The real estate market is dominated by the big players — it may seem like there’s not much space left to squeeze into, but the abundance (and successes!) of real estate startups prove otherwise. New technologies are becoming a must — according to the Real Estate in a Digital Age 2018 Report by the National Association of Realtors, 73% of people who are planning to buy or rent a house use a website, phone, tablet or app in their search.
The necessity is the mother of invention — more and more real estate startups (or, as they are frequently called, “property tech” or simply “proptechs”) are entering the market, and they are getting a fair share of the investment cake. In 2019, the funding gathered by proptech companies have already reached $1.9 billion and it’s projected to surpass last year’s record of $4.99 billion by the end of the year (source).
The ideas behind these companies are quite diversified — from making buying, selling or renting easier, through 3D building visualizations, to property investment platforms. Let’s have a closer look at real estate markets in the era of digital transformation.
Real estate market and access economy
The access economy phenomenon defined as systems that enable users to pay for goods instead of having to own them (think Uber) hasn’t skipped the real estate market. A great example is Airbnb — a company that’s currently worth $31 billion. One of the world’s best-known proptechs recently decided to diversify its business model by launching Airbnb Adventure — a service providing multi-day trips and activities in different locations around the world. This way, the company broadened its scope to tourism services.
At the end of 2018, the company announced entering the real estate development market by launching a project called „Backyard”, which focuses on designing and building homes for flexible and shared living arrangements. Airbnb’s business model development is far from what traditional real estate businesses look like. Yet, it’s one of the most successful companies on the market.
Blockchain and proptech? Why not?
Blockchain has found its way to real estate, too. Several proptechs are making good use of blockchain technology in many different ways. Seattle’s SMARTRealty, for example, uses smart contracts to enact and maintain property purchase and rental arrangements.
New York-based company Meridio allows commercial property owners to sell digital shares of their real estate and Slice based in Los Angeles makes it possible for smaller investors to invest in commercial property. Whether it’s for smart and safe contracts, investment management or ownership verification, blockchain seems to be more and more present in the real estate market.
Marketplaces on the rise
Another large category of real estate software is marketplaces. Zillow, for example, is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration, and knowledge about options of buying and selling. Through the years, Zillow managed to become a software that serves the full cycle of owning a property and living in it: that includes buying, selling, renting, financing, making over and more. It’s a great example of a platform that’s scaling according to the actual needs of its customers. “Four out of every five homes in the United States have been looked up by at least one person on Zillow,” according to their statistics.
There are many other similar platforms, such as Trulia, Realtor, Rightmove or Zoopla. All that software focuses on helping customers and real estate agents to search for fitting house options. Trulia decided to focus not just on houses, but also on the neighborhoods to choose from. It seems obvious that for families with kids the neighborhood is as important as the house itself. Trulia was the first platform that decided to solve this problem for users, and it helped the platform to stand out.
Trulia Neighborhoods feature provides virtual neighborhood tours with pictures, local stories, drone footage, and overlay maps. You can find out what locals say about important topics like neighborhood safety or schools. Users can also use maps to explore the neighborhood for restaurants, groceries, and other places.
VR? Of course!
Whether you want to look up and buy a house or rent an office that has been already built — no problem, marketplaces are your place to go. But what about deciding before construction finishes? The answer is VR. Enscape 3D, for example, allows developers to render 3D visualizations of buildings that are still under construction. The software makes it possible for potential buyers to take a virtual walk around the building. Roomy, on the other hand, allows real estate agents to stage interiors in virtual reality. Staged houses sell much faster and at a higher price, so the tool gives agents a great advantage.
Follow or get left behind
New technologies are on the rise in the real estate industry — no doubt about that. To stay competitive (or even stay on the market), anyone — starting from real estate agents to developers — will have to participate in the digital transformation. It doesn’t mean one has to have large budgets or its own IT resources. Whether it’s implementing one of the existing solutions or creating a new one with the help of expert programmers — it’s becoming a necessity. So, real estate players — make a move now or get left behind by anyone who goes digital first.