How the Covid-19 Pandemic has Digitalised the Real Estate Industry
Introduction
Government regulations resulting from the Coronavirus Pandemic has changed how property transactions are conducted globally . Many issues arise from the inability of tenants to meet landlords and estate agents face to face, such as fraudsters taking advantage of this situation with a view to scam unaware tenants. Additionally, the landscape of the real estate industry has changed dramatically due to uncertainty in property markets. Real-Estate Firms are finding new methods to adapt using digital portfolio systems to monitor their properties and cutting costs by relocating to flexible office spaces that suit their needs. There is also a new emerging market of Proptech companies which main focus is digitalising Real-Estate transactions.
Virtual House Viewings
One major issue that became apparent due to Covid-19 regulations is the inability to conduct in person house viewings. However, advancements in digital platforms have allowed potential tenants to view properties virtually. For instance, many property marketplaces and estate agencies have designed 360° virtual house tour platforms allowing potential tenants to view the entire property in detail online. The major online property marketplace Rightmove allows advertisers to even record their own virtual Recording and upload it to the platform where interested individuals can view. Additionally, tenants can also use Zoom to ask Estate Agents additional questions and to view any areas of interest in greater detail.
Challenges
One issue with digital property viewing platforms is that they are exposed to fraudulent activity as the tenant is not viewing the house in person. Potential scams could arise when a scammer exploits the inability to conduct in person viewing due to the pandemic and fraudulently places an advertisement for sale for a house that he has no association with. Scammer's would then screen record an authentic listings virtual viewing recording and upload it as if it was his own. Unfortunate tenants would then place a deposit for the property via bank transfer and only to their disbelief to find out later that it was a fake listing.
How this can be resolved
One method that would reduce the amount of fake property listings on online marketplaces is through further screening. At present anyone can list a property whether they own it or not. If it was mandatory to submit documents that show proof of address or ownership such as bank cards or land registry documents, it would significantly reduce the number of fake listings online. Currently Zoopla a major online property marketplace are running a reporting service where users can report listings if they believe they are fake, therefore, helping to reduce fraudulent activity on the platform.
Digital Documents
Prior to the coronavirus pandemic it would be common for landlords and estate agents to meet with their tenants in person to present the tenancy agreement and deposit documents so they can read them and sign. However, as this can no longer occur due to covid-19 regulations, agencies have resorted to using online digital documents such as Eversign that can be accessed via email. These platforms are generally very secure as they are encrypted using a 256 SSL, and are legally binding as it allows for secure electronic signatures.
Issues with Digital Documents
Although digital documents have been essential for allowing tenants and landlords to finalise contracts it is not without flaws. One major flaw is that not all digital signature platforms are encrypted to a high standard. This may lead to the possibility for data breaches and potential signature forgery which would have major ramifications .Additionally, it can be expensive to implement digital documentation as you need to purchase the software which may not be commercially viable for small businesses.
Digital Portfolios
As the pandemic lead to widespread uncertainty in real estate markets Investors and companies with large portfolios may find it difficult to keep up to date with changing coronavirus regulations in different regions. Property management software platforms such as AppFolio will allow landlords to monitor tenants by location and view key information regarding their tenancy agreement and rental payments. This will help drive efficiencies and reduce tenancy voids and late payments. Keeping track of occupancy rates is vital to remain profitable especially in this period as the flow of tenants is reduced.
Flexible office space
As demand for office space has decreased significantly especially in central locations, companies can cut costs via downsizing and relocating outside of the city centre. Flexible office space in suburbs are very ideal for many companies as it can be customised to suit their needs. For instance, Wework which is a market leading flexible office space provider that was struggling prior the pandemic after a failed IPO has managed to survive the Covid-19 pandemic. This is due to the increased demand for flexible office space which was indicated in a study conducted by Cushman and Wakefield.
Proptech
Government Covid 19 regulations has changed how people search for property. Instead of going to high street estate agencies to buy or rent properties, individuals have turned to digital platforms such as Zoopla and Rightmove which streamline the entire process. Currently there is an emerging market for Proptech Startup companies which specialise in this field with an aim to improve the property purchase experience. For instance, Offr a startup that raised over £2.5 in seed funding orginised by Barclays, is the first company to find a solution which can remotely automate 85% of the property transaction process making cross border purchases possible during the pandemic.
Conclusion
Overall, we have seen how the property market is adapting to meet the needs of tenants and landlords during the Covid-19 pandemic via the use of various digital platforms and new technologies such as virtual viewing platforms, digital documents and digital property management systems. we have also discussed the flaws of using these digital technologies and also touched on current real estate trends such as flexible office space assisting companies to cut rental costs, and how Proptech companies are digitalising property transactions.
