5 Problems Virtual, Augmented and Mixed Reality will solve in real estate
Buying a new home, moving offices or opening a new store are important decisions and it’s often buying a pig in a poke. Imagine, you’re buying an apartment off-plan, leasing office space which is not fitted out or retail space where the previous fit out has to be changed completely. The problem is that you have to imagine something that doesn’t exist yet and that doesn’t make it easier to make the right decision. Sure, there are tools to make life easier like sample floor plans, models, 3D renders and mock ups but it still is rather challening to grasp fully unless you’re an architect or interior designer.
Virtual reality has been out there for ages it seems and my personal experience dates back to the film “The Lawnmower Man” from 1992 and trying on awkwardly clunky VR’ish goggles at the IFA in Berlin probably at around the same time. But technology for virtual, augmented and mixed reality (VR|AR|MR) is developing rapidly and gaming has been at the forefront. More recently, Pokemon Go certainly opened eyes in terms of opportunities in other industries and Swedish furniture giant IKEA has been pioneering this when they launched their augmented reality app “IKEA Place” using Apple’s new ARKit technology and iOS 11 late last year. What it effectively does is that it enables IKEA’s customers to visualize furniture from the virtual catalogue in their real home.
Here’s my take on the 5 main problems that VR|AR|MR will solve in the real estate industry:
- Cost — Property marketing is expensive. That is especially true for residential projects with off plan sales. Marketing budgets can reach 5–10% of all development cost and often include costly newspaper ads, TV or radio commercials as the main marketing channels. Salaries and commissions for on site or telesales staff are high. Setting up sales offices and marketing suites on site for larger projects can easily cost a 7-digit amount to construct only to be demolished when the project is completed. For smaller projects or more central locations often expensive retail or office space is leased to accommodate sales offices or marketing suites. Key marketing materials will include high end presentations, videos and brochures. 3D renders used in these alone can easily cost thousands of dollars apiece. Most developers will happily allow for expensive marketing budgets and not even question any of these as sales and sales speed are critical to them. No wonder property marketing has become an industry. VR|AR|MR solutions on the other hand cost only a fraction and are way more cost effective.
- Reach — The entire residential sales process is based on buyers who visit the marketing suite. While that can be very effective when they do visit that’s not the case when they don’t visit. First of all, marketing suites are not open 24/7, you can’t visit them any time you like. For buyers from a distance on the other hand it will be more difficult to visit the marketing suite. Think of foreign buyers, they rarely will travel all the way to visit the marketing suite. How well do you reach them? A key advantage VR|AR|MR solutions offer is that because they’re digital, they’re typically accessible 24/7 and from anywhere in the world. While VR|AR|MR solutions will not make marketing suites and on-site sales obsolete they will add a powerful and social media friendly channel. Think of the omni channel trend in the retail industry. VR|AR|MR solutions will not only exponentially increase customer reach and hence the number of marketing suite visits but will also enhance the quality of the incoming prospective buyers. Anyone who’s had a virtual look beforehand will have an idea already and know what to look for while there, and afterwards won’t have to revisit over and over again. This in turn will speed up their decision making process and therefor save buyer and seller a lot of time.
- Measurement — One of the key problems of conventional property marketing is that it is very difficult to measure. Digital by nature, VR|AR|MR solutions on the other can be easily integrated into any digital marketing campaign. Digital marketing in turn is very easy to measure using analytics tools such as Google Analytics or Similarweb. With analytics it is easy to not only track amount of traffic but also origin and engagement. This is extremely useful in assessing return on investment for digital marketing in particular. A quick look at developers’ websites reveals that quantity and quality of traffic is far from ideal. It also reveals that the real estate industry is lagging behind when it comes to leveraging digital marketing.
- Experience — Any of the conventional marketing tools will only provide a very limited experience if any. Sample layouts and 3D renders in brochures, videos and presentations will be static and mock ups too will only be one size fits all. There’s no personalization. Conventional marketing tools don’t give you an idea about how it will be like to live in that space. VR|AR|MR solutions are obviously still developing but offer a key advantage when it comes to providing that immersive experience. Personalization is very important and through changing views, angles, daylight, colors, materials or even furniture or interiors as a whole this is easily possible in VR|AR|MR. Feeling the depth of space, ceiling height or how furniture will look in the new home will even intensify the experience especially when using VR goggles for example.
- Engagement — Looking at real estate developers’ online presence it’s not very difficult to see how limited engagement actually is. This is paradox given that the internet is the number one source of information. What drives online traffic or engagement is content. VR|AR|MR solutions provide the most relevant content, experience. It’s social media friendly and can be easily integrated into digital marketing campaigns to create a wholistic customer engagement. Enhanced engagement will enable developers to better understand home buyers’ preferences and improve customer relationship. Paired with AI and machine learning VR|AR|MR solutions will not only be able to increase engagement but in the long run will also provide valuable feedback on home buyers’ preferences which in turn will enable developers to develop projects that sell faster and/or at a premium.
Marketing suites and mock ups still form the backbone of experience driven property marketing but that only helps to convert visitors into buyers. VR|AR|MR will increase the number of visitors by providing the platform for interaction and experience without visiting.
VR|AR|MR solutions are strong property marketing tools especially for the housing market. The technology’s there, it’s developing rapidly and it’s helping customers in the decision making process. According to Goldman Sachs virtual and augmented reality in real estate will hit $2.6 billion by 2020 which to me seems to be on the very low side.
And as Jesper Brodin, CEO of IKEA, said at this year’s World Economic Forum (WEF) in Davos: “(What) we haven’t been able to do before is to find easier ways to connect with people so digital opens up massive opportunities for us.”.