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USA Real Estate Blog

Real Estate Future-Tech and the Property Market of Tomorrow

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The Real estate industry is on the brink of a dramatic evolution with the next decade riding upon the exponential rise in new-age technologies. With transformative business models completely redefining perceptions of property investment and management, simple adoption of innovations by agencies will be insufficient.

The Property Market House of Cards Primed For Restructuring

As the wave of disruptive innovations through Artificial Intelligence and Blockchain reinvigorate industries coming into the next decade of digital progress, the real estate market can be seen as a laggard in respect to adoption and integration of such technologies. With the increasing ease and availability of AI, Blockchain, and Big Data, the property industry is likely to see a sharp increase in adoption which will uproot the very fundamentals of property management that we see today.

Automation through artificial intelligence and sophisticated machine learning algorithms are gradually moving their way into key aspects of a real estate professional’s job, with the potential for automation alone estimated to be around 40% through the use of AI across the entire value chain of a given property (PWC, 2018).

These software algorithms will increasingly adapt and interweave itself into more complex areas of property, including voice recognition, budgeting & planning, and decision making processes. Fundamentally, the real estate industry is a knowledge-based business, and hence AI will soon be an integral component of both the gathering and analyzing of client information.

A number of key areas can directly benefit through the integration of AI; namely, the increase in highly personalised property recommendations, taking into account aggregate client data and consumer trends, and development of long-term relationships through AI-based Customer Relationship Management (CRM) systems.

However, the selling of property still requires a ‘human touch’ that no AI is likely to be able to achieve (anytime soon at least). Vian Chinner adding that

“Ultimately, AI will give estate agents the gift of time, which will enable them to spend even more energy doing what they do best — closing deals.”

The use of Artificial Intelligence in real estate is still very much in its infancy, with only a handful of viable start-ups moving in the direction of mainstream property tech adoption. With its broad spectrum of use cases, however, the real estate industry will soon see a rapid and disruptive integration of AI in the coming years.

The transaction of high value assets such as real estate has always been a slow adopter to digital platforms, with property acquisitions generally being conducted through face-to-face engagements with various parties. However, smart contracts backed by the Blockchain create a highly secure and efficient transaction system for purchasing and selling property, and creating a completely transparent data ledger.

“There are many ways we could use Blockchain technology in the real estate: purchasing real estate, escrowing real estate; recording the transfer of ownership of real estate onto the Blockchain…”

In effect to Ragnar Lifthrasir’s outlined use cases, the break-down of intermediaries and decentralisation of transactions will reduce costs and improve security, complementing the increase in liquidity and opening the potential for fractional ownership (whereby investors are able to pool funds for joint ownership of real estate) and thus vastly improving convenience and lowering barriers to entry.

Ultimately, Blockchain technology will act as a more effective tool for agents to secure transactions and utilise smart contract functionalities going forward.

In the world of real estate, more and more agency deals rely upon intelligent data collection and analysis to allow for faster, more accurate appraisals and forecasts.

With the growing adoption of Internet of Things and the increasing requirements of users and owners, personal and building related data will accumulate on a rapid scale. Real estate firms that utilise this data in a profitable way will position themselves for adaptability and future-proof their business practices.

However, whilst big data is seen to have the greatest potential impact on industries surrounding the property market, it also faces a number of tough challenges that may prevent maximising its full utility.

Access to data is one such problem, with parties claiming their right to ‘their’ data through privacy gates, restricting not only their competitors but the industry as a whole to this valuable source of information.

Secondly, strict regulation of data collection and use will have a decisive impact on the success of future real estate business models, with governments tightening down on digital progression through consumer data collection.

“The volume of user data that the industry generates today has piqued the interest of international technology companies and other new market participants. Right now, digital heavyweights have the advantage in terms of digital skills and data applications. However, monetization of data can overcome low margins and lure these tech firms into the real estate world.” (Deloitte, 2018)

Big data has the farthest reaching impacts within the property industry, with benefits outweighing on the consumer-side through building management technology, quality of living Eco-factor optimisation, and healthier buying and selling habits through more informed decision making.

The property market of tomorrow is likely to be Co-ruled by Artificial Intelligence, powered by the Blockchain and enriched through Big Data analytics. The fourth industrial revolution will see the rise and fall of many industries with those that more effectively adopt prevailing. The question remains; will real estate firms become a relic of the past, Luddites of agency in the face of AI automation, or can they re-invent their value proposition to something more?

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