Now that we are safely in 2023, the real estate industry is closely monitoring the new year ahead. The past two years have been tumultuous, but the industry has largely persevered thanks to technological advancements and tools that have supported all parties involved. From agents to investors, lenders, property managers, homeowners and entrepreneurs, technology has improved the real estate sector for everyone.
A common question among industry players is: what technological advancements can we expect in 2023? In this article, we will explore the potential tech trends set to dominate real estate in the coming year.
Virtual reality (VR) and augmented reality (AR) have been popular in the real estate industry for some time, but the pandemic has certainly accelerated their adoption. With lockdowns in place, many agents and property owners had to resort to virtual tours as the best alternative to in-person showings. This shift revealed the advantages of virtual tours over traditional ones, making them a preferred method for the future.
According to a Matterport survey1, listings with 3D virtual walkthroughs sell 31% faster and for up to 9% more. The use of VR and AR in real estate is expected to continue growing, especially among investors. Homebuyers can preview their future home and experience its atmosphere through 3D tours, while investors benefit from these virtual walk-throughs.
Furthermore, VR is not only used in real estate sales but also in the rental market. A growing number of landlords and short-term rental hosts are using virtual tours in their listings to attract renters. With the results of the Matterport survey, this may soon become the norm for rental listings.
The growth of virtual real estate and investment opportunities is poised to be a major driving force in the real estate industry in 2023. The metaverse real estate market was valued at $821.9 million in 2021 and is projected to reach $5.95 billion by 20282.
This trend is fueled by the advancements in virtual reality, augmented reality, and the integration of blockchain technology into real estate. Despite the potential for diversification, buying assets in a virtual world is still a novel concept, and investors are likely to proceed with caution. It's important for them to weigh the benefits and risks before fully embracing virtual properties as an investment option.
The rise of fractional ownership
Another emerging real estate tech trend that will continue to gain popularity in 2023 is fractional ownership. This concept has been present in the real estate industry for a while, with investors using methods such as syndication, real estate investment trusts (REITs), and partnerships to own shares of real estate assets. However, technology is now accelerating this trend, leading to a democratization of the real estate market.
In the past, fractional ownership required substantial initial capital, making it inaccessible to many investors. For instance, most REITs had a minimum capital requirement of $25,0003, and only accredited investors were eligible to participate. However, there are now a growing number of PropTech platforms that allow for smaller investments, making it possible for a wider range of individuals to invest in real estate.
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.
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.
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.
Increased efficiency is the primary advantage of the recent surge in technology in the real estate industry. Real estate professionals, such as agents, brokers, lenders, property managers, investors and even homebuyers and sellers, have been able to automate numerous repetitive tasks, enabling them to complete work faster and more efficiently than ever before.
Currently, many Customer Relationship Management (CRM) applications cater to different aspects of real estate. However, it is expected that in 2023 and beyond, there will be a growing demand for comprehensive platforms that either cater to a specific niche or cover all aspects of real estate, from start to finish. Streamlining processes holds significant potential, and this has not gone unnoticed by real estate professionals.
The advancement of artificial intelligence (AI) in the real estate technology industry has been underway for years and has seen significant progress in recent times. AI and big data have made it possible for property investors to find and analyze investment opportunities with unprecedented speed and efficiency.
One emerging trend that is expected to gain traction in 2023 and beyond is the use of quantum computing AI in real estate. The global quantum computing market size is predicted to grow from $470 million in 2021 to $1,765 million in 20264, and this is just the beginning. Although the application of quantum computing in real estate is still limited, its potential is huge. As the technology develops, it's likely that more and more PropTech startups and companies will incorporate quantum computing into their algorithms.
Technology continues to play a major role in shaping the future of the real estate industry. From virtual reality and augmented reality to artificial intelligence, fractional investment and virtual real estate, 2023 is poised to bring exciting advancements and opportunities. As the real estate industry continues to evolve, it's important for all stakeholders to stay informed about the latest technology trends and developments to make the most of these opportunities. Whether you're a seasoned investor or just starting out, the use of technology in real estate is only set to grow, and it's essential to stay ahead of the curve to remain competitive and successful.