The COVID19 pandemic has ushered in the era of “digital-first.” This trend applies well beyond tech companies. Artificial Intelligence, machine learning software tools, and other advancements are also transforming the real estate sector.
So, what is real estate in the digital age?
Traditionally, the real estate industry has been slow to adopt new technology. However, consumers are growing increasingly dependent on technology and the Internet in their day-to-day lives.
Anyone who wants can have access to real-time data about property listings, prices, market trends, etc. The real estate sector in the digital world is much more fast-moving. People can leverage technology to buy, sell and even manage properties with little to no manual effort.
Here are some other major tech-driven trends that are set to dominate the global real estate industry –
Property technology or “Prop-tech” is the use of software and other digital tools to facilitate real estate deals and operations. Over the last five years, “Prop-Tech” companies have amassed over $95 billion in funding.
Here are some pain points in the real estate sector that these companies aim to eliminate –
- Workflow management software tools to facilitate instant connections between buyers, sellers, and realtors.
- Data and analytics software tools to provide more relevant property recommendations to buyers and sellers. These software tools utilize AI and machine learning to give investors relevant and real-time updates about property listings.
- The use of IoT devices to give remote tours and property assessments to aspiring buyers.
Some Prop-Tech companies are also investing in robotics to aid construction projects. These companies are also behind the rise of modular or prefabricated homes. In the 21st century, Prop-Tech companies will play a crucial role in dignifying traditional real estate processes.
Tokenized Real Estate
Contrary to belief, the tokenization of real estate is a very simple and effective process. Here’s how tokenized real estate works –
- A real estate asset (e.g., a commercial building) is divided into shares.
- Each share is represented by a token. These tokens are part of a secure blockchain.
- People can buy these tokens to own pieces of that commercial building.
The underlying asset in this scenario (the commercial building) is always visible on the blockchain. Investors can always verify the status of their building’s ownership. They can sell/buy their building’s tokens any time they want on various marketplaces.
The tokenization of real estate is an important trend because –
- It reduces the barriers to entry for aspiring real estate investors. Young, first-time investors can own buy these tokens for less than $50 to $100.
- It becomes easier for real estate investors to diversify their portfolios. They can own multiple pieces of different properties.
- Tokenization allows for increased liquidity and high speed, high-efficiency transactions.
Tokenization platforms such as Fabrica and Harbor are making great advances in real estate tokenization.
The Ability to Discover Under-Valued Properties in Real-Time
A real estate investor in the digital age should always be prepared to make moves. That means procuring real-time data from different property listing systems (MLS) in different cities or even countries.
For example, there are approximately 597 MLSs in the United States. The latest AI-powered software tools can monitor these listings 24×7 and give investors key insights about property prices. These AI and machine learning engines can –
- Analyze large numbers of property listings
- Compare them to similar listings
- Assess the transaction histories of every property listing
- Accurately estimate the fair market price of each property
As soon as the software discovers properties that are under-priced, investors can make their moves. The ability to make moves in specific real estate markets before other bidders allow investors to maximize their profits. Once you buy multiple properties for discounted prices, your overall profit margin will be much higher than usual.
These technologies and software tools are slowly becoming indispensable in the real estate industry. Any investor who wants to “win” in the digital age of real estate must learn about these trends and technologies.