Owning a piece of land is a dream for many and is considered to be a milestone in their lives. The main issue with such a mindset is that people focus on owning the property fully and single handedly. People also tend to invest in residential real estate property without really realizing the benefits of commercial real estate property.
Several real estate experts have now and then identified commercial real estate property to be an investment that yields you higher returns on investment. A commercial real estate investor can make commercial investments in different options like retail spaces, offices, data centers, cold storage, tech parks, and warehouses. They have been historically treated as the best commercial investment options as they come with lucrative returns.
Technological advancement has affected different sectors and real estate was no exception. The prop-tech startup has been gaining popularity in the present times and one of the main reasons for this is that they amalgamate real estate, finance, and technology to create a platform whereby investors can come together and invest in a property with a foreseeable exit strategy.
The emergence of technology has disrupted several industries and as stated the real estate is no exception. The impact of technology on different sectors is also growing at an exponential rate and the current pandemic is an aiding factor which has contributed to the disruption as people are now getting more and more comfortable with the technology. Thus the technology is evolving quickly and is shaping the future of the real estate sector.
The real estate sector has been traditionally considered to be one of the most reliable investment options and many did believe that the real estate sector was immune to technological advancements. However, the pandemic has resulted in people using technological mediums to carry out various activities and thus real estate transactions through newer technologies have also gained prominence. Some of the emerging technological trends in the real estate sector include:
The technological advancement in the real estate sector cannot be effectively discussed without making reference to blockchain which is technology including cryptocurrencies like Ethereum, Litecoin, and Bitcoin. Cryptocurrencies have made a huge impact in the payment, remittance and the foreign exchange is carried out. The basic concept of blockchain is to provide a digital public ledger that shows the record of all transactions taking place which need not be verified through bodies like banks, etc.
The real estate sector was also impacted by blockchain technology as it opened up an online market for trading your real estate assets. The real estate assets are tokenized and are traded in online markets just like stocks. The tokenization of the real estate asset has made it more convenient and has also helped in solving the earlier issue of real estate being an illiquid asset.
B. Virtual reality (VR) and augmented reality (AR)
Virtual reality (VR) and augmented reality (AR) are some of the other most important technological advancements that have impacted the real estate sector. Virtual reality has enabled prospective tenants and buyers to conduct a visual virtual tour of the property from anywhere in the world. The property is open for inspection and visits 24/7 and this has been instrumental in saving cost for both clients as well as agents by enhancing engagement and also efficiency.
On the other hand, augmented reality has helped brokers and builders to display their unfinished properties to their potential customers who can further make the property attractive by decorating the same through their phones or tablets. The construction process has been viewed from a unique perspective with the help of immersive 3D visualization.
C. Fractional Property platforms
One of the most common real estate investment trends is fractional ownership. This is expected to grow further in the coming years as well. Fractional ownership investments are carried out through online platforms whereby investors are provided with the opportunity to invest in large projects by purchasing fractions of the property. By investing through fractional income, you as an investor will be able to invest in large properties which offer you higher returns. The concept of fractional ownership has spread widely in developed economies like America, Singapore, Hong Kong and is slowly gaining popularity in India. The fractional owner ownership has been beneficial as it helps in diversifying your portfolio and distributes limited risk to its investors.
Investing through fractional ownership is beneficial than the traditional investment method. Let’s say you have Rs. 1 crore, if you are investing through traditional methods, then you will be able to purchase only one property. On the other hand, by investing through fractional investment methods, you can invest in more than one big commercial project in ‘fractions’, that too in different parts of the world.
Wondering if it is safe to invest in fractional ownership? Yes, it is safe as your liabilities are limited to the extent of your share in the property. With the help of several Proptech platforms, fractional ownership has been made more reliable as people can now enjoy easy access to properties that are listed after carrying out a strict due diligence process.
Like the two sides of a coin, fractional ownership has advantages and disadvantages. Some of the disadvantages of investing in fractional ownership include the fact that it can be difficult to resell such properties. Sometimes it can be difficult for some people to collaborate efficiently with others in terms of interiors and management. However, fractional ownership can help you seize your dream property at a lower price.
D. Business intelligence and an increase in data volumes.
Business intelligence which has been derived from a large database has been one of the biggest trends of the real estate sector. It can be instrumental in the real estate sector as it facilitates the communication and interaction of property owners, agents, and customers. Business intelligence hereafter referred to as BI, has provided the investors with different tools to help in their decision-making process. BI helps in analyzing and reviewing various details such as when potential customers have been visiting a property, their buying interest, the expected selling price, etc. BI generates all this information based on customer’s searches and views.
E. Shift to Cloud
Cloud Management Software has also started gaining popularity in recent times and is emerging to be a real estate technological trend. It is beneficial as it provides scalability, better accessibility, and security. The Cloud has also been considered to be an effective and efficient technological tool as it is time-saving and cost-saving. This software enables the sellers and investors to log in and check both their financial position and also property information at any point of time. This technology has been used not only in the sales transaction and has been used in the rental real estate sector as well.
IMPACT OF TECHNOLOGY ON REAL ESTATE
Let’s further see how technological advancement is affecting the real estate sector.
a. The technological advancement has equipped the realtors to generate leads and then promote their offering to a wider audience with greater ease when compared to the earlier times.
b. Most of these applications or websites have been created in a mobile-friendly manner which makes it easier for investors to access, view, and buy the property. c. Eliminates the cost of hiring intermediaries and thus better return returns on your investment.
d. Transaction management has also been made easier through smartphone technologies. e. The technological advancement in the real estate sector has also been extremely useful to buyers as it facilitates the appraisal process.
f. The tiring paperwork during the property sales transaction has been made easier using electronic document signing apps and automated emails.
g. Technology has been fruitful in making data accessible through 3D virtual tours, videos, demographics, etc. Thus the technology has made the investors well informed.
FUTURE OF TECHNOLOGY IN REAL ESTATE SECTOR
The concept of disruptive technology is quite self-explanatory as it is the technology that has the power to redefine the traditional or already established technology and is capable of changing the face of a particular industry. Disruptive technologies are capable of both creating new technologies or fundamentally change how a sector or industry normally functions.
The real estate sector was quite immune to technological advancement earlier. Now even the real estate industry is adapting to technological advancements at a faster pace. This fast adoption of technology can be observed by just paying attention to proptech startup companies which are funded through venture capitalists.
There are three main technologies in the real estate sector which are considered to be disruptive, according to real estate experts includes blockchain technology, augmented reality, and artificial intelligence. Even though the role of the real estate agent is not eliminated with the growing
technology, the investors must adapt themselves to it. Thus, the impact of technology in the real estate sector cannot be denied and it will prove to be disruptive shortly.
Investing in real estate has been considered traditionally to be one of the best forms of investment. However, the high capital requirements of real estate have always made investors hesitate. Earlier people with smaller capital were unable to diversify their portfolio using real estate assets, however, that’s not the case now.
As technology has been evolving, the real estate sector too has evolved to include several methods which have made commercial investments more accessible. The technological advancements have also helped in eliminating the previous limitations of real estate investments. The introduction of blockchain technology has helped in making real estate transactions more easier as the real estate assets are being converted into tokens and sold online like stock. This has also helped in increasing cash flow in the real estate sector and thus, real estate is not an illiquid asset anymore.
Fractional ownership, crowdfunding, etc. are carried out through different online platforms like Assetmonk. With the emergence of such methods of investment, you can now invest in large real estate projects with smaller income and maximize your profit from capital appreciation and rental income. Thus, the introduction of the technology and its advancement is having a positive impact on the real estate sector as it has made the realty transaction more convenient for its buyers.