People worldwide have stakes in real estate, as property owners, consumers, or managers. You, therefore, have to understand the trends and the future of real estate for a competitive edge.
Real estate, just like any other industry, keeps on changing. Emerging technologies and shifting home buyer demographics impacts the development of the industry. Other changes are also attributed to political and economic discrepancies.
Here are some of the trends that will inform the future of real estate:
Specialization
Competition in the current real estate set up is at its stiffest. New investors are using technology and tiered pricing models to edge out the traditional real estate industry players. According to the Urban Land Institute and PwC, competition in real estate is an upward trend. To stay on top of things, you must embrace creative ways of finding new markets. You also have to consider cutting costs and reducing overheads for competitive rates.
The other viable option is to specialize in a specific niche. Specialization and focus on niche-level opportunities allow you to offer the best quality for the target market. Some of the areas to specialize are senior housing, co-living, data centers, offices, and hotels.
The ULI report recommends specialization; and that you learn how to provide great value in your area of choice. It reads, “Specialization has become the hallmark of many professional sectors. Real estate is no exception.”
Real Estate Outsourcing
Most real estate investors are outsourcing specialized, non-core functions to outside vendors. Outsourcing helps in reducing costs and other broader strategic outcomes. It speeds up decision making, productivity, and customer satisfaction. Also, it improves data capturing, reporting service requests, occupancy, and energy consumption.
Reports by JLL show that investors are partnering with managers for better business intelligence. Facility managers, on the other hand, use sophisticated technology and analytics to bolster productivity. Technology generally improves profitability, and elevate the employee experience.
Outsourcing reduces overhead costs. An external partner handles day to day operations, while you remain with a lean internal team. This allows you to work with a small, productive and manageable team.
As much as outsourcing seems like the in thing, it requires vigilance. Before outsourcing, ensure the external partner can provide world-class expertise. Check for intensive risk management, standards, and compliance. The deal is then built on trust, which strengthens over time as the partnership develops.
The Rise and Rise of Real Estate Technology
Every industry player in real estate has pain points that need solutions. Homeowners are looking for faster sales while incurring lower transaction costs. Brokers need more data, improved corporations in their network, and productive transactions. Tenants need affordability and faster leasing and payment processing. Investors need assurance of demand and supply data for better investment decisions.
All these pain points have prospects of solutions through technological advancements. The better the solutions, the more productivity, and workflow.
However, real estate is one of the slowest sectors to adopt new technologies. This should not be the case, given its size in investments and usage. The industry involves a lot of paperwork, calculations, and large transactions. These aspects can use top technologies for efficiency and accuracy.
So far, the industry has adopted tools like Lotus and Excel. These tools have improved the quantitative approach to portfolio management and investment. The success of such tools calls for more solutions for other functionalities like accounting, analytics, and underwriting.
The increase in internet speeds and access has also played a role in the expansion of real estate. The Internet has made online transactions an integral part of the consumers. They are increasingly relying on the internet as a valuable source of information. Online platforms like Trulia and Zillow are top data and information companies. This has made them industry giants.
Advancements in data processing have created even larger specialized real estate companies. WeWork and Airbnb are some of the industry leaders in the upsurge of the sharing economy.
Venture funding also has a role in the real estate technological advancements. Having grown over the last decade from $20 million in 2008 to $4 billion in 2018, indications are that it will be on an upward trajectory.
Big Data and Machine Learning
Big data, AI, and machine learning are crucial in real estate for efficiency and productivity. Machine learning translates data to develop consumer applications and eCommerce facilities. This helps with the quicker matching of buyers with the property. The predictive technology in machine learning helps in the maintenance and upkeep of the property.
Compared to traditional methods, machine learning makes it easier to collect data. You can install automation systems like sensors in strategic areas in the building to collect data. The system then uses the data on security, energy, and elevator system to improve efficiency. Companies like PointGrab, TellMePlus, and BuildingIQ are already achieving traction in building automation technology.
The other application of big data and machine learning in real estate is property management. Property managers use performance data to review agents’ prospect conversion. While using chatbots and applications to streamline the initial sales process. These systems collect information on consumer preferences and coordinates site visits.
Big data and machine learning also impact property listings. Online companies like Airbnb and Zillow use data to match consumers with the most relevant property. For more sales success, property owners and managers must understand these platform’s operations to create converting listings.
Over time, sustained technological improvements will make machine learning and AI more accessible.
A Greener Future for Real Estate
From construction to design, real estate requires more sustainable practices. Urban Land Institute shows the commercial real estate industry is incorporating wastage-limiting mechanisms. These mechanisms seek to reduce water use, poor waste disposal, and carbon emissions.
The World Green Building Center states a third of carbon emanates from buildings. Proper waste management and reducing carbon emissions will help in protecting the environment. Greenprint Center for Building Performance projects a 50% reduction of emissions by 2030. Installing high-efficiency equipment and controls are some of the ways of reducing emissions. Others being, waste reduction projects, installing high-efficiency lighting equipment and reducing water use.
According to the National Association of Homebuilders, younger buyers are responsible for the need of sustainability features. The consumers are willing to spend more on purchasing a property. As long as it comes with longer-lasting and sustainable features. This implies that you need to use more energy-efficient appliances and systems in your property. With sustainable features, you can attract the right environmental-conscious buyers.
The Rise of Construction Costs
A report by PwC on Emerging trends in real estate finds an increase in construction costs as an expected challenge. Using the law of demand and supply, the demand for housing will go up, leading to a reduction in supply and labor. Coupled with the slow growth of labor productivity in the construction sector, you end up with a shortage. To ensure profits, property owners will have to increase the rents and buying prices.
Also, as mentioned earlier, green technology is a factor that increases costs. Most of the sustainable and energy-efficient solutions are expensive to buy and install. It is not a concern, though, as the consumers are willing to spend more for efficiency.
The Change in Customer Expectations
The need for better customer experience is at an all-time high. Data shows that consumers are willing to pay 16% more for top services. The best services feature speed and efficiency, convenience, and knowledgeable employees.
Real estate being an industry based on relationships, you have to ensure customer satisfaction. This is the best to master customer retention and to build your reputation. The sustained entrants of the new industry players are also another reason to provide superior customer experience. Providing the best customer experience is the ultimate way to beat your competitors.
To meet customer expectations, you need to involve customer intelligence and service aptitude. Instead of trying to solve customer needs, expect them, even when they are not already aware.
Most real estate players are adopting automation and AI to streamline processes and transactions. The solutions reduce response time, update websites, and personalize the customer experience.
Also, you must measure customer satisfaction levels. Use tools like the Net Promoter Score to determine customer opinion. To gauge the service level, you should confirm the likelihood of your customers recommending your business to other people.
Bottom Line
New technologies, changing homeowner demographics, and relationships are the real estate future drivers. Technology is improving customer access and availing more opportunities. With the right technology, you will have the best solutions for assured customer expectations.
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