The value of the global real estate industry is estimated at $217 trillion (Ksh22.2 quadrillion), with residential property making up the lion’s share at about 75% of the total value. In Kenya, the prices of real estate property continue to skyrocket as the economy has witnessed an exponential growth of the middle-class and this trend is likely to carry on as the disposable incomes of more Kenyans are projected to increase.
Buyer demographic shifts impact heavily on the trends in the real estate industry and developers and other stakeholders have to cater for the market needs by innovating strategically.
In the real estate sector just like any other industry, it is about innovating and deploying business models that can inculcate technological advancements that will drive efficiency in the entire development process all the way from acquiring land, construction, marketing and even how potential buyers interact with the property.
Take Airbnb, for example - an accommodation sharing platform started in 2008 - and that has redefined hotel booking for millions of users worldwide. This convenient and flexible way of selling space has been adopted globally and is estimated to be worth more than any hotel chain. Operating in more than 81,000 cities across the globe, it has disrupted long-established players and continues to be profitable.
From the trajectory that the industry is taking, there are many more innovations - property tech (proptech) - that are already and will continue to disrupt the real estate sector. Only those real estate experts who will integrate these developments into their systems in good time will see long-term success.
But what are these proptech innovations and how have they redefined real estate?
Transaction Process
Property buying is quite a laborious process with unavoidable intermediaries like banks, credit facilities making the process expensive, slow and illiquid. What the industry needs is increased efficiency during transactions and Blockchain technology could change the way we track and transfer real estate assets, the valuation process and the speed of transactions. Most importantly, it could resolve some of the longstanding problems in real estate, for instance, corruption, inaccessibility and lack of liquidity.
Blockchain will achieve this because of its three key characteristics: the fact that all data held within it is not owned by anyone, cannot be altered and can be accessed by anyone who is part of the network.These features make it possible to execute smart contracts, which allow homebuyers to engage with developers directly, without needing go-betweens as is currently the case. Since the terms of the contract are only fulfilled once each party holds up its end of the deal, individuals will not need to engage third parties. Blockchain tech will also speed up the process immensely and protect real estate investors from fraud since records are openly and readily accessible and there is no chance that they can be tampered with.
Virtual Reality (VR)
When property hunting, visiting a property is not only time-consuming but can be expensive especially if there are multiple properties to be viewed. Virtual Reality eliminates the need for a client to physically visit a property as it creates an immersive experience with three-dimensional walkthroughs of properties.
Potential buyers can now take virtual tours from anywhere in the world. Not only do they save endless hours spent commuting between various properties, they are also not restricted by borders.
Additionally, where a project is sold off plan, investors are able to get an accurate representation of what they are buying even before construction commences. This also affords them greater choice because they can visualize the architecture with the added feature of making changes to the design while experiencing it in real time.
3D-printed buildings
Imagine having your house printed in a record 24 hours. The idea sounds unbelievable but that is already happening thanks to 3D printing. Already in use by construction companies in Russia, US and China, 3D printing is proving to be future of construction as it is faster, cheaper and a more sustainable option.
When you compare it to the traditional building process that takes months to the single day building period, this tech is a game-changer especially in areas with massive housing shortage. Developers are even using locally recyclable materials which translate to massive savings in labor and material costs.
The potential of 3D printing to build homes is only limited by our imagination.
Drones
Storytelling in real estate has had great advances with one of the newest trends being using drones to take awesome aerial images. Used for all types of listings including residential homes, apartments, resorts, vacant land, commercial properties, these shots offer a unique perspective when showcasing property.
Drones have other useful applications where they can be used to transport materials, surveil sites and make detailed aerial analyses of complex terrains during construction. Uptake of drones is however undermined by insufficient legal regulations where countries’ laws are yet to be established to facilitate the use of the tech.
Smart Living
Comfort and sophistication are factoring greatly into the lifestyle choices of many homeowners. As such, the Smart home feature that offers convenience via the integration of digital assistants is gaining popularity. The convenience of monitoring every aspect of the home from a centralized control further adds to the lush lifestyle.
The Internet of Things (IoT) has completely changed how people interact with their environment. Imagine having your fridge send a shopping list to your store, which will be delivered by a driverless car. This reality is only a few years away and some of it is already being incorporated into current construction. IoT is the system of physical objects that have been connected to each other through the Internet. This enables them to perform smart functions without needing human intervention. Anything can be connected to the Internet and become an IoT device, from household appliances to security systems and everything in between. In the future, smart homes, offices and cars will be more mainstream and many households have at least one IoT component inside them.
Artificial Intelligence (AI)
Already taking over customer support operations as basic chat bots, artificial intelligence is likewise expected to play a role in real estate with building organization, design and management being eyed as potential areas of application.
It has the capacity to solve mathematical and logical problems better than any human. For this reason, computers will be taking over many jobs in the coming twenty years that are still currently being performed by humans - either physically as robots or in the form of software. While machines were previously used only to replace manual labour, they now also have mental capability and the capacity to learn.
Artificial intelligence could represent a big opportunity for real estate experts. Developers could use computer-controlled structural analysis software in combination with design software to calculate building statics.
Robotics
Strictly speaking, robots are not exactly all that new in the real estate sector. They are being deployed in commercial real estate to help operators manage their properties. Through Robotic Process Automation (RPA) very repetitive processes inside companies like invoicing, renewals or payments are automated.
At the same time, manual labour in construction can be performed much quicker and more precisely and thus also more safely by robots. Developments in robotics when combined with improved sensor technology, artificial intelligence and networked computing infrastructures could soon lead to revolutionary technology.
Synthetic biology
It is still too early to say to what extent the increasingly sophisticated biotechnology will impact the technology used by the real estate sector. But one thing is clear: As soon as it impacts the production of building materials, the life cycle of buildings will rise significantly. In the not too distant future, there could be materials which repair or even restructure themselves through mitosis, or cybernetic walls which adapt to building occupant requirements.
Data Analytics and Machine Learning
Accurate data creates deep knowledge - We have more data at our fingertips than at any other point in history. This presents tremendous opportunity for innovation. Commercial real estate developers need information on how their properties are performing on a variety of levels, from rental rates to energy efficiencies.
This data can be easily gathered, tabulated and turned into actionable insights; this can help property managers make smarter decisions based on actual data rather than projections. This leads to faster and more accurate appraisals.
Buildings can also use data gathered through smart technology to automatically adjust to the number of people in the building, the weather and other factors that maximize tenant comfort while minimizing energy costs.
Big data can be used to create 3D models and virtual reality simulations that let developers, construction teams, architects and lenders tour a building in detail before they can even break ground. This can prevent costly mistakes and help future tenants visualize their new space
To put it simply, advances in technology will continue to disrupt real estate. The end result will be a highly efficient, vibrant and global real estate sector with unlimited options for buyers and builders alike. Developers that embrace proptech sooner rather than later stand to reap the most value because as unpredictable as the market may be, one thing is indisputable: proptech is the future of real estate. With all these new technologies on the horizon, the future of the real estate sector remains exciting.
Author Info: Gitonga Muriithi is the Head of Sales and Marketing - Centum Real Estate.