Upcoming digital transformation trends in real estate
The global real estate market is estimated to have reached US$ 7,063 billion in 2022, and the IMARC Group predicts that this market will exhibit a CAGR of 1.8% from 2023 to 2028, reaching US$ 7,954 billion by 2028.
The advent of spring marks the beginning of the busiest season in real estate. Most buyers initiate their search by going through the listings available online. Consequently, despite being slow to adopt digitization, real estate is currently poised for a massive technological transformation. This is predicted to help this industry overcome upcoming cyclical headwinds and steer it toward long-term growth with profitability.
The need to stay relevant and aligned with changing market trends drives the real estate sector to evolve and adapt to new paradigms. Staying ahead of the competition is imperative. Adopting disruptive digital technologies and leveraging data analytics are the only ways to achieve it. Other reasons that justify the need for digital transformation in real estate include increasing global audience outreach, changing customer demands, improving operational efficiency, streamlining organization structure, and achieving cost efficiency.
The inroads made by AI technology into real estate have already made this sector lucrative for investors and customers. It has also increased the productivity of people associated with it, like real estate employees, agents, and brokers. Enhanced adoption of the latest transformative technologies will amplify them and add on a few more.
Deloitte's latest report on real estate lists six key expected outcomes of real-estate digital transformation. They are:
Elevated, frictionless customer experience
Unique personalized relationships
Data analytics-based decisions
These key outcomes, once accomplished, will help foster growth through meaningful interactions and collaborations.
User activities online leave a digital footprint or data trail. With an exponentially growing customer base looking for online convenience in real estate, Big Data generation is an obvious outcome. Traditionally, the real estate industry has only used data for transactional purposes and to determine the value of a property.
Now data is analyzed to help buyers, realtors, brokers, and agents optimize their operations by gaining better market insights into trends capable of influencing future consumer behavior. Further, Data Analytics can streamline associated workflows for property listings and help people make informed decisions on critical real estate metrics like property value, its physical attributes, and rental rates.
It can also enhance real estate investment portfolio management by identifying niche audience segments and targeting potential customers with concentrated sales and marketing efforts. Buyers can now calculate investment ROI to understand the feasibility of their real-estate investment. This enhances buyer confidence.
Other benefits include proactive implementation of risk management efforts by identifying potential vulnerabilities from the data analysis of past transactions.
Data Analytics will have a significant influence on current and future real estate transactions. From lead generation to workflow efficiency and reporting, data analytics will help unlock new potential levels for all aspects of the real estate industry.
Typically, buyers visit at least 5 to 7 houses before zeroing in on one. While physical tours are time-consuming, virtual tours are time-efficient.
A virtual tour is a comprehensive “3D walk” through a property put up for sale. Accomplished with just a few clicks by using technologies like AR and VR, potential buyers can view properties irrespective of their location, making the whole process convenient and easy.
A Goldman Sachs research predicts that the market for VR in real estate alone will generate approximately $2.6 billion by 2025.
Real estate virtual tours typically start with giving buyers virtual directions to reach the property. They unlock the front doors virtually and walk through the property to better understand its layout, size, and features. No agents or appointments are required. Buyers can even decorate the homes virtually.
Virtual tours make for an interactive and engaging experience. Buyers can make immediate decisions, and realtors and brokers can capitalize on this to enhance cost-effective conversions.
Real-time tracking software
Conventional legacy systems cannot cater to the growing demands of this sector. Several aspects of real estate need real-time tracking, like agent output, transactions, and customer relations. Implementing ERP or Enterprise Resource Planning software is already driving real estate digitization in a big way.
Real-time tracking will enhance its significance by improving transactional data management and streamlining deal closing with smart contracts and eSignatures. The resultant seamlessness achieved will augment the buyer-seller relationship. Other benefits include improved efficiency in monitoring property listings, generating leads, and augmenting transactional accuracy.
Traditionally, the real estate industry has been plagued by transactional fraud. Adopting disruptive blockchain technology can reduce instances of fraud by providing a host of safe options like better data accessibility, zero intermediaries, enhanced process transparency, reduced business costs and risks. In addition, it will empower buyers and realtors to close deals quickly and securely.
Statista reports forecast the worldwide spending on blockchain solutions to grow from $4.5 billion in 2020 to about $1.9 billion by 2024.
The viability of this forecast is evident from the benefits that blockchain technology usage will bring to the real estate industry. For example, by creating an immutable ledger of all transactions, blockchain technology makes it easy to track property ownership and transfers. Encryption and decentralized record-keeping make this technology resistant to tampering and fraud. This will further help to enhance the security of these transactions.
Real estate witnesses a relatively higher number of customer interactions and can benefit significantly from integrating this technology. AI-powered chatbots can augment the efforts of live agents by enhancing lead generation, building customer profiles, answering customer queries, resolving customer issues, and scheduling virtual property viewing.
Automating repetitive tasks will help free-up live real estate agents so they can focus on other complex and important tasks like formulating marketing and sales strategies. The need for customer service staff is also greatly reduced, leading to a decrease in the company’s operational cost.
Additionally, Chatbots can add value to real estate customer service with their round-the-clock availability, real-time, ultra-fast, personalized customer engagement, and excellent time management.
Short for property technology, proptechs are touted to be real estate technology drivers and disruption power centers. They rely on information technology to help buyers and realtors research properties, match buyer needs with available listings, and buy, sell, rent, and manage real estate.
Even though a relatively new development in real estate, its rapid acceptability is powered by the convergence of technologies associated with digital transformation and the cloud. Proptechs will benefit this industry by minimizing individual transaction costs and resources, maximizing efficiency and accessibility, saving time, and customizing property management.
At its core, SpaaS deals with helping corporates create upgradable and adaptable office spaces aligned with their evolving needs. It proactively enhances productivity by transforming experiences within an organization’s real estate portfolio.
This concept challenges the norm of conventional asset ownership by offering physical space access monetization as a service. Corporates save on operational costs by paying only for the area currently in use.
With technology playing an integral role in enhancing the efficiency of the real estate industry, all processes from property search to financing will become streamlined and frictionless. Taking advantage of the trends mentioned above will be a major competitive differentiator.