Top 5 Technological Trends Changing Real Estate

1. Blockchain technology 

Blockchain stores and transmits information in a decentralised and secure network. It is built on a chain of data blocks linked together through cryptographic operations.

Blockchain technology emerged on the international stage in 2008 when a pseudonymous author called Satoshi Nakamoto published "Bitcoin: A Peer-to-Peer Electronic Cash System.". The article introduced the idea of a decentralised electronic money system (decentralised cryptocurrency) called Bitcoin, which uses blockchain technology to conduct transactions without the involvement of an intermediary. In 2009, the first version of Bitcoin and blockchain software was released. Since then, blockchain has become the foundation for the development of other cryptocurrencies.

Blockchain technology provides high levels of transparency and security for real estate transactions. It can be used to verify ownership, record transaction history, reduce reliance on intermediaries, and increase security, which presents significant opportunities for the real estate industry.

Blockchain technology is essential to real estate tokenisation, which is the process of dividing a real asset into digital tokens which represent a portion of the underlying property. Real estate tokenisation has immense potential to increase liquidity and access. According to Savills Research, the total value of global real estate reached US$326.5 trillion in 2020. In 2021, global fixed income markets stood at US$126.9 trillion, global equity markets reached US$124.4 trillion, and the total US Dollars in circulation stood at US$40.8 trillion. As such, the potential market value of real estate is 1.1 times the combined market value of global fixed income, global equities, and the US Dollar. 

Learn more about the potential of real estate tokenisation. Download Savills special publication, Navigating the Risk of Real Estate Tokenisation.

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2. Virtual Reality and Augmented Reality

The application of virtual reality (VR) and augmented reality (AR) in real estate will change how we present and view property. Potential customers can take tours, interact and understand how a property feels without having to be there physically. It will be significant for sellers and agents because it will expand their reach significantly. In theory, an unlimited number of clients could view a single property at the same time, which will save time and money while boosting efficiency.

VR and AR will also be significant in the design and development of real estate projects. Developers can create interactive 3D models, which will allow investors to understand the space, size, and structure of the property before making an investment decision.

Here are a examples of VR/AR applications in real estate:

IKEA Place: The IKEA Place app allows users to use AR technology to view and interact with IKEA furniture as if it were already in their home. Users can select and place to-scale images of items in images of their homes or spaces to see how they look and if they would fit.

3. Artificial intelligence and machine learning

Artificial Intelligence (AI) and machine learning (ML) have immense application potential because of their ability to collect and analyse information to automate the appraisal process, analyse market data, and forecast prices. Its reach also extends to the transaction and contract process. 

Examples of AI and ML in real estate:  

• Propy: Propy is a real estate transaction platform that uses AI to automate the transaction process, verify information, analyse contracts and monitor the buying and selling process.
• ShelterZoom: ShelterZoom is a technology company that uses AI and ML to create smart contracts and optimise transaction processes.  

4. Internet of Things (IoT) 

Internet of Things (IoT) is the concept of connecting physical devices to the Internet to exchange information and data, in which smart devices automatically interact with each other and with people.  
The invention of wireless devices such as Bluetooth and Wi-Fi in the 1990s opened the possibility of wireless connectivity for IoT devices. In recent years, the development of technology such as 5G, AI and ML continues to contribute to the development of IoT.

In real estate, IoT brings solutions such as smart management, monitoring and protection, and smart utilities. This technology has led to the development of: 

• Smart cities: A smart city uses ICT to improve the quality of life, operational efficiency and management in urban areas. The goal of smart cities is to take advantage of advanced technologies such as IoT, AI, sensor systems and network connectivity to create a smart, sustainable, and convenient living environment. Some examples include Marinha District (Lisbon, Portugal), Singapore, and Gangnam District (Seoul, Korea).
• Smart buildings: Smart buildings use technologies such as IoT, sensor systems, AI and ML to automate and optimise processes and services. Intelligent systems in buildings manage and control energy, lighting, temperature, security management, monitoring and control systems, and equipment and services.

5. Big Data

Big data and analytics refer to the processing, management, and analysis of very large and complex data sets that cannot be handled with traditional tools. Big data is often generated from many different sources such as social networks, mobile devices, sensors, transportation systems and many others.

Big data can be applied to analyse the market, customer behaviour, products, and competitors, which can help businesses forecast and optimise their products and processes for future success.  

In real estate, big data can also apply to urban management and can asses traffic, energy, and resource optimisation, which can improve urban planning and security.

Conclusion

Human existence is defined by the inventions it creates. Currently, high technology is changing the course of society, and so with it, how we interact, transact, develop, and understand real estate. New, advanced technologies are delivering greater interaction, changing development strategies, and improving transparency and safety in transactions. Understanding new technologies like real estate tokenisation and how they influence the market will give real estate developers, investors, and operators a competitive edge.  
Learn more about real estate tokenisation in Savills latest publication

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