Innovation and digitalization of the real estate market
The topic has become a hot one: the digitalization of the real estate market has undergone a significant acceleration, with conferences and the industry press buzzing about it. But what is it actually all about?
The digital transformation that is currently happening - considered by many to be the fourth industrial revolution - is now an unstoppable reality that’s profoundly impacting every sector of society.
As an industry that’s traditionally been resistant to change, the real estate industry may finally be ready to take advantage of the numerous opportunities offered by digital technology to transform itself and redesign processes, products, and services.
New models and applications are changing the face of the sector, and all the major players, from developers to intermediaries, have to face them. Let's take a look at some of them.
The role of PropTechs
This new synergy between technology and real estate is well summed up by the term PropTech (an acronym for property technology). It's used to describe all those high-tech companies and startups that take advantage of digital to innovate and improve the process of buying, selling, and managing properties. It's everything from dematerializing contract documents to real estate crowdfunding.
To get an idea of the phenomenon, the Italian Property Network's annual report says that the number of PropTech companies in our country has almost doubled in two years, from 152 in 2020 to 273 in 2022. This is still a tiny number compared to the European average, but it shows where our market is going.
Big Data, a key asset
Big Data are a valuable resource that technology gives us It's a lot of complex data we can collect, process, and use for specific purposes. For example, Artificial Intelligence and the Internet of Things allow us to digitize properties and collect a ton of data on how spaces are used, while Machine Learning algorithms can improve the current accuracy of valuations.
A big part of what makes Big Data so important is the ability to gather and analyze a large amount of information from many different sources, such as online searches, real estate transactions, and sales prices.
By doing this, we're able to have a better and more accurate understanding of market trends, identify growth areas and new investment opportunities, as well as improve marketing strategies and customize services.
Previously used only for gaming and entertainment, virtual reality is now everywhere. In particular, it's revolutionizing the real estate market by making the experience of designing, buying, and selling properties extremely immersive. This is done with tools like virtual tours and representations of projects that aren't even built yet.
But there's more. Using these technologies in real estate goes way beyond the physical product. Some platforms even let you buy virtual land and properties in the Metaverse.
Though virtual reality does not yet represent a significant share of the real estate market, it's worth monitoring it closely as it offers tremendous potential for growth. It's estimated that 5 billion people will use the Metaverse by 2030, according to Citi.
Blockchain and real estate tokens
Blockchain technology offers a safe environment to store and share information. The application in real estate would simplify rental and sales procedures, like letting you record property deeds without a notary.
Blockchain can also be used to create the so-called real estate tokens, which are digital certificates representing a share of property ownership - a bit like company shares. A trend that’s destined to explode once Italy regulates it from a legal point of view.
Digital and sustainability, a strategic synergy
The digitalization of the real estate market is a key component of the race for ecological transition. The new technology in the sector is making data collection and analysis much easier, allowing for sustainable property management.
In this context, BIM (Building Information Modelling) is perhaps the biggest innovation currently available. It allows the creation of a Digital Twin, which is an exact digital copy of a building or construction project that lets you collect real-time data and track performance based on ESG metrics.
In light of these observations, it's clear that adopting new digital technologies is an essential step for the real estate sector to stay competitive and efficient. Digitalizing processes and activities opens up a lot of new possibilities for delivering increasingly high-performing and high-quality services, improving positioning and customer experience.