Digital transformation is not just a buzzword. Numerous industries have leveraged the power of high-end technologies to ride the wave, with the real estate domain being one of the most eager adopters of digital trends.
In this fast-moving, tech-driven world, digital transformation has become an integral part of all businesses focused on staying afloat, growing their bottom line, and winning customer loyalty.
Expected to reach a value of $4,923.3 billion by 2031, the real estate sector has also started implementing modern technologies and tools in its processes to become more efficient and advanced.
In this article, we will explore how exactly real estate stands to benefit from digital transformation, learn which technologies and tools it relies on, and discover some of the most prominent digital real estate use cases.
Why is digital transformation in real estate important?
Businesses can resist anything except digitization.
The global digital transformation market is expected to grow to as much as $1,548.9 billion by 2027, forcing all sectors to do a full about turn and shift from their traditional working models into digital ones.
Real estate has followed suit and is already starting to replace its outdated legacy systems with novel leading-edge technologies to enable process and personnel innovations, boosting the Industry 4.0 revolution across commercial and residential real estate organizations.
These days, real estate investors, managers, developers, agents, brokers, and other entities have been heavily investing in their technological and organizational transformation to maximize return on investment, bolster their operational efficiency, and satisfy clients’ ever-changing needs and demands — and this trend is bound to continue.
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What are the benefits of digital transformation in real estate?
The benefits of digital transformation for real estate are abundant, the most outstanding being streamlined workflows, an enhanced customer experience and journey, greater access to data, better decision-making, and reduced costs.
Streamlined workflows and operations
By delegating mundane and repetitive tasks to sophisticated solutions powered by advances in AI/ML and big data, real estate companies stand to enjoy faster speed and fewer errors, which results in greater efficiency and more positive outcomes for all parties involved.
Meanwhile, employees can apply themselves to more serious duties that require their attention and focus on what is really important.
Enhanced customer experience and journey
Thanks to the amazing capabilities of AR/VR technology, real estate agents can provide their customers with unique experiences such as engaging, high-quality 3D tours around a real estate property.
In addition, with the help of data analytics, real estate businesses can gain better insights into their customers’ behavior and preferences and use that information to tailor their offerings, thus improving the overall customer experience.
See how PixelPlex delivered this VR real estate platform for generating 360° virtual tours
Greater access to data and better decision-making
Technological advancements have made it possible to acquire access to critical information much more quickly, allowing the real estate sector to operate with transparent and reliable data.
With novel data mining and analytics tools at hand, real estate stakeholders can extract and analyze valuable insights about various aspects of their operations, including urban development projects, a property’s trading history, regional infrastructure, noise levels, and environmental issues in the area — and consequently, make more informed decisions.
Digital tools can help real estate companies reduce overhead and production costs and enable them to establish greater control of their budget.
By investing in technology and digitizing their processes, businesses will also notice substantial time savings, which will empower them to free up resources and concentrate on the core business objectives.
Which technologies and tools help bring about digital transformation in real estate?
Different leading-edge technologies such as blockchain, AI/ML, AR/VR, the metaverse, NFTs, and the IoT contribute to digitization within real estate.
Let’s discover how exactly they help real estate professionals transform and upgrade their workflows and where these smart techs can be applied.
Blockchain has been widely and extensively used within the real estate industry. According to the FIBREE Industry Report 2022, the number of blockchain-related real estate products offered in 2022 jumped to 476 compared to 2021 when about 400 products were listed.
The technology can be leveraged in a variety of real estate processes, making them more sophisticated and efficient.
The decentralized nature of blockchain allows real estate to securely store information in distributed ledgers, where there is no central point of control. This provides a highly secure, tamper-proof way to record, store, and share information about real estate asset ownership and a wealth of other internal data, which helps minimize fraud and property scams.
Importantly, blockchain facilitates faster and more transparent transactions. It is a well-known fact that the execution of real estate transactions has been a slow and complicated process. With blockchain, though, real estate businesses can enjoy more efficient transactions and all stakeholders involved will be able to see the status and history of all financial operations.
It is also worth noting that the technology enables the tokenization of real estate properties, which results in greater liquidity and more investment opportunities for newbies and pros alike.
With tokenization, one can tokenize a property and distribute tokens, each of which will represent a certain percentage of ownership over the asset. The great advantage of tokenization is that property owners do not have to sell their assets, while token buyers can enjoy lowered barriers to the investment market.
In addition, real estate businesses can make use of blockchain-enabled smart contracts. These are able to automate various procedures, such as contract agreements and payment terms to boost financial management, and even sales transactions by confirming their validity in real time.
California-based company Propy, for example, utilizes smart contracts in real estate to streamline transaction management and empower industry professionals and their customers to reach their goals faster.
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Expected to hit $1,335.89 billion in the real estate market by 2029, artificial intelligence has been regarded as a real game changer in the industry.
