How is Real Estate Technology Affecting the Property Sector?
In this guest article, Tudor Lodge Consultants explore the effect that real technology is having on the property sector.
PropTech and real estate technologies are changing the way the property industry operates; everything from buying, selling, renting, maintaining, and building is changing as innovative new technologies enter the market.
The real estate sector has been traditionally slow in the uptake of new technologies, stubbornly hanging on to old and inefficient ways of doing things, especially when compared to other sectors that have been more readily adopting new technologies.
However, things are changing fast as the industry is recognising the immense benefits they bring, and PropTech and real estate technologies are helping transform the property sector.
Indeed, a report compiled by the University of Oxford, Technology, and the Future of Real Estate Investment Management, shows that many more real estate businesses (53%) are investing in these technologies to help them run more efficiently and cost-effectively. Many of those that took part in the survey stated that they have already seen significant changes in the industry and that they expect to see this trend continuing in the coming years. Furthermore, about 42% stated that they can appreciate that technologies, such as Smart Building technologies, can be very beneficial.
As the UK and other countries take steps to reduce humanity’s ecological footprint on the environment, these innovative technologies will not only help the property sector transform and enter the full depths of the digital age, reducing costs and saving time, but they will also be very beneficial in mitigating human impact on the environment.
Everything from automation, smart building technologies, 3D printing, off-site manufacturing (modular construction), drones, to AI and Building Information Modelling (BIM), will help better conserve and allocate precious resources, as well as improve waste management.
An Introduction to PropTech
PropTech is a term that many use in the property sector to indicate new technologies that are shaping its transformation; it is a contraction of the words “property” and “technology.” It’s a broad term that includes numerous technologies, including digital and hardware innovations. Sometimes it can be known in other terms, such as CREtech (commercial real estate technology) and REtech (real estate technology).
The property sector is only just starting to see what these technologies have to offer, and their use will only increase over time.
Real estate technology
“Real estate technologies are helping the industry to provide a better service and value to its customers,” said Jamie Jonson, CEO of FJP Investment. Jamie continued: “There are various aspects of homebuyers’ expectations that can be improved by the property sector, like improving features that are important to them: photos, floor plans, virtual tours, contact details, etc.”
The use of drones, for example, can provide high-definition video footage and photos that can be used to highlight a client’s property. It will give potential buyers a better visual understanding of the property’s best features, like the scale of the land that comes with the property.
Virtual reality tours are another feature that many buyers are taking advantage of in helping them short-list properties in which they are interested. Especially since the onset of the pandemic, more people are using virtual tours to save time and search from the comfort of their own home.
Augmented reality (AR), too, is another technology that is starting to appear in the property sector. AR can be utilised by off-plan investors to visualise what a completed project will look like by viewing a realistic digital representation of the planned end product.
Homebuyers and renters are increasingly using automated platforms more than they have contact with human estate agents. We have seen similar trends in other sectors, like retail and self-service checkouts.
This trend will undoubtedly increase, and those businesses that do not adapt to changing consumer patterns will struggle to compete for clients in the new digital world. The computer screen shop window is replacing the traditional shop window.
Many homebuyers and renters have already experienced the excellent tool that is 3-D virtual property tours. Virtual tours allow users to search for properties online without having to take the time and cost of visiting the property in person. It provides an opportunity to view properties and shortlist them down to the ones to visit in person, something that is always recommended.
Technology is improving all the time and now includes being able to take a close look at the property in detail, including looking around outside and in all the rooms to see what furniture they have and if it will meet your needs.
Everyone is busy and time is short, so when it comes to real estate customers looking for accurate and reliable answers to their queries, AI software can provide a useful, innovative service. This allows for a 24-hour service when customers can make contact and expect a timely response.
AI has improved in recent years, and now the user’s experience is like talking with a human agent. Superior to common so-called chatbots, a conversational AI can respond and answer most questions effortlessly.
Big data is a term that refers to the ways in which enormous amounts of data is analysed, extracted from, or in some way managed for large data sets that are too complex or large for traditional data processing to deal with. Much of the data is stored in huge warehouses and contains a vast amount of information regarding all sorts of things, such as consumer and other trends.
By using big data and advanced analytics to sort through it all, research has shown that property sector applications based on machine learning and AI can make some pretty accurate forecasts. For example, it can predict rent changes within a 90% accuracy tolerance based on several data points and market signals.
Given that calculating expected rental yields and projected profits is an essential part of property investing, for property investors, this is an especially useful tool when searching for and selecting the right buy-to-let property investment. The same principle also applies to commercial property landlords; they will want to predict with as much accuracy as possible what they can expect from renting out units in the near and long term.
Most people associate blockchain technology with cryptocurrencies, but actually, it has a much broader application and use in business as well as in the property sector.
One way in which this technology can be used is to verify secure and encrypted transactions and to ensure the integrity of financial and other records, such as title deeds.
Like how users can purchase fractions of cryptocurrencies, blockchain technology will allow fractions in property investments to be made securely, such as allowing property owners to sell a portion of their investment to other interested investors. This will also allow smaller investments to be made, which will therefore open property investing to a wider market than previously.
It’s worth taking a brief look at how other industries have invested in blockchain technology to give an idea of how pervasive it is becoming and how each sector is improving their services:
- Banking & Insurance Industries – $1bn
- Finance Industry – over $700m
- Manufacturing & Resources industries – $653m
- Retail and Professional Services including Real Estate – $642m
Blockchain technology allows for a shared and secured database, and this will improve the transparency of the sector and help alleviate past concerns. Transactions that include things like buying and leasing will contain records for common knowledge and can be scrutinised by anyone in the chain.
Investing in fractional property transactions
As mentioned above, investors can now invest in fractional ownership of a property asset with relative ease. For other types of investments, like investing in aviation, for example, fractions are not an unusual way of investing. Owning fractions of property investments is now becoming more popular, and it is also an effective way to diversify an investment portfolio.
One significant obstacle for many people entering the property investment market is having the available capital, which can be quite a considerable sum. Some investors borrow the money, but others don’t want to do this. This is where fractional investing comes into use using blockchain technology.
Groups of investors can now own property jointly and share in the profits. This can give opportunities to low-wage earners and newbies who want to enter the property investing market.
Smartphone and tablet apps
Real estate and investing apps are becoming more common, especially apps that are related to renting and buying property. These apps can also be customised to meet the specific needs of the user.
These apps are not just a gimmick of the industry; they offer a real benefit to the user. Compared to traditional ways of searching for property, the databases accessed via these apps are constantly updated and offer accurate, real-time information.