Despite a growing appetite to harness the benefits of new technology, the fundamentals of real estate investment have not changed. It involves complex procedures for the purchase, ownership, management, rental and sale of assets for profit which is managed either by the investor or by third parties – and it will continue to do so.
Consequently, investors, owners and managers have not had the motivation to digitalise their business and processes. However, a perfect cocktail of forces is about to rip the business model up and those who do not prepare for total digital transformation face being left behind.
A perfect storm
Over the next decade, a multitude of factors will significantly impact business models and accelerate the adoption of new technology, including:
- a generation grown up in the digital age
- telecommuting / remote working
- world population growth
- GDP increase
- intensified competition for prime assets.
Most importantly, major advancements in new technology will accelerate the pace of change.
We’re already seeing positive impacts of digitalisation across all asset classes of the real estate sector with our everyday tools, such property management systems, getting stronger and enabling organisations to improve the efficiency of their processes and business activities.
Even in areas that were until recently considered abstract, such as Bitcoin, we’re seeing great strides taken in the sector, while Big Data has enabled many organisations to gain deeper insights than was possible before.
As the technology develops and new opportunities arise, the landscape will become more complex. Choosing where to invest your resources will be a vital decision.
A total transformation
Simply making sure your systems are up to date will not be enough. For each company, digital transformation requires a long critical rethink of their approach of how digital will benefit them all.
Organisations must first understand the changing market and revise their activities and processes in order to exploit the new opportunities presented.
If they wish to compete they’ll be increasingly software driven.
However, the digital flux will mean the focus diverges from traditional in-house and Software as a Service (SaaS) models towards an overarching platform that will enable applications to have a simplified and fast deployment across all platforms, including mobile.
Addressing this need are Infrastructure as a Service (IaaS) platforms such as Microsoft’s Azure and Amazon’s Web Services (AWS). These types of platforms provide virtualised computing resources over the Internet and can be scaled up and down to meet the needs of your business.
We’re beginning to see examples of real estate companies who are embracing IaaS platforms for innovative uses which could soon become the norm.
One such example is Centaline, one the largest property agencies in Hong Kong, who have developed a cloud-based service that allows their agents to shoot, edit and upload video footage using their mobile devices. The service provides house-hunters with a walk-through of their prospective home and has resulted in a five-fold increase in click-rates.
That’s just the tip of the iceberg.
Start transforming now
In the not too distant future, businesses that have adapted will have innovative technology that continuously improves processes and carries out activities for them. Until that point, you will have to take steps yourself to ensure your business is prepared.
In fact, smart companies are already laying the ground works for the future by integrating their systems, processes and activities, mining valuable insight from their data, exploiting their technological assets and exploring automation and enhanced intelligence to deliver real value quickly, effectively and efficiently.
So, even though the fundamentals of real estate investment are the same as they’ve always been, if you want to compete in the long term, you had better start preparing for digital transformation now.