Technology in Real Estate – expert’s view
5 STEPS TO DIGITAL TRANSFORMATION IN REAL ESTATE
Year 2020 has changed the world. No doubts about that. Among many aspects of this change, the most groundbreaking, in my opinion, is the common understanding that there is no way back from the daily use of new technological solutions that today are popping up like mushrooms in practically every area of our lives. Whether we like it or not. Technology stuffs itself into doors and windows. It enables efficient continuation of the business despite the difficult conditions of lock down and remote work. Today, technology is no longer a difficult word – proptech, fintech or other tech – today technology is a strategy and tools thanks to which companies can operate and thanks to which they will gain a competitive advantage. Today, every company must become a technology company. It is not enough to have a smart employee or a company that manages and archives our servers or supplies some software.
Today, DIGITAL TRANSFORMATION means BEING OR NOT BEING for an organization.
The real estate area quite persistently resisted these trends, which, after all, are no longer any revolution in the 21st century. Face-to-face transactions, personal signatures, documents in paper, Excel or word, uninteresting photos of available spaces, scattered databases and, above all, the lack of consistency and transparency of real estate data, both in the historical and current context.
According to KPMG’s annual survey “Is your digital in the right hands?” out of 188 surveyed companies in the world, only 29% confirmed that they have a digital strategy for the entire organization, another 29% have a digital strategy in some areas and 19% do not have it at all. The level of integration within the organization is on average 5.4 points out of 10 possible.
Investments in technology as much as 40% are not considered a priority and 34% do not have a person responsible for implementing digital transformation. And the main assumptions of digitization are not to increase revenues, but rather to optimize costs or improve the efficiency of processes and accelerate decision-making.
Of course, I assume that the data from the research report in 2020 will bring a significant change in this approach, although I do not expect a revolution because in 2020 organizations were largely focused on adapting to the new situation and implementing emergency cost optimization strategies to implement the adopted goals.
So the road to digital transformation in real estate is not all roses. Why? According to EY’s research from 2020, among property owners, 53% of respondents say that they lack the right people with competences in new technologies. In addition, there is still a rule in the area of real estate that “if something has not gone wrong, do not change it”. 58% say it is difficult to integrate new systems with existing infrastructure in an organization. And as many as 39% of the respondents to the EY survey are before implementing any technological solution! It is hardly surprising that this area is still a closed book rather than a well-known guide. We are constantly proving that modern solutions must become part of the strategy, improving the cost effectiveness and efficiency of the organization.
DIGITAL TRANSFORMATION IN REAL ESTATE – WHY IS IT NECESSARY?
Today it is actually a rhetorical question. Organizations that do not adapt to the changing reality will simply disappear and this time it will take much less than Nokia or Kodak. According to research, McKinsey confirmed that the average lifespan of a company on the Standard & Poor 500 list was 61 years in 1958. Today it is less than 18 years. McKinsey estimates that by 2027, 75% of the businesses today on the S&P 500 will simply disappear. Without digital transformation, many companies will not survive. And certainly not in the same formula.
Today, what counts is the speed of reaction, flexibility, agility in action and decision-making, as well as personalization of solutions to customer expectations. All solutions must be designed for the customer’s new digital journey. The organization needs to re-understand the expectations of the recipients of its services and products. And there is no uniform approach here. Every business is different, with different challenges, opportunities, and procedures.
We must strive to simplify, standardize and strengthen processes and transactions in the real estate world by using technology in both software and hardware. Today, real estate must be SMART, i.e. smart and tailored to the client’s needs. They must be WELL meaning “healthy” and “comfortable”. In all of this, technology should be the catalyst for the optimal use of your property.
Today, technology in real estate begins to take on a “human” face and in place of difficult words such as: bigdata, AI, VR, blockchain, robotization, chatbot, there are specific solutions, tools, platforms and applications that change our everyday life and detach the onethat has always been motionless real estate, moving it into a remote cloud. People have to build new digital strategies by analyzing trends and new technologies that, if not adopted, will have a devastating effect on the further development of the organization. A new path of digital development must be found based on understanding and analyzing the new digital customer journey.
STEP 1 – SMART REAL ESTATE: BIG DATA & DATA ANALYTICS – Collect and analyze data
Real estate and related services are overflowing with information about buildings, their projects, equipment and systems, construction, use, management, tenants, owners, agents. These data are collected in various ways on various carriers, in applications, systems, programs, CRMs, etc. There are so many variables and new ones are constantly generated that the so-called manual analysis would have no chance, and at best, by the time of completion, it would probably no longer be relevant. By comparing the data of historical events, behavioral and social behavior analysis and current data, we predict trends, customer behavior, tenant needs, investor behavior and their impact on the value and price of real estate at a specific point in time (predictive analytics). This is the key to development, improvement of operating efficiency and increasing the company’s profits.
