The World Built Environment Forum
Facilitate industry-leading discussions on the potential of the 21st century's people and places.
7 AUG 2018
Head of Training & Product Development, RICS South Asia, Rajiv Nehru MRICS explains why technologies, such as virtual reality, Artificial Intelligence and blockchain, will transform business models in real estate.
Technology is playing an increasingly important role in the Indian real estate sector. Property technology (PropTech) made its presence felt in the sector around 2005, when we saw the emergence of online real estate marketplaces, such as 99 acres, magicbricks.com and housing.com. These start-ups disrupted the way home buyers bought property. It allowed them to look for properties from the comfort of their homes and compare the specifications of properties online.
While online real estate marketplaces have not completely replaced real estate agents, they have created opportunities for a more transparent and improved home-buying process.
Typically, home buyers visit multiple properties before deciding on the one they want to buy; it is a time consuming and often expensive process. Online marketplaces can now use 3D modelling and virtual reality, which allows them to view a virtual walkthrough of a property, without visiting the property itself. Developers use customised colour palettes, furnishing and lighting etc to help buyers visualise their future homes in under-construction projects.
A recent Goldman Sachs report says that by 2025, virtual reality will be a US$80 billion market, with real estate accounting for US$2.6 billion of it. In India, many technology start-ups and popular online real estate marketplaces offer virtual reality tours of properties.
The real estate sector has not been quick to adopt new technology, but the changing nature of the industry is forcing it to take a fresh look at the way business is been. The industry is now a lot more open to adopting new technologies, such as AI, which have the potential to improve many facets of the industry.
In the pre-construction stage, AI can be used to ensure that there are no flaws in a construction plan, which helps avoid unnecessary changes during the construction process. Data analytics has also become important; real estate companies can use AI algorithms to make sense of data and improve areas of business, such as marketing, finance and accounting etc.
AI "chatbots" on websites can be used to handle routine enquiries from customers about properties. Globally, many real estate companies are incorporating these into their websites to engage with customers. This allows companies to save on customer service costs and optimise time spent answering routine questions.
AI can also make buildings smarter and safer. AI-enabled security systems offer automated voice and facial recognition, which can improve a home’s security. AI can also use building data to identify temperature levels and energy consumption, thereby improving sustainability and reducing operational costs.
Blockchain is set to cause significant disruption. Blockchain uses concepts, such as AI and Internet of Things (IoT), to integrate databases in real time. It allows users to share encrypted data in a seamless and non-corruptible way, which makes it less vulnerable to hacking and far safer.
The primary benefit of Blockchain is that it can be a direct link from a business to a service, and vice-versa, without any intermediaries, which saves cost, time and clutter. The implementation of Blockchain in the real estate space will have a huge impact on processes. For example, buying raw materials is a complicated process for developers because they do not know whether the price they are paying is the lowest and whether the source they are buying from is reliable. Procurement of goods and services at the right price is always a guesstimate for developers. Blockchain offers real-time transactional data on raw materials that can help the buyer choose the right price and source.
Blockchain can help standardise and secure real-estate data. In fact, Blockchain can be used in every real estate process, which requires comparison or verification of data. It can be used during the entire lifecycle of a project, from pre-feasibility stage to the execution stage to the maintenance stage of projects. Many processes within the real estate development lifecycle, such as product specifications, pricing, smart contracting and procurement, can be processed through Blockchain to reveal realistic data, which can be used to drive sustainable operations.
Land records are critical to the property market — titles decide who owns what property — however, land title records in India tend to be fragmented and unclear. Blockchain can help buyers determine the title of land, ownership details, the number of transactions that have happened on land parcels, and whether any land disputes have occurred. This information is critical and can save time, cost and avoid fraudulent land deals — this will lead to improved transparency.
Blockchain could even enable crowd-ownership of property, whereby a group of people come together online to buy a share of a property. A co-owned property lease could be taken on by a company such as Airbnb, and revenue that is generated could later be transferred to each investor relative to their investment.
Those who do not keep pace with these changes are at the risk of becoming redundant.