By Aryaman Vir
To say that the last two years have changed the way the real estate market operates is an understatement. As the pandemic worsened, the need for technological advancement in the real estate sector was crucial. The pandemic steered this transformation and for a sector like real estate which has been traditionally slow to adapt to tech, PropTech companies emerged as real game-changers.
PropTech is booming and it is here to disrupt the real estate space by changing the way we look at property investments. New-age tech-enabled platforms are helping buyers/investors to view multiple properties without moving out of their homes. These platforms are adding value by taking on the real estate industry to make it better, spurred by an ever-changing digital landscape and new consumption pattern.
According to a report published by EY, Real estate firms are now realizing they need to shift to the changing technology landscape to stay relevant and gain an edge on their competitiveness. Post COVID-19, PropTech has seen a wider growth and demand. With the increasing demand for tech-enabled real estate platforms, some trends like the use of AI, machine learning and Robotic process automation (RPA) can witness significant momentum in 2021. Such technologies enable a systematic and comprehensive evaluation of a large spectrum of properties in real time.
The rise of artificial intelligence evolution in real estate
Artificial Intelligence has significantly optimised the decision-making process with regards to asset identification and selection. AI platforms use algorithms and machine learning to process big-data sets to identify correlations, patterns, and relationships across a broad spectrum of parameters and variables. By identifying such variables and evaluating their impact on multi-scenario probabilistic models, the asset selection process over time has evolved from subjective evaluation to deterministic and quantifiable in nature. Well-designed AI algorithms constantly test the feasibility and impact of different parameters – this can often result in significant insight triggering a ‘butterfly effect. The butterfly effect is the idea that small changes can have non-linear unpredictable impacts on a complex system. AI can also help in the prediction of any safety hazard or construction defects saving time and money.
AI helps in property valuation that is it can determine the rates of the property with the use of a “predictive analysis” algorithm. Predictive analytic algorithms evaluate the probability of occurrence relevant events – changes in demographic pattern of the micro-market; income distribution of individuals in the vicinity; projection/viability of future competitive supply; amongst many others. This aids in determining the true intrinsic value of a property. Often markets tend to not align with intrinsic value which provides a compelling opportunity to identify assets via such algorithms that have a higher intrinsic value than the prevailing market rates.
Increased adaption of cloud-based technology to ease the work
The cloud service has been a boon to real estate stakeholders because they can now access data on any property from anywhere. The clouds assist in the storage of large data sets on a remote server, which can be accessed by stakeholders to answer any customer questions about any property they are interested in. This lowers manual office work and saves a significant amount of time and energy spent searching for papers. According to Rapid Scale’s research, "about 80% of top PropTech companies are adopting some form of cloud technology." Cloud computing is available in three main service models, each of which caters to a particular set of corporate needs. Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS) are the three paradigms.
Virtual tour of the property
With the second wave hitting our country, movement has been restricted and therefore it is difficult to visit the property that an investor/buyer is interested in. They can now virtually visit the property and make a decision. In this process, a video conference is scheduled between the stakeholder and the buyer and all questions are answered related to the property and a virtual tour is provided. Virtual property tours provide a realistic reflection of the actual look and feel of the subject property. In real estate it has often been the case that the investor/buyer feels the quality of the property did not match their expectation – rather than depending on one’s imagination, individuals can now opt for virtual tours!
Robotic Process Automation
It refers to the use of software or bots, to automate regular clerical jobs at the site, which do not need high-level decision-making. For example- regulating contracts and coordinating signatures and approvals amongst multiple vendors. Other frequent clerical duties that can be automated with the use of bots include data gathering on buyers and sellers, data maintenance, and data compliance reporting.
It is a more cost-effective option. Companies that have implemented RPA have witnessed a 10% to 40% reduction in operational costs. 1 RPA allows an employee to focus on higher-value duties, such as interacting directly with potential buyers and sellers. This enhances the likelihood of more deals being closed, resulting in a direct contribution to a company’s revenue. It significantly reduces the chance of human error, resulting in more dependable results. As a result, data compliance becomes simple.
Traditionally, real estate space has been largely unorganised in India but these emerging technological advancements in the space have disrupted the industry making it approachable for the retail investor, transparent, and also, more reliable for the end customer. These innovations and developments will help real estate sustain in this technology-driven world and secure its own comfortable place in the competition.
(Aryaman Vir is the Founder & CEO of MYRE Capital. Views expressed are the author’s own.)