Digitalisation and AI (Artificial Intelligence) are the most intensively discussed topics in the real estate industry. The subject aims at increasing the efficiency of existing processes and the institutional side of the industry is really interested. And in some ways, this is a breakthrough. This article elaborates on the current status quo and future path of the industry. Design/methodology/approach – The real estate industry is evolving, and parts of the business are increasingly being conquered by “prop techs” and “fin techs”. They have come into real estate to stay not because they discovered inefficiencies in the way one manages and does business with real estate, but because they come with an arsenal of new technologies that can change the whole game.
In this fast-changing digital world, it has never been more dangerous for companies to neglect the importance of accepting new technologies. And, the real estate industry is no exception. Ever since then, AI-based applications started to boom, and many interesting Chabot concepts started to shape the sector. In the beginning, people just wants to explore how to use this AI engine to create a bot, however as the AI infrastructure keeps improving, it is clear that AI will surely help people in their everyday lives and make businesses run more efficiently & enhance their customer service.
All property developers have had to embrace digital technology as it has enabled them to serve customers better and stay ahead of their competitors. This is the best time to revolutionize real estate business models as the Covid-19 pandemic has profoundly changed the way people live, work and play in a way that could have never been imagined previously.
Most businesses have adapted and are innovating to ensure consistency of services during extensive lockdowns and to ensure they serve customers in a way that safeguards health and safety. To say that, the last two years have changed the way the real estate market operates is an understatement. As the pandemic worsened, the need for technological advancement in the real estate sector was crucial. The pandemic steered this transformation and for a sector like real estate which has been traditionally slow to adapt to tech.
Moreover, the industry players are starting to understand the benefits of investing and using modern technologies. According to the Technology and The Future of Real Estate Investment Management report created by the University of Oxford, in 2020, 53% of real estate companies are now directly investing in technology. 42% of Statist respondents confessed they see potential in smart building technologies, while 56% of respondents have already noticed the impact from the tech sphere.
It is poised to see even more growth in how new technologies are genuine real estate disruptors and will affect everyone involved in the industry.
Introduction of AI
Real estate software customers expect to get the best service and experience from using the technologies. Contact channels must be available 24/7, the response time must be as fast as possible, and the error rate should be close to zero.
An automated service desk with the conversation AI can easily fulfil the requirements. This technological approach goes beyond common chat bots. According to Deloitte, “these assistants would be built for purpose, have a rich set of capabilities, and be integrated into the end-to-end process landscape of the enterprise.”
Artificial Intelligence (AI) and Machine Learning (ML)
Artificial intelligence and machine learning have revolutionized the real estate industry, from enhancing processes such as relevant home search to refining transaction processes. Artificial intelligence can help real estate agents in identifying quality leads that visit their websites. ML algorithm saves time by identifying those leads with the most potential in becoming a genuine buyers.
As we all know, the ongoing pandemic is not going anywhere shortly, and it will keep changing consumer behaviour worldwide. Customers are getting addicted to the latest technology year on year. Real estate businesses that adopt digital transformation will see a significant boost in their business growth and have a competitive advantage. Artificial intelligence (AI) assists machines in completing complicated and sophisticated jobs. This includes everything from assessment, problem-solving, and decision-making to pattern identification and comprehension. Machine learning is frequently utilized as the AI’s primary method.
Over the years, real estate sector has been working in the traditional model, where consultants and consumers have dealt face to face. However, COVID-19 has given a big push to real estate technology. As we all know, technology has helped various industries and sectors to grow to a great extent.
The surprising outcome of the COVID-19 pandemic has been the mass adoption of technology by a wide range of industries including real estate. Cases on COVID-19 new variant started to rise again globally, more property owners and operators, developers, builders and other real estate professionals will need to embrace tech trends to meet their needs, starting from the desire for more flexibility, to safety concerns, to the next generation’s evolving preferences. The adoption of technology in the sector will help to create an impact on revenues in the long run.
Nowadays technologies such as artificial intelligence (AI), virtual reality (VR), augmented reality (AR), as well as the internet of things (IoT), are the major emerging property technology trends. The use of these technologies in real estate is still in its nascent stages, but slowly and steadily innovation is taking place.
Following are some of the technology trends we expect to see in the sector in 2022.
Digitalisation
If someone is looking for a new property, they must have looked for properties that match their preferences on the internet. This normal and simple act is the basis of the change that is going to help the real estate sector in the coming years.
With the help of Prop tech, both developers and buyers are able to access information and consult online. Online catalogues, video/ virtual tours of the property, online transactions are some of the parameters that the real estate industry has begun adopting using technology for making processes swifter, more efficient and user-friendly. With this, signing the builder-buyer agreement and making payments online is the new norm that is being implemented.
Block chain
Block chain and real estate are two terms people don’t often relate together however like other industries, block chain is disrupting traditional real estate processes, especially in the area of contracts and security. Block chain technology can be highly beneficial to the real estate sector as it eliminates the need for liaisons and verifications via banks. With this, it will also help to reduce the chance of fraud or a data breach.
Flexible workspaces
With the new normal anywhere and anytime workplace, realtors require being flexible in time, location and environment for leasing commercial properties. Workplaces can be allocated ‘anywhere’ and ‘anytime’.
Virtual reality
The advent of Virtual Reality (VR) or 3D mapping technologies are helping the sector for digital walkthrough which allows prospective tenants, buyers, or managers to undertake property inspection online. It can provide a personalised and customised property-buying experience. Clients can visualise the interior as well as the exterior of the commercial property in 3D holograms on a real-time basis. The advent of digitisation is majorly being witnessed in the metro cities for the time being. However, developers and real estate consultants must encourage the digital push in smaller cities too, which will help to enhance the demand and supply of housing in smaller towns. Also, the Government has been pushing reforms in the real estate sector for the last three years to expedite construction and completion of the projects. Technology’s role is an indication of the future growth and