PropTech: Disruption Wave in Real Estate Industry
Homes and properties are extremely important and a sentimental part of a private portfolio to take any risks with the process whereby it is traded, held or valued.
Moreover, real estate as an asset class has matured over the period of time. Various players in the ecosystem need to realize this and make the appropriate adjustments. In the current market scenario, especially with the pandemic situation there has been a drastic shift in the approach towards the real estate sector.
In the past we have seen real estate as an asset as well as industry has not been immune towards innovation but we have recently seen the rise of the term “PropTech” across the value chain in real estate sector. As per a report by JLL, the reason for this rise in use of technology has been primarily because real estate and associated segments accounts for 17-20% of the global GDP.
During the current global shift towards a reliance on digital technologies, many innovations are emerging which propose to increase the transparency of the real estate market and integrating the players of the industry to create a larger ecosystem.
Recently, the growth of the PropTech portals such as Zillow, Housing, RightMove etc. not only ensure that the investment decisions are made using more factors and also provide data in a digitalised format, enabling machine learning programmes to execute investment decisions with greater accuracy and stronger predictions. One of the examples has been Zestimate by Zillow to help home sellers better understand the home values in the existing scenario.
However, when we speak about digital transformation, US & European markets are much more evolved and prepared as compared to the Asian, African & South American market. Out of the 7000 PropTech companies globally, more than 2000 are US based.
We have spoken about the rise and importance of PropTech in the last few years and how it has disrupted the entire real estate industry. Thus it is very important to understand what exactly is PropTech and various kinds that are involved across the value chain.
Smart Real Estate
Smart Real Estate provides platforms that may simply offer information interaction across the residents, or they may directly facilitate or control various services.This sector supports real estate asset, property and facilities management. Sharing some of the examples involved at various levels from initial blueprint to development to interior design, safety etc.
VU.CITY integrates data & demonstrates the real life impact of buildings on their surrounding environments. It also helps people organise, visualise & analyse city data in the clearest & most accessible way to make better decisions.
Further, it offers huge benefits to architects, developers, local authorities, planning consultants agents etc. both in their own work and supports greater communication and collaboration.
Katerra exists to help transform construction through technology—every process and every product. Katerra offers end-to-end services, including design, manufacturing, and assembly of all building types, specializing in commercial buildings, retail, healthcare, hospitality and housing solutions.
They have delivered a model home in Riyadh within 48 hours
The company specializes in 3D printing architecture, production of building & development for more than 17 years, which is the first 3D printing architecture in the world.
Experience step-by-step how SmartSkin can create a smart, sustainable and comfortable building without impacting the architectural design.
Similarly there are a lot of products which will help real estate with the smart solutions. Solutions like MyGate which will help with security and safety aspect of the residents. Philips Hue which will help you with lighting automation system.
The smart solutions in real estate sector is actually assisting various players with creating a positive moment of truth at various touchpoints.
2. FinTech Real Estate
FinTech Real Estate is technology-based platforms which facilitate the trading of real estate asset ownership. They may simply provide information for prospective buyers, sellers, brokers etc. to directly facilitate or effect transactions of asset ownership.
Online Residential Brokers
Today, 90% of residential sales are generated by portals and only 5% by estate agents’ shop windows. Portals like Zillow, Trulia, Rightmove and Zoopla are some of the tech-enabled information portals residential real estate which has been successful in engaging with the customers across their buying/selling journey.
Today brokers are using various tech based solutions to showcase the assets to improve the decision making systems. Some of the examples are AR based assistance (Sotheby’s International Reality is the first virtual staging augmented and mixed reality app, transforming the homebuying and selling experience for sales associates and consumers) or Chatbot experience for a 24/7 personalised customer service.
Automated Valuation Models & iBuyers
Generally, home buyers rely on agents with imperfect information, biases and preferences, resulting in varied outcomes that generally disadvantage home buyers. AVM model helps buyers to get details about their choices. It also helps the agents to understand the market better. Automated Valuation Models (AVMs) utilise Machine Learning to make predictions about the price of any property based on real estate, economic and spatial data.
Having the ability to accurately determine a property’s value can aid buyers, mortgage lenders and banks in establishing the amount they are willing to loan.
Hometrack is still exploring how it might assist in the development of instant mortgages as part of their Digital Street Initiative, exploring how geospatial technology can improve the land buying and registration process.
Commercial real estate data
In case we are looking for disruption in the commercial real estate industry it will be only if there is the availability of standardised, accurate, real time, digital data and whoever is the first to reach will hold a very strong market position.
Skyline AI & Proda are the artificial intelligence investment managers for commercial real estate.
Smart Legal Process
Currently the real estate industry is plagued by differing data formats held within unstandardized lease documents and un-interoperable software systems.
AI-powered data extraction and contract analytics platform for corporate and legal documents will help to extract, compile and digitalise all the relevant data from a scanned paper document.
3. Shared Economy
In the shared economy, distributed ownership of a resource enables individuals to split the use of things like cars, houses and other spaces, or to hire out personal and real property assets to other intending users.
AirBNB, OYO Rooms, WeWork co-working space and co-living spaces are some of the examples of shared economy. Sharing the asset has been one of the ways where tech companies and asset owners have shaken hands to offer services to the end customer. The collaborative way - is a way of distributing services that differs from the traditional model of corporations.
Finally, Digital Transformation has enabled a boom in technology platforms to be applied to various aspects of real estate industry. The global shift towards the use of digital technology has facilitated innovation, specifically in the three horizontals of information provision, supporting transactions, and enabling management and control.
However, the transformation is still at a very nascent stage and there is still a long road ahead. The journey ahead needs to understand not just the pain points but also how the positive moment of truth can be converted into exceeding customer expectations and unexpected joys during the entire user journey.
Buoyant Consulting Studio assists organisations of various domains to understand the requirements and needs of the users and offer solutions across the value chain. Collectively, we provide exceptional experience for applications and complex systems, working with various clients. Make sure you have done a design thinking based workshop on value based customer profiling & sales management.
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