The real estate has always been a conservative industry. For a long time, it was very slow to adopt tech innovations. The reasons are quite clear:
- Slow asset turnover and the diversity of property types make the sector ill-suited for disruptive approaches.
- The strong risk-averting culture leads to the reluctance to experiment.
- The general practice of relying on connections and the slow build-up of trust between the involved parties create opaqueness in transactions and relationships.
Only a decade ago the landscape of the industry began to change. In 2007 we saw the first startups that tried to introduce innovative technologies to the real estate, creating what is now known as PropTech (property technologies). Everything started with several websites that provided listings of residential property.
The second stage began in 2013 when data analytics and virtual reality were introduced into the industry. In a year, massive experimentation with new technologies such as drones and blockchain followed, and we’ve entered the era of PropTech 3.0. To get a deep understanding of its current state and see some predictions you can read the University of Oxford’s research on the topic.
Now let’s take a closer look at the key technologies that are transforming the sector today.
Big Data Analytics
This technology helps investors and real estate businesses get insights on value, current state, and history of both the property and the neighborhood through automated data analysis. It enables making informed decisions about investments and property management.
In a modern world, a multitude of public sources supplies large volumes of data. The magnitude of input is so high that manual analysis just cannot factor it. Special algorithms allow discovering both the current picture and future trends.
Customers also benefit from big data. It makes pricing and appraisals more accurate and transparent, mitigating the risk of misinformation.
The efficiency of the current conveyancing processes can be greatly improved. Each party has to validate the received data, which results in high transaction costs. Blockchain can eliminate the need for middlemen and additional fees by creating an open and secure database of title and transaction information to be used by buyers, sellers, tenants, and real estate companies.
Blockchain-based smart contracts can create conditions for affordable investing as well as protect against fraud in its various forms. Property can be tokenized and sold in shares to investors with very moderate capital.
Unfortunately, because of legal barriers and regulations, large-scale implementation of these technologies can only be expected in the long term.
Drones are widely used in real estate marketing. They create compelling aerial images and videos of tall office buildings, large manors, and vast land properties.
They also have another application: property maintenance and managing. They can scan for cracks and defects on the outside of skyscrapers, measure weather conditions, and collect a lot of other useful data that needs to be analyzed on a centralized basis.
Virtual and Augmented Reality
Today’s customers spend a substantial part of their lives online where everything revolves around the excellent user experience. Increasingly, they come to expect the same in real life.
Virtual reality tours enable buyers to view the property in an immersive way from any place in the world. A photo or even a video often does not picture the objects in the right way that would allow for accurate evaluation. With VR and AR, you can look in every corner of the house without leaving your couch.
The market is growing slowly but steadily. By 2020 the number of VR and AR software users if forecasted to reach 200 000 people.
There are plenty of other technologies that help to revolutionize the real estate industry. These are the Internet of Things, 3D printers, and geolocation to name a few. The sector is also influenced by sharing economy trends, which are exemplified by such companies as WeWork and Airbnb.
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