By Mihai Cornu
Real estate is the latest industry to be hit by a tech craze consisting of automation, increasing globalization and other trends that have already taken financial services and other industries by storm. The use of these technologies is playing an increasingly important role in the real estate sector, building on the development possibilities first initialized by the introduction of the internet.
Up to 95 per cent of home buyers find their next property through the web, an indicator of both the increasing need for convenience and the level of market competition between buyers. There are several technological trends set to take place in 2019 and beyond, which will build on this precedent and radically change the industry for the better.
It is estimated that more than four billion people around the world are active users of the internet, including home buyers. These buyers have more access to proptech developments than ever before, including a host of services and technologies that are globalizing the real estate industry and making cross-border investments achievable.
Property search platforms are expanding to meet a growing global demand by enabling buyers to specify their property requirements and gain exposure to foreign property investment with relatively low risks. Websites like Zillow, WorldProperties and more are starting to add international listings, but borderless real estate is being driven forward mainly by tokenization.
The tokenization of real estate will not only make real estate investment more accessible to new investors but will also provide the options of higher liquidity and fractional ownership.
Blockchain in real estate eliminates the need for intermediaries like law firms and real estate salespeople because it can ensure propriety verification, allowing buyers and sellers to execute transactions. Paying for a property using cryptocurrencies can also help buyers avoid bank fees. It cuts the fees associated with escrow by using contracts that can be customized according to users’ needs.
On Cloud 9
Cloud services are pegged to be one of the biggest technologies to be adopted by the real estate industry in the coming years. Cloud-based services have moved into the mainstream.
Cloud services would complement real estate tokenization as a way to establish and maintain the international collaboration of services. For the real estate industry, the ability to securely store large amounts of private information will be invaluable. Data stored on the cloud is not only more secure, but is also safe in the case of disaster, providing more long-term access.
Driven By Data
Most real estate developers and investors want to gain a better understanding of which property to purchase, and where, in order to maximize any potential profits. The ground-breaking solution for this problem is data-driven investing, where data analytics is used to determine the characteristics of a property that could add to or decrease its value.
Data collection has skyrocketed in the past five years. Data is also being produced by properties themselves with more buildings than ever before adding Internet of Things capabilities, making specific data capturing available. This data gives real estate market participants an edge over the competition, by using data-based decision making focused on the needs of users, owners or the property itself.
Another benefit to this type of data-driven investment is the ability to compare the data of various properties in order to select the one with the highest profit-potential.
Regulating real estate tech
Along with the changing technology in real estate, another trend will be that of regulation. New technologies often call for new rules as they fall outside of what has been established, affecting multiple parts of the real estate sector. For example, the tokenization of assets is increasingly being regulated in several countries.
Even personal data will be touched by new regulations. Thus far, collecting consumer data is a highly contentious issue when it comes to compliance and privacy, and the implementation of the above-mentioned tech will trigger a second look at the rules that govern the sector. Last year, California Governor Jerry Brown signed into law AB375, the California Consumer Privacy Act of 2018, which is the equivalent of the European Union’s General Data Protection Regulation. Several other states are preparing similar acts.
To help regulators, many of these technologies are already providing a new level of transparency in the commercial real estate industry such as online financing, and this trend is set to continue to residential real estate. As real estate becomes more connected to technology, the issues of data accumulation and privacy will need to be addressed sooner rather than later in order not to stifle innovation, but regulators are taking an open and research-based approach to implementing new laws.