What’s Hot In Real Estate Tech Right Now?
Four Trends You Need To Know More About
Internet of Things
Do you like buzzwords? No? Too bad. These three aren’t going away:
The Internet of Things, or IoT, is the connection of devices to the Internet; this can include everything from cars to airplanes to your refrigerator. For commercial real estate, IoT allows buildings to come to life and to communicate with internal devices to make sure that processes are operating at maximum efficiency. Devices working in tandem can create seamless experiences for individuals who are accustomed to such things in the rest of their daily lives.
Here’s an example: after entering your building lobby with your key fob, your apartment’s climate control system is activated, your kitchen lights turn on, and music from your smart speaker starts to play. With connected and smart devices, scenarios like this are no longer science fiction. And with all of that said, it’s makes sense that there’s no shortage of investment in the space… the IDC reports that global IoT spending will reach $1.29 trillion by 2020, with an annual growth rate of 15.6%. The companies that utilize IoT will be at a distinct advantage when searching for tenants for their buildings due to consumers’ desire for valuable interactions with technology.
It’s no shock that Big Data is making its presence felt in the real estate industry. Just about every major industry is being transformed as previously fragmented information is being disseminated to the masses, making processes flow more efficiently and effectively.
Companies like Zillow and Trulia, for example, have made data such as sale prices, demographic data, and average rent rates available not only to real estate agents, but to prospective buyers as well. Commercial real estate data has also become more accessible; this increased transparency allows for appraisals to no longer be a guessing game. And with added information, decision makers can more accurately analyze investments, which greatly reduces the risk that was previously taken on.
Big Data has also allowed agents to target the right consumer based off of their behaviors, demographics, and interests that they put on their social media profiles. These behaviors and interests can then help the agent understand what these individuals are looking for: a couple with children may be intrigued by great schools in the area, whereas a fresh-out-of-college graduate will want to find an area with a flourishing nightlife and retail options. Either way, Big Data provides a way to better understand the buyers’ motivations before the agent has even made an introduction.
And for those that are maintaining large commercial real estate properties, Big Data can work in conjunction with IoT to help alert building managers when there is a problem with the building (i.e. air conditioner breaking down, plumbing issues, etc.). This alone can help to reduce risk and tackle issues as they occur, saving time and money for the managers.
AR and VR
For starters, let’s delineate between Augmented Reality (AR) and Virtual Reality (VR). The Virtual Reality Society defines VR as “the term used to describe a three-dimensional, computer generated environment which can be explored and interacted with by a person. That person becomes part of this virtual world or is immersed within this environment and whilst there, is able to manipulate objects or perform a series of actions.” Think of the Oculus, or films like Tron and Ready Player One.
Augmented Reality (AR), on the other hand, is an interactive experience of a real-world environment whose elements are “augmented” by computer-generated perceptual information, sometimes across multiple sensory modalities. A perfect example of this was the worldwide phenomenon of Pokemon Go! Users were able to interact with their physical surroundings, but also had a distinct and unique experience through their mobile devices, as Pokemon appeared directly on their phones.
The connections to real estate are very apparent right from the get-go. The ability to deliver a prospective client a 3D home viewing experience from the comfort of your office? Not bad. And for augmented reality, it’s entirely possible to walk someone through an empty apartment, but have a viewfinder (i.e. a smartphone) show what the room would look like with trendy furniture, or that shag rug that you refuse to get rid of.
Simply put, with VR, it’s much easier to show more properties to more prospective buyers. And with AR, a sense of personalization can help buyers better visualize their dream home.
According to Goldman Sachs, VR alone will be an $80 billion dollar market by 2025 — with $2.6 billion of that coming directly from real estate. As a result, many other experts expect AR and VR to fundamentally change the buying process in real estate.
If a tech piece is written without a mention of blockchain, does it even exist?
As a quick refresher, the blockchain is a decentralized distributed ledger that keeps a public permanent record of transactions and information. The decentralized nature allows for two parties to complete a transaction without having to use a third party as an intermediary. In addition to maintaining a trustless environment (eliminating the need to use trusted third parties, i.e. big banks, governments, etc.), the blockchain’s distributed ledger ensures that risk of fraud and manipulation of transactions is minimized due to its immutable nature. For real estate, that means solving issues with lengthy wire transfers, improving title records management, implementing smart contracts for confirming agreements, and providing increased liquidity.
At RealBlocks, we’re using the Ethereum blockchain to provide Institutions, Real Estate Funds and Family Offices the ability to raise capital to form an investment fund for a prospective construction project, or dilute equity stake in an existing portfolio via tokenized private placement offerings. This solution provides issuers accelerated offering timelines, democratized access to a global pool of qualified investors, plus flexibility and control of the offering (through buybacks or further liquidation depending on the token net asset value, or NAV).
On the demand side, domestic, international, and cryptocurrency investors will be able to purchase fractional shares of real estate portfolios, receive passive income based on their pro-rata share, and seamlessly liquidate their holdings, which is a major differentiator between this offering strategy and the traditional route.
What other trends do you see emerging in real estate tech? Comment below!