and monetary costs. Some of the more notable real estate technological developments have been listed below.
All things Internet of Things(IoT)
Many industries are adopting the use of the Internet of Things (IoT), and the real estate industry is no exception. An example of IoT would be any building that is connected to devices like lighting systems, plumbing, and electrical devices via the Internet to perform smart functions. The evolution of IoT will only progress as nations become smarter with the rise of 5G technology.
Co-working spaces are beginning to deploy resources to implement IoT technology as it allows flexibility and possibilities of workspace optimisation. One such way is to leverage on real estate technology by install sensors in the building to assess the occupancy of working spaces and conference rooms for optimal utilisation. This will contribute to the managing of operating expenses and energy conservation as the lighting, temperature and air quality of the building can be controlled remotely, improving the overall experience of tenants.
Virtual/ Augmented Reality
In contrast to traditional house-hunting, real estate buyers will now have the option to use VR technology to view potential homes – leading to substantial savings in both time and money. Buyers will undergo an immersive interactive experience that provides precise information through the use of 3D models. According to Goldman Sachs, the market size of Virtual Reality (VR), a fast-advancing teal estate technology, is expected to reach $2.6 billion by 2025, predicted to be the next largest computing platform in the world.
Predictive Technology and Machine Learning (ML)
As preferences of property buyers continue to evolve, real estate players need to remain nimble if they intend to maintain prime positioning in the industry – this is where the adoption of machine learning (ML) and predictive technology within the real estate scene is of utmost importance.
The common misconception between Predictive Analytics and Machine learning are that they are the same, which isn’t entirely accurate. They have overlapping functions and often work in tandem with each other with one key difference – machine learning technology can make assumptions, test and learn autonomously.
Predictive Technology uses historical statistics to predict future outcomes such as possible changes in the market or a customer’s behaviour. Machine learning (ML), on the other hand, uses algorithms to provide systems with the ability to automatically learn from data to improve experiences or instructions without being explicitly programmed.
What does that look like in the real estate market you ask? Softwares or apps can match prospecting tenants with the right homes at a price that drives profit. Companies like Airbnb and Zillow have already adopted such real estate technology to disrupt the way current property buyers, sellers and renters procure and transact.
Previously, property management companies and commercial real estate used customer relation management and excel software for their operations. In an age where data is king, big data is essential where business intelligence is concern, especially when making major fundamental decisions. The development and increased usage of business intelligence software are paving the path for a more rigorous analysis of multiple data sources. As such, businesses can derive actionable insights that help them tailor their engagement or product/service offerings to their target audience. The $20 billion market is expected to continue thriving over the next decade as more real estate companies adopt such softwares with smart real estate technology.
Rapid Online Transactions
According to Strait Times Magazine, about 70% of the residential real estate property transactions in Singapore are manually handled. Although this is soon to become a thing of the past, as the Infocomm Media Development Authority (IMDA) has revised Singapore’s Electronic Transactions Act (ETA) where new plans are promoting more modern technologies like blockchain and biometrics. It ensures that compliance standards regarding digital credentials for electronic signatures are met. Real estate companies in Singapore should adopt electronic transaction systems as part of their plan to stay competitive in the real estate industry.
The use of blockchain-based technology in the real estate industry can improve transparency and overall security as it bypasses intermediary companies like the bank and credit card companies. Executives within the Commercial Real Estate (CRE) industry foresee brands turning it into a real estate technology, transforming core CRE operations such as management transactions and property transactions like purchase, sale, financing, and leasing.
Tokenisation is a complex process where a piece of real estate, usually of substantial value is liquidated through a token sale within a blockchain platform allowing multiple buyers access to co-own an asset – a revolutionary marketplace for exchanging real assets fluidly. Already claiming to be a form of real estate technology too.
Smart contracts, a type of blockchain-based technology, for example, can automatically implement terms of multiparty agreements resulting from parties agreeing upon terms and trust, greatly reducing risk of error or manipulation. It also allows for trasnactions to remain between the buyer and the seller.
As PWC suggests, real estate companies need to work towards embracing real estate technology and trends, readily and hastily to transform workflows that are in direct relation to how real estate properties are bought, sold and searched for.
The sooner organizations and property giants realised the effect real estate technology will make in this world, the smarter processes will be. Join the global proptech movement to enable a smarter, better and brighter workforce today!