As it happens in other sectors of the economy, technology has penetrated the real estate sector and has disrupted the status quo, contracting jobs and creating new opportunities, especially for the millennials.
In many parts of the world, the disruptive impact of technology in real estate is quite evident and many real estate practitioners and professionals have accepted it as the new way to go.
A recent KPMG survey on 130 real estate decision makers from 36 countries shows that 86 percent of respondents see digital and technological innovation as an opportunity, but there is a snag here. Only 24 percent of the respondents has a clear digital and technological strategy.
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The survey indicates further that 30 percent of firms in Americas and Asian Pacific (ASPAC) think the impact of property technology (proptech) will be significant with 64 percent in Europe, Middle East and Africa (EMEA) countries agreeing to that. But only 13 percent felt Blockchain, which is a technological tool that aids registering property, would improve speed of transaction due to technological innovation will have the biggest impact on sector.
In Nigeria, the impact of these innovations is already being felt, though not as deep and pervasive as it is in the Western world. Technology based (online) property platforms like Lamudi which has now rebranded to Jumia Houses, PropertyPro.ng, Real Estate Market, estate intel, etc have brought technology to bear on real estate transactions, making listing, leases and sales a lot easier.
“While using property portals is a common practice in developed markets, it is a relatively new phenomenon in emerging markets where internet penetration remains low but rising fast”, noted Obi Ejimofo, former managing director of Lamudi (Jumia Houses), disclosing that a survey of local brokers revealed that 91 percent of all professionals observed a significant increase in online inquiries while 59 percent of those surveyed cited online listing platforms as their channel of choice to advertise properties.
This shows that as an innovative and transformational tool, technology has taken position in the real estate sector, accounting for the significant changes which increased data availability and information has brought into market transactions and development processes.
“With an innovative tool like Proptech, there is already a movement driving a mentality change with the real estate industry and its consumers regarding technology-driven innovation in the data assembly, transaction, design and management of buildings and cities”, noted Luqman Edu, CEO, Filmo Realty, at the one-day Real Estate Unite Summit in Lagos.
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Proptech is a collective term used to define startups offering technologically innovative products or new business models for the real estate markets. Because of this, the market is already experiencing wave of innovation, investment and entrepreneurial activity.
The implication of this is that there will be job losses because work that five to six people would do manually, technology would employ just one person to do it and do so efficiently at much lesser time. This means too that real estate firms that are not ready to make the switch may not be favoured by the bright future of real estate that will be driven by technology.
Proptech companies are starting to develop solutions that solve problems that the real-estate market wants solutions for, but in spite of its inefficient processes and unnecessary transaction costs, real estate is one of the last industries to adopt technology which is why there is a clash of generations where start-ups (proptech) are generally aimed at millennials while real estate leaders are generally from an
Whereas Blochain has the potential to aid land registration, real estate transactions, title ownership, due diligence and building maintenance records without need for human interface and intermediary costs, fin-tech comes in as a platform which supports transactions (sales or leasing) of real-estate; gives more information; is transparent and faster.
This means that in Lagos State, for instance, where land transaction is not only tortuous, but also expensive, the introduction of Blockchain in its land administration will make a clean sweep of the many exploitative ‘tables’ that registration files have to pass through and ‘something’ given.
“Transactions will be direct, properties will be smart buildings, there will be flexible use and flexible ownership of such properties where technology drives real estate”, Edu noted, recalling that in Q4 2016, Trulia, an online property platform, had an average of 140 million monthly unique users and “45 percent of these visitors, in the last 12 months, are planning to buy/sell a house in the next 12 months”.
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There are however, inherent opportunities in all these developments. Apart from the rise and rise of technology firms that offer these products and services, new jobs are being created for people with the requisite skills. Opportunities are also be created for vendors and tech equipment manufacturers.
It is estimated that 3-6 percent of the cost of real estate goes to legal, valuation, structural due diligence, contracts, advisory, and agency fees. Efficient storing of lease information, it is hoped, opens possibility of greater liquidity.
For investors and developers, there are also opportunities that call for increased investment in real estate. “The future of real estate anticipates unmanned, robotic buildings such as in 3D printing and warehousing”, Edu observed, adding, “there will be smart buildings that will be able to run wholly remotely such as in driverless cars and delivery vehicles or bots for logistics and real estate”.
Smart cities which will be driven by technology will integrate multiple information, communication technology and internet of things (IoT) solutions for a whole city. People will be engaged to make all these happen.
Technology has brought the world to a point where people should worry less over basic necessities of life. With crowd-funding, for instance, it does not make sense any longer for property buyers to put down 30 percent equity and take management issues when they can invest in rental cash-flow online.