Future of Real Estate - Big Data & Innovation
Our everyday lives have been affected great deal by the technological and IT advances, especially on the social front. However, the real estate sector has not yet been impacted to the scale and manner other industries have, but remains as vulnerable to disruption as any other industry.
An important question to ask over here is how should real estate industry (service providers) change their business models in order to be ahead in the game and meet the demand. Before answering this question, lets take a peek into what all is on offer.
Real estate deals rely on data analysis, from faster, more accurate appraisals to forecasts , the use of data analytics can lead to decisions about property investments. The amount of data real estate industry produces, cash rich companies specializing in big data analytics with their data supported business models will enter the sector. Such traits will automatically place these companies ahead of the traditional firms, which may face a learning curve in adopting data as a business models. Companies like Amazon Alexa, Google Home, Google Nest, Samsung Smart Things have shown keen interest in building system automation for newly constructed and existing buildings. The next step forward for these companies would mean asset and property managers losing great deal of influence over there traditional business models. To maintain their business edge, they may need to reinvent their business models and value proposition. Let's look at some of the technological innovations transforming the real estate industry.
Robotics
Because of rising wages and improving automation, robotics provide an attractive alternative to today's labor-intensive services. Many processes like surface cleaning, security service, facade cleaning, painting, inspection of hard to reach exteriors are already being carried out by robots. These robots are currently tackling simple, large scale tasks but eventually they may take over more complex roles including front office tasks and acting directly with people as indispensable support providers.
Augmented and Virtual Reality
Augmented Reality combined with digitized building models, can make hidden components visible, similar to x-ray glasses. Consider going through a virtual three dimensional architectural floor plan of your next condo.
Sensors
Sensors can free providers from rigid processes, enabling them to adapt their services on an as-needed basis. Buildings can have sensors that enable remote monitoring, and if anything goes below a certain threshold, alarms can be triggered, prompting dispatch of the repair crew. By analyzing the consumption- providers can also align their services more closely with the user's requirements, improving customer satisfaction.
Internet of Things
Internet of Things (IoT) is made up of everyday objects embedded with sensors and other technology that allow them to pick up data and pass it on to other objects. For example, the intelligent climate control system might also detect debris and deploy housekeeping robots for cleaning, sensors in plants could communicate with automated watering systems. According to International Energy Agency, IoT technology could lower the energy consumption of residential and commercial buildings globally by as much as 10 % between 2017 and 2040.
Building Information Modelling
Building Information Modeling (BIM) is digital representation of physical and functional characteristics of a facility. A BIM is a shared knowledge resource for information about a facility forming a reliable basis for decisions during its life cycle; defined as existing from earliest conception to demolition.
Traditional building designs are largely reliant upon two dimensional technical drawings. BIM extends this beyond 3D, augmenting the three primary spatial dimensions, with time as fourth dimension and cost as fifth dimension. More recently there are also references to a sixth dimension representing building environmental and sustainability analysis, and seventh dimension for life cycle facility management aspect.
The Future
Real estate sector has been profitable business for decades, so the pressure to adopt new technologies hasn't been strong enough. As the technologies mentioned above become more important to building planning and construction, real estate service providers will have a chance to distinguish themselves via digitization.
Cities where demand is more for real estate will be the first to outfit for new technologies. Thanks to higher rents, investment costs for new buildings and modernization might be higher as well. Its hard to forecast the demand for turning existing buildings into smart buildings, but its easy to visualize that existing buildings, because there are more of them, offer greater potential for digitization than new ones.
Eventually, the cost-benefit ratio will determine how quickly existing building inventory goes digital. Since the investment is more likely to pay off in highly sought-after locations, that's where the first wave of digitization will take place. Only the applications that provide a building's user with added value will get necessary investment, and for this it is important to understand how user requirements might change over time.
For real estate service providers, another potentially disruptive aspect of digitization is the flow of data from the building users. This data could become a second source of revenue in the future and those who can use this data in a profitable way will be well-positioned for future success. The opportunity for real estate providers is that they currently sit at the data source, if done right, they can enjoy a competitive edge in setting up data driven services and staying in contact with the users, owners and the property itself.
In the years ahead, digital innovation will significantly alter not just real estate but also the business models of real estate service providers. These changes may shift responsibility, expertise, and risk in the industry, thereby shifting margins as well. Despite rapid technological development, its integration in the real estate sector will be staggered. The speed of change largely depends on the pace of new construction and modernization, as well as on the readiness of owners and investors to invest in the real estate inventory.
