Commercial real estate is one of the industries the pandemic affected the most. As stated in the Federal Reserve Bank of St. Louis, the real estate market dynamics during the pandemic are very similar to that of the previous three falls. The potential collapse of the industry seems to happen in the near future. Only government policy aimed at lowering rates on mortgage loans, extending the maturity of debts, and other balancing instruments delay inevitable events. But it won’t work for long. How can companies survive a recession without a significant reduction of their earnings? The introduction of technology in all areas of real estate is one of the essential steps for transforming the whole industry.
How has COVID-2019 impacted digital real estate business opportunities?
Deloitte conducted a survey to identify problems in the digital capabilities of the real estate industry during the pandemic. Do the companies agree that they felt the need for technical tools and changed their plans for business transformation during the quarantine restrictions?
- 56% of respondents answered that they agree or completely agree with the statement;
- 26% partially agreed;
- 15% expressed neither agreement nor denial of the statement;
- 3% responded with partial consent;
- 2% expressed disagreement or categorical denial.
So, more than half of the companies really felt the need to introduce technologies into routine processes and now are planning to make changes in operational procedures. But which technologies, according to the business, have the most significant impact?
According to Statista, the business receives the greatest benefits from investments in process management technologies and construction — 68%, financing, and investment process — 59%, back-office operating efficiency — 51%, project appraisal — 46%, work with regulations and standards in the field of real estate/construction — 39%, management of data on quality and market value — 32%, and work with applications for development, permits — 22%.
Specialized IT technologies, as real estate management services, are increasing market demand. Experts also note the growing popularity of basic CRM systems, re-equipped by businesses to suit their needs. But the most noticeable changes are connected with technologies for working with social networks. The trend of looking for customers where they spend most of their time is growing. Now every step in working with commercial real estate and construction projects is closely related to technology, from starting a search for plots and houses to closing deals, where every payment for hundreds of thousands of dollars can be closed with just one click.
Technologies allow you to maintain and increase the profitability of investments, free up part of the budget, control the speed of execution, and save resources. But not all popular solutions can be practically helpful for your business.
What IT solutions should you pay attention to now to help your business tomorrow?
The pandemic precisely showed the most complex operations and points of business functioning: from remote work and the difficulties of interacting with the team to contacting clients and selling services/property. Business went online and now has almost the only way to contact the world: according to the National Association of Realtors, 9 out of 10 real estate companies already had a website in 2018. Today, it is not an innovation but a common practice. What will be really useful to implement in work now?
1. VR / AR Technologies
According to the National Association of Realtors, people born between 1980 and 2000 are the most active buying audience in the real estate market. They prefer to make purchases online and explore the object of interest from all sides.
Creating an emotional connection when meeting the object of desire is the main goal of using technology. After all, numbers, criteria, and conditions are secondary factors if visual satisfaction is achieved.
Today, 130 thousand experts worldwide have confirmed that they spend about 5 thousand dollars a year on virtual or augmented reality technologies. And 4 of 10 of their buyers confirmed the crucial importance of virtual tours in making a purchase decision. According to expert estimates, by 2025, the virtual reality market in real estate will be estimated at $ 2.6 billion in profits.
2. Fintech in real estate
The pandemic completely changed the purchasing habits of users. So, in 2020, 64% of transactions were carried out online. The ability to book an object, apartment, or plot with favorable lease or sale conditions through an advance payment in one click is one of the most common services in the real estate industry. Technologies based on big data analysis, blockchain, and machine learning allow you to find out how users behave at the moment of the greatest desire to buy. They show you where you should place an offer to make a payment in one click. It provides advantages in remote work not only for users but for real estate agents. If days ago it was necessary to spend time on registration of transactions, now sending the first payment implies accepting the terms of cooperation and accepting the contract automatically.
The growth in demand for advanced financial technologies in the real estate industry is confirmed by the fact that 4 out of 50 Forbes Fintech 50 companies focused on fintech.
3. Big data management
Research shows that 4 of 10 companies still use spreadsheets and manual information management in their work. Regular updating of information in the listings of real estate platforms, social networks, or on their websites can take more than 55% of the time of a full-time agent. Data management automation systems allow you to aggregate the necessary information, process it following established algorithms, and export it via selected channels in a matter of minutes. Separate tools or modules in CRM systems allow you to automate the work by presenting objects to customers and keeping the data up-to-date. Moreover, agents can expand the range of information that will be downloaded through the specified channels automatically, which will increase the interest of potential buyers. After all, 24% of customers lose interest in the object of purchase or lease only due to the lack of a detailed description.
Being where the client needs it and showing advertisements for objects to the target audience located in the coverage area is a fast-growing trend. User activity through mobile devices speaks for itself: 90% of potential buyers use mobile phones and spend 55% of the time on the Internet using these devices.
User activity through mobile devices allows geotargeting to develop actively. It is enough to fulfill several simple conditions: to have a mobile phone with constant access to the network, to look for real estate through a portable device, and to be in the area of sale or lease. Statistics confirm that 72% of buyers are ready to respond to personalized marketing notifications that meet their marketing needs. The introduction of such technologies into the Real estate app will increase the conversion several times.
5. Artificial intelligence
According to the CRE Innovation Report, employees of real estate companies are most loyal to technologies based on artificial intelligence. It is not surprising that the scope of AI is so wide: from analyzing data to predict the profitability of a construction project to identifying purchasing tendencies and habits. The error rate in the data collected by artificial intelligence is only 1.9%. Smart real estate maintenance systems, personalized advertising, improved listing systems, the actualization of property values, accurate forecasting of the construction budget, and automation of decision-making on mortgage lending are already implemented solutions based on AI. According to analysts, artificial intelligence technologies in companies will increase business value by $ 2.9 trillion this year, and employee productivity will rise by 6.2 billion hours.
Yes, the technology sector is a treasure trove of ideas and opportunities for the real estate industry at every stage of the supply chain. Implementing advanced solutions will allow your business to endure the transformation of business processes in a post-pandemic world. Add value to your business, deliver higher ROI, and enter new markets today with insights from Rocketech!
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