Real estate is the world’s largest asset class worth an estimated US$277 trillion. Yet, the industry has been relatively slow to adopt new technologies, and has received lower levels of investment compared with areas like financial services.
This lag in adoption has been credited to multiple factors such as cost, availability of skill sets, an if-it-isn’t-broken-don’t-fix-it culture, and the difficulty in integrating new technologies.
A survey by consulting firm EY found that 58% of real estate executives say new systems don’t integrate easily into existing infrastructure and processes. The same study found that 43% of technology providers highlighted the challenge of widespread adoption of their tools across a client’s business.
While it’s not surprising that a traditional industry like real estate lags behind other sectors in adopting new technology, those who hesitate risk being left behind by their competitors.
In the last few years, proptech has grown steeply, with CB insights reporting that the value of real estate technology deals reached US$8.9 billion in 2019. The Center for Real Estate Technology & Innovation found that US$23.8 billion was invested by venture capital in proptech start-ups in 2020.
The proptech opportunity
The pandemic has forced sweeping changes to the way we live and work and many businesses have had to take an adapt or die approach. In the face of Covid-19 challenges, reliance on digital has grown, with companies in real estate having to innovate and accelerate technology adoption.
In 2020, Forbes reported that 81% of real estate companies were planning to use new digital technology to improve traditional processes, and that tech and software spending is increasing by over 11% per year.
Virtual, no touch experiences
The preference for no-touch experiences and social distancing measures, so important during the pandemic, is predicted to have longer-term implications for real estate. Consumers increasingly expect companies to keep them safe with consumer-facing tech aimed at physical protection and control over proximity.
Automated valuations, virtual property tours, touchless entry points, chatbots and contactless transactions are set to grow with innovations offering proptech consumers safe and secure interactions.
Looking at the recent explosion of proptech, it’s clear that the use of new and emerging technologies like virtual reality, artificial intelligence, big data and blockchain are set to become the norm.
A recent survey by the National Association of Realtors in the US, found that among potential homebuyers, almost half used the internet to search for properties first.
During lockdown, real estate firms turned to 3D virtual tours and contactless walk-throughs to bridge the experience gap. AI-based smart bots helped to deal with client queries and close deals quicker.
Real estate innovation
Platforms that help to digitise the complete rental and sales experience will become a strong foundation for future business.
5G mobile networks have the potential to be transformative by providing more bandwidth for smart sensors and devices to connect residential and commercial spaces to the internet.
Tomorrow’s real estate innovations could see smart buildings that improve experiences with connected features like security checking, entry and escalators that are user specific and triggered contactlessly.
We will see new communication and scheduling tools that help tenants, owners and property managers track maintenance requests and amenity bookings. In commercial and co-working spaces, smart schedulers will ensure optimal use, help employees book rooms, and prevent overcrowding.
Contactless digital payments
During the pandemic, the real estate sector saw digital payments become integrated in every aspect of the house buying and rental process. From paying deposits and rent, to utilities and maintenance fees, digital transactions have offered the convenience and safety demanded by all stakeholders.
Property owners and managers are always looking for ways to remove friction from the payment process for residents and internal teams. It’s safe to say that most consumers prefer online options to save time and simplify the payment process. Nowadays, online payment solutions aren’t just nice to have, consumers expect them.
At Zai, we make it easy for proptech platforms to set up and manage flexible end-to-end payment workflows, connecting multiple parties such as agents, property managers, tenants, landlords and service providers.
According to McKinsey research, digital and technology adoption is taking place at a rate about 25 times faster than before the pandemic. Real estate technology and service-led solutions are revolutionising the sales and rental experience, transforming the workspace industry, and having a major impact on the future of greener cities.
As the use of technology in real estate markets becomes more popular in every area, the tech-enabled real estate companies that embrace change will have the opportunity to capture significant future market share.