The real estate industry is one of the most economically valuable sectors in the world. Yet it is slow to adapt to digitalisation compared to other industries. Yet innovative and disruptive technologies are an essential part of the modern world. Although the real estate sector could make use of many different technologies, many hurdles need to be overcome before adequate use can be made of them. This article will summarise which hurdles the sector has to overcome to transform from real estate to smart real estate.
What hurdles of digitalisation does the real estate sector face?
In order to keep up with digitalisation and technological transformation and innovation in line with the requirements of Industry 4.0 and transform into a smart real estate sector, the current real estate sector has to overcome some hurdles. First and foremost, it requires effective management to enable this transformation. These obstacles pose management challenges that impact the adoption of disruptive digital technologies (DDT) and innovation in smart real estate. The findings of a study by Ullah & Sepasgozar revealed that DDTs have not been adopted so far due to excessive costs, organisational policies, lack of awareness, reluctance, lack of user demand technical integration, lack of government support and funding. Overall, the highest barrier (risk) scores are found for the high cost of software and hardware, the high complexity of the chosen technology dissemination system and the lack of government incentives (policy regulations and standards) from project planners and investors. These barriers need to be addressed to pave the way for the adoption of DDT and innovation in the real estate sector and create a pathway to smart real estate.
An additional growing problem for the industry, according to Ullah & Wang 2018, is the increasing consumer regret after buying or renting a property. According to data, 44 per cent of real estate consumers (almost one in two) regret their decision to buy or rent. The main causes of these regrets are a lack of information about properties and the complexity of the buying process, which hides important information, including fees. When consumers discover details or fees after the purchase, distrust and regret in DDT is increased. The research showed that the main cause of regret is a lack of information.
Did you know?
Disruptive digital technologies are also called the Big 9. These are: Drones, the Internet of Things (IoT), Clouds, Software as a Service (SaaS), Big Data, 3D scanning, wearable technologies, virtual and augmented reality (VR and AR), and artificial intelligence (AI) and robotics.
The benefits of Big 9 technologies in the real estate industry for consumers
Ulla and Wang's study elaborated on the extent to which consumers can benefit from Big9 technologies in SRE. User-centricity should be at the forefront of the dissemination of information here.
In particular, the enormous potential of Big9 technologies needs to be passed on to end-users or consumers, who are the actual payers for the technologies and industrial upgrades. Here is an overview of the benefits:
Big 9 technologies for end-users and consumers:
- Big Data: Big Data-powered analytics: enable neighbourhood and place insights to be offered, such as crime rates, travel costs and sales figures
- AI: Using Artificial Intelligence, consumers can connect with their dream properties based on predictive analytics and intelligent matching (This saves time and can avoid human error).
- Clouds: Clouds can provide access to property details, maintenance schedules and financial details.
- SaaS: SaaS-based access to leases, rental and contract documents, security issues and work orders, among others, can increase the sense of connection between consumers and their real estate matters.
- IoT: Immersive tools linked to the internet make consumers feel more bound to their buildings and properties, as they can receive notifications and control their property's devices remotely.
- Drones: 3D and 360-degree imagery captured by drones provide unique, wider angles, detailed and comprehensive images and videos that show exterior details such as sun patterns, roof conditions, nearby green spaces, distances to amenities, as well as finer interior details such as mould growth, crumbling paint, damp corners and others.
- 3D scanning technology: these provide building and property floor plans and drawings that can be merged with building management models to intelligently match space layouts and ensure good use of the property.
- Wearable Techs: These offer consumers luxury and flexibility through gadgets and sensors installed in their property.
- VR and AR: Visualisations and 3D tours can help consumers make better decisions about buying or renting their properties.
From obstacles to future opportunities!
The real estate industry needs to improve the adoption of disruptive technologies to move from traditional to smart real estate (SRE). The core components of SRE are mainly sustainability, innovative technology and user-centricity. These do not only address one stakeholder group, but can benefit consumers, brokers and associations, government and regulators, and complementary industries - and their needs, e.g. in terms of buying or selling property, profits, taxes, business and/or other factors. The benefits of Big9 technologies, as described in the current study, should open up discussions and avenues for their adoption, and lead to more accurate and reliable information being made available to consumers. Based on this information, consumers will be able to make better decisions and will be less likely to regret their purchase and investment, if at all.