Real estate has traditionally been an industry reliant on age-old practices, unchanged for decades on end. Many of these old legacy practices have included notoriously slow transaction times, paper-process dependence and desperately inefficient uses of intermediaries, which cost entrepreneurs both valuable time and money when selling or buying a property.
But to see the future of real estate, we need to look at the global impact of technology. Already transforming finance, supply chains and other industries around the world, the advent and development of new technologies is bringing renewed hope to the real estate sector. Real estate must evolve to meet and exceed the demands of a technology-driven generation and these four innovations could transform the industry entirely in a short amount of time:
Blockchain technology is already shaking up the financial sector, and also having an impact on the real estate industry. Far beyond the world of cryptocurrency, blockchain technology has the ability to affect the management of property, the registry of land, transaction confirmations, and multiple other facets of the industry in a positive manner.
Blockchain is expected to bring lower costs, more secure transacting and completely borderless payments to real estate; and with no intermediaries needed, it will save plenty of costs. Advancements like the tokenization of real estate, and fractional ownership are also changing the way real estate entrepreneurs are approaching the market. Fractional ownership refers to the ability of multiple parties unrelated to each other to share in the ownership of a high-value asset such as real estate. Blockchain will additionally offer the ability to store private information like credit scores, social security numbers, and transaction records securely.
The innovation taking place in virtual reality technology carries great potential for the real estate sector, particularly in the area of home sales. Virtual reality may have become mainstream through the gaming industry, but is now being used to create virtual house tours for interested home buyers. Using this technology, buyers are able to get more personally familiar with the space while also customizing the experience to their own tastes.
With augmented and virtual reality, buyers can look around the property and change cupboard colors, surface textures or types, and other home fixtures. Perhaps the biggest impact would be the ability to stage and offer tours of properties which are still being constructed, allowing sellers to share their vision in detail with possible buyers, and get instant feedback. Another application for the technology is the management of vacation rentals which typically have high turnover rates. Through VR tours, property owners and managers can assist tenants with finding and understanding property utility services, without ever physically being present in the property.
Internet of Things
The Internet of Things refers to a network of devices, which are internet-enabled and can “talk” to one other. This type of networking can include interactions between mobile devices, vehicles and even buildings. In real estate, IoT can add to the management of property facilities in a variety of ways- by linking security systems to wearable devices or by helping emergency responders identify if a building is clear of inhabitants in case of a crisis.
IoT offers the beacon technology, allowing the property to communicate with any smartphone-holding individual in general proximity. In real estate, beacon technology could work in the following way: a property which is for sale could have a beacon set up, which will interact with nearby smartphones and share the property’s details, making it more visible to potential buyers. In addition, IoT has predictive analytics which enable homeowners to identify and address building system failures before they even happen.
Artificial intelligence is yet another technology making waves in the real estate industry.
Capable of personalizing every customer interaction based on their personal responses and interests, it becomes possible to provide the perfect property for each potential buyer. AI-based bots can provide 24/7 coverage to customers who visit property websites or listings, responding to queries at all times of the day and night. They can “chat” with buyers on behalf of the property managers and collect basic information for the person to follow up on.
AI has developed to the extent that it can predict whether individuals are likely to default on their loan or to fail a credit check based on the information provided by or about that person. AI can also be used in the field of property management to monitor when maintenance on a building may be required, or when issues might occur. For real estate developers, AI can analyze a neighborhood and predict area pricing based on geography, crime rates and future developments that could take place in the area.
Real estate is the largest asset class in the world, but has been arguably the slowest to adopt new technologies. After lagging behind, the sector is finally catching up to new technologies, which could soon become the standard. Lower costs, increased efficiency, borderless payments and better property management are only some of the benefits to implementing new technologies. Blockchain, virtual reality, the Internet of Things and AI are some of the most notable technologies innovating the industry, and their impact is set to overwhelm all expectations.