For example, understanding tenants’ behavior over time can tell us the most likely interested in renting or buying. The analysis of data on the size, availability, price or location for the purposes of creating a heat map will allow us to choose the best property for our client.
STEP 2 – SMART REAL ESTATE 2 STAGE: Artificial intelligence (AI) and machine learning
We already know that data and how we can use it through analysis in the real estate world are the basis for gaining a competitive advantage. However, the enormity of this information appearing in real time would require a huge amount of time and resources, therefore technological tools for such an analysis appear. Among them, the technology of artificial intelligence and machine learning – they will not only quickly collect, but also analyze and interpret the available required data. These are tools thanks to which information will literally take us to another dimension. We gain insight into data on a given area of the market, specific real estate, information on returns on investment, and finally selecting, indicating the appropriate space or building to the client’s needs. It’s time for real estate agents to move to a higher dimension of collaboration with technology that will help them increase efficiency and productivity as well as ensure higher customer satisfaction.
Artificial intelligence helps machines evaluate, draw conclusions, solve problems or make decisions according to a recognized pattern. As a result, repetitive or time-consuming tasks can be easily automated. And communication is entrusted to chatbots, which are active 24/7, helping customers and responding to their inquiries.
Artificial intelligence algorithms today, drawing on both internal and external sources of systems, are used, for example, in energy management, warning against consumption peaks, analyzing weather data and thus enabling early response of BMS settings, enabling reduction of facility maintenance costs.
STEP 3 – REAL ESTATE – FINANCIAL TECHNOLOGY: BLOCKCHAIN
Blockchain may at first be associated with cryptocurrencies, but the use of this technology is much more. Blockchain both stores encrypted data and is an open digital register of transactions and contracts that cannot be changed once they appear in this register. Transparency, security, electronic documents and finally the elimination of intermediaries such as a bank. Sounds good right? Much faster, automatically and accessible. There is no place for financial frauds or cyber attacks here, because the transaction register does not have a single owner. Blockchain is just accelerating, finding its application in many industries, a solution that will become more and more popular mainly due to ensuring the security of transactions and their speed, which in today’s world determines competitiveness.
STEP 4 – REMOTE ACCESS – GETTING TO THE CLOUD
The year 2020 brought the requirement of what was previously only a benefit and not for everyone, i.e. remote work. And if you need to work distributed and away from the office, the resources of the organization must be available from anywhere and anytime. The digital transformation of an organization is also a multidimensional transition to work in systems, applications, portals and messengers based on databases located in the cloud. With quick and easy access. Today it seems obviously obvious, although in many organizations, both micro, medium and large, we still find a lot of information placed on hard drives of laptops or desktops, not made available for use by cooperating persons.
Today, the cloud should include systems for managing sales, marketing, management, cooperation with customers or shared disks of the organization. And besides, the entire technological database of tools for cooperation with clients, whether in the form of web applications, mobile applications or property management systems, where you just need to log in to be up to date with all the information, without making phone calls, writing e-mails and waiting for a response – all data and documents on a given project available immediately. In addition, better protection against hacker attacks and ensuring business continuity.
STEP 5 – CHANGING THE ORGANIZATION’S CULTURE
Today’s digital transformation is the basis for the organization’s survival. Data management, data analysis, robotization of processes, artificial intelligence. Transformation is definitely something more than implementing an application, using a platform or electronic document flow. It is reinventing, or rather constantly reinventing, the business model both in the area of core business and by creating new branches of development and sources of income. And of course the need to find a balance between them. Transformation is a constant change. Implemented as a result of the analysis of customer expectations, and not only through the optimization of internal processes. It requires the involvement of the entire ecosystem of the organization, and often even changing its culture. It is not enough to increase the efficiency of the IT department, it is only the beginning. Technological innovation may arise through the separation of teams fully focused on the search and implementation of modern technologies and new business models or through cooperation, or joint venture or acquisition, with external entities from the market. Creation of a comfortable internal ecosystem in an organization open to seeking solutions and market partners. What is more, it is also open to cooperation with competitive entities, which may allow for increasing the market reach or the use of available tools or products. The entire culture of the organization must be transformed through education, good management and good communication. You have to start working in an agile model, moving away from rigid divisions, procedures and agreed plans, accepting change as a building block, relying on communication and flexibility to deliver a solution quickly and creating an environment friendly to innovative thinkers.
This approach, focused on interactive customer communication, aims to create a personalized customer experience that enhances mutual cooperation and productivity of the organization.
Author:
Seweryna Afanasjew, MRICS
RICS World Europe Board Member
Last Updated on March 31, 2021 by Karolina Ampulska