Impact of technological advances in real estate industry
By Mr. Harish Sharma, Founder & CEO, Plinthstone, Multi-speciality Real Estate Advisory Firm
Technology has long been an inevitable part of our lives, lifestyle and society. Covid-19, re-established the importance and usefulness of technology as it penetrated deeper and seeped into industries and government verticals that were left untouched by technological advancements before the pandemic.
One such industry is real estate. Before Covid-19, the realty sector had been slower to integrate and adopt the technology and digital tools for better functioning. But the impetus added due to Covid-19 led to a digital revolution within the industry. And, within a blink of an eye, realtors not only relied on technology but resorted to it for dealing with all kinds of challenges, as well as their day to day operations.
Technological advancement in real estate sector, now, has become the de facto standard. Increasing number of real estate builders and developers are accelerating towards ‘smart offering’ to enhance the standard of service for consumers. From VR/3D enabled site visits to chatbox-assisted inquiries and online bookings to digital transactions to tech-enabled solutions, the sector acclimatising to various technological tools for enhanced consumer experience. Moreover, all verticals of realty firms like IT, HR, finance, design, sales and marketing are evolving in terms of use and upgradation of technology.
The advent of this technological revolution has led to the development of all aspects of real estate at a much faster pace. Right from connectivity and hardware advances enabling mass deployment of sensors to machine learning and artificial intelligence (AI) techniques facilitating workflow automation— Close to 8000 companies are now offering technology focussed solutions for real estate globally which accounts to an increase of over 300% in the last 10 years.”
While there have been at length discussions and debates about how technology is impacting the sector, the basic question is still— what’s driving the digitization of real estate?
Is it automation and AI— As per numbers, nearly all technology applications across the built environment are based on generating or utilizing data, with advanced data processing, analytics and automation at the core of this growth in the ‘digitization’. Infrastructure and buildings are generating increasing volumes of data, and across the core set of technology types and tools—from ‘smart’ buildings and cities to automated workflows and even virtual reality viewings—the ability to gather, process and analyze this information in order to generate meaningful solutions is integral.
Data is also one of the main issues holding back adoption of new technologies and platforms, with siloed, partial and lagged data inhibiting the ability to utilize the available technology.
On the other hand, centralized and structured information is the key to some of the most exciting applications of the novel technology with the greatest ability to boost efficiencies and aid decision-making, from real-time portfolio performance tracking to AI and automation. Generating trust in data and technology—particularly for AI applications where these automated processes are public-facing—is also crucial for acceptance and adoption of new technologies.
This paradigm shift to technology has led to real estate capital markets becoming more transparent. The digitization of transactions and migration of opportunities to online marketplaces will support the accessibility of investment opportunities for investors. This shift will also encourage market liquidity, and the change the perception of real estate to a ‘low risk, long-term hold’ investment.
The influence of technology in the acquisition will accelerate the process. As investment markets become more digitally enabled, this will expand the availability and access to data to shape strategy and asset selection.
Also, deal execution can be improved with technology. While commercial real estate transactions largely remain a manual process, embracing technology can improve deal flow, increase efficiencies in the closing process, and reduce the time to complete a transaction.
Digital marketing tools are also decreasing the time and effort needed to market commercial properties. Advanced CRM tools and analytics now allow sellers and brokers to more accurately identify and target potentially interested investors or tenants in real time for more focused marketing campaigns. Once deals are in process, online data rooms permit relevant information to be shared privately, while virtual viewings based on immersive AR/VR and drone technologies let interested parties assess buildings remotely.
As technology increasingly underpins new business models and the interaction between people and their urban environments, greater collaboration, transparency and trust will be needed between technology firms, property companies and the industries they service, as well as between individuals and governments, to ensure that real estate can respond to these challenges and create more livable, healthy and sustainable buildings and cities.
