Unless you’ve been living under a rock, it’s no secret that the real estate market was one of the industries most affected by the pandemic. The almost ‘supersonic’ property boom has reshaped Australian real estate markets across the board - residential, commercial and industrial all had highs and lows. Big game changers like state lockdowns and the rise of remote working had people moving interstate or regionally for a ‘sense of freedom’, having a positive flow on effect for the residential market but leaving the commercial market out in the lurch.
So what does 2022 have in store for real estate? Well, it’s all shaped around technology: in particular, PropTech. According to Forbes, PropTech has grown 1072% between 2015 and 2019 and in 2018 alone, $8.3 billion was invested into the digital industry. This amount is expected to keep growing. In the commercial market alone, Deloitte reported that 56% of the industry said that the pandemic revealed vulnerabilities and shortcomings in their company’s digital capabilities and technology in the real estate industry. This assumption just in the commercial market can easily be also assumed for residential and industrial.
In this blog, we take you through the next big digital trends in real estate and how they are helping agencies to innovate and adapt to the unpredictable nature of the economy.
What are the next big digital trends in real estate?
The following are a list of PropTech trends that are on the rise and how you can leverage them for your real estate business in 2022:
Virtual and augmented reality immersion
Even back in 2019, a survey by the National Association of Realtors found that nearly 50% of potential buyers researched properties online first. The introduction of virtual and augmented reality technology will simply elevate this research experience while complementing the need for technology that allows for remote property viewings as a result of COVID restrictions.
What can this technology do for real estate agents? Essentially create a ‘mock up reality’ of what properties will look like digitally for potential buyers so they can experience them from the comfort of their couch, desk or home. It is also great to capitalise on opportunities with long-distance buyers who physically can’t come over for a viewing. It opens up the chance to get more buyers and therefore, more offers. This doesn’t just impact already established builds.
Newly established or under planning builds can use virtual and augmented reality technology to create realistic architectural walkthroughs that can help potential buyers experience the property before construction even starts. From a property manager and real estate agents perspective, this can be used for both renters and buyers to help them become more acquainted with the space. Examples of software businesses that specialise in this include Hyperreality Technologies and RealAR.
Artificial intelligence and robotic process automation
Artificial intelligence (AI) and robotic process automation (RPA) or machine-learning will help make collected data more ‘actionable’ or used in a more efficient way. Chatbots have already made a name for themselves in the way of customer service but to add further value from a real estate agent's perspective, they may even be able to allow them to communicate with potential buyers and renters during virtual or online showings of property.
Artificial intelligence can work wonders in terms of predicting pricing trends based on historical data and even crime, school or transport activity. It’s able to process large sums of data, generate it in real-time and offer valuable market insights from it to real estate agents. Examples of software businesses that specialise in this include LeadSquared, Zillow, Compass, LoanSnap, Gabbi.ai and Again X.
Data analytics and data management
We’ve seen the likes of Amazon and eBay use big data analytics to recommend products to consumers based on previous purchases or pages they’ve recently visited or bookmarked. Netflix, Binge, Hulu, Stan and other online streaming services do the same thing and recommend movies, shows and so on to viewers based on preferences and similar patterns in other viewers. The same can be applied to the property market.
Property research sites are already using big data algorithms to allow buyers or renters the opportunity to input the ideal number of bedrooms, location, price range, pets allowed and so on. The next step is going the extra mile in terms of personalisation and allowing these algorithms to send similar properties when buyers aren’t actively looking based on past preferences or trends relative to their search history. Examples of software businesses that specialise in this include Northspyre, Rockestate, Trulia, and Redfin.
Fractional property investments
Fractional real estate or property investing is essentially a person, company or entity can have fractional ownership of real estate or a percentage ownership of an asset. There are many hopeful buyers out there who simply don’t have the funds currently to purchase outright or even build a deposit for a property purchase. This problem is solved through fractional property investment, which allows benefits such as income sharing and usage rights with other individuals or investors. It enables a more diversified investment portfolio while also giving real estate agents guaranteed future payments.
The digital trend aspect comes in through the split of the property into shares which get given to the individuals sharing or the investors. Agents can take advantage of this by offering this to potential buyers or advertising that they actively support or understand the benefits of fractional property investing. Examples of software businesses that specialise in this include BrickX and Domacom.
Building management systems
You’ve heard of smart homes which can adjust the lighting and temperature to user preferences. Building management systems (BMS) and controls can take this one step further and use sensors and AI to make the lives of people easier from controlling building heating, ventilation and air conditioning through to energy management systems. Technological advancements in BMS can actually sense the ambient temperature of a space and, based on tenant preferences and historical data, adjust the temperature before the tenant even considers changing it.
It is a great way to save costs and improve building efficiencies as it can, based on foot traffic data, identify spaces within buildings that people are working from. Have you ever gone into an office and it is absolutely freezing and you have to manually change the temperature or call the building manager to do something about it? With BMS, it’ll use data to set the optimal temperature depending on how many people are in one given space. Same can be said for the use of energy or electricity. Examples of software businesses that specialise in this include Pinestack and Fantabee.
The use of drones has become common practice for real estate agents looking to take their marketing to the next level and provide potential renters, investors or buyers with the opportunity to view the property online. This allows them to view the whole property from different perspectives and works quite well for buildings or large properties with acreage or land. It is an opportunity to create more enticing and existing content to showcase properties.
From an agent's perspective, drones can also be used for property maintenance like using smaller drones to check for flaws in places people can’t reach. It can also help monitor residential properties and ensure commercial or industrial structure integrity. Examples of software businesses that specialise in this include Triad Drones and LibelLab.
To preface blockchain interventions, let’s address some key players. Paper documentation is still a very large component of real estate property-related transactions and often involves the addition of third parties like banks and brokers which can get messy. Not to mention younger generations who want to invest but are less likely to in property as they simply can’t afford to.
Blockchain property technology is changing the game here through ‘smart contracts’ which essentially remove the need for third party involvement and paper documentation by storing property data online. Blockchain PropTech can also enable individuals to invest small amounts of money in real estate digitally over time, making property investment accessible to more individuals. Examples of software businesses that specialise in this include Dyvare and Mevi.
What other trends are present in the real estate market?
For more information and insight into the state of the real estate market for this year, check out our 2022 Real Estate Trend Report where we review key indicators of a thriving market - fluctuating housing prices, increases in industrial rent and commercial markets rebounding. Industrial markets are set to witness a 'demand supply conundrum', commercial markets anticipate a full 180 degree rebound with the introduction of hybrid workplaces and residential markets have mixed reviews.