The advances of artificial intelligence and machine learning can provide real estate companies with valuable insights that enable them to operate more fruitfully with their customers. AI and ML algorithms are able to process enormous amounts of data and translate them into insights about consumer behavior that can later be used by real estate agents to produce customized offers and services.
As well as this, AI and ML can assist real estate businesses in bolstering their marketing activities. For instance, ML models can be utilized to segment customers in accordance with their social media activity and browsing history, identifying core behavioral patterns and targeting them with relevant real estate ads.
AI-powered cognitive technologies such as computer vision (CV) and natural language processing (NLP) models can be employed for real estate appraisal. So, CV can scan visual content, including satellite images and property photos, while NLP can be deployed to extract information from social media, ads, and government and competitor websites to provide information critical to real estate developers and constructors.
AI-powered chatbots may also serve 24/7 as real-time assistants that answer questions or provide relevant information to potential customers about real estate offerings and deals in the area.
Globally, the use of AR/VR in the real estate market ecosystem is forecasted to be worth $1,151.9 million in 2023.
Thanks to virtual reality, potential buyers can be invited to a 360-degree digital overview and walkthrough of their properties of interest, regardless of their own current location or other physical constraints. This tends to benefit both realtors and customers alike, bringing the latter an especially enjoyable experience.
Sotheby’s luxury real estate recently offered a virtual walkthrough option for customers who own a VR headset. This function is available on both the iOS and Android operating systems.
Real estate architects and designers can also harness the power of VR to check and visualize their concepts and even work together with different stakeholders in virtual environments.
The visualization capabilities of VR enable designers to remove walls, relocate various items, and customize design features. This helps bring a vision to life faster, meet client expectations, and foster simplified and engaging communication between all the parties involved.
Metaverse and NFTs
The global metaverse in the real estate market is projected to reach a value of $5953,6 million by 2028.
Metaverse technology allows real estate agencies and their customers alike to discover novel revenue streams and opportunities. So, for instance, virtual property owners and developers can exploit digital plots of land or buildings in various ways, including advertising, event organization, virtual offices, flipping, brokering, renting, and managing and making money from it.
Apart from the metaverse, real estate businesses can consider implementing non-fungible tokens in their workflows.
Real estate agencies can mint title deeds and other property documents in the form of NFTs to optimize and secure property ownership verification and minimize the possibility of fraud.
Companies can also utilize NFTs to digitize property mortgages. For example, LoanSnap, a California-based mortgage lending firm, minted some of its residential mortgages as non-fungible tokens through its Bacon Protocol platform. After the NFT was minted, it was sent to the borrower who was then obliged to make mortgage payments directly to the Bacon Protocol. Afterwards, the NFT could be used as collateral across the DeFi ecosystem.
Check out our comprehensive guide to metaverse real estate and see why it is so special
The global market for the Internet of Things in smart commercial buildings is projected to rise from $42.8 billion in 2019 to $82,7 billion by 2025.
Commercial real estate companies can rely on sophisticated IoT technology to offer their clients advanced solutions for handling different systems and processes in homes, workplaces, and public areas.
In particular, commercial real estate can leverage IoT-enabled building management systems (BMS) to optimize building performance and employ sensor-generated data to enhance the building user experience.
IoT-enabled BMS can also be used to cut down on energy use as well as the cost of repair, maintenance, and administration. Property owners are encouraged to use motion and occupancy data collected by IoT-enabled sensors within a building to regulate air-conditioning and lighting in real time, thus substantially minimizing energy costs. CRE companies, on the other hand, can make use of this data to offer clear value to tenants, as the system could help lower energy bills.
Crucially, industrial IoT alongside smart building technology can help the real estate industry to attain its decarbonization goals, as owners are on the lookout for ways to reduce the operational and embodied carbon footprint of a building.
On top of that, coupled with the capabilities of big data analytics, IoT can be used to monitor and assess the condition of critical building assets and equipment, including air conditioning, boilers, pumps, strain gauges, elevators, and lighting systems. This helps prevent breakdowns and improve efficiency by enabling action to be taken before any problems occur.
What are the prospects for digital transformation in real estate?
Given the pace at which technology progresses, it is safe to say that digital transformation in real estate is a never-ending process. Novel digital tech and trends are abundant and require businesses to remain vigilant and forward-looking so as to continue to deliver the best service to customers and not lag behind their competitors.
Once you have decided to bring about digital transformation in your real estate business, reach out to our seasoned experts for help. Throughout our 16 years of experience, our tech-agnostic specialists have helped real estate companies of different sizes enhance their operational efficiencies, unleash new revenue streams, and stay on the same wavelength as their customers by leveraging the capabilities of cutting-edge technology.
Drop us a line and let’s kickstart the digital transformation of your business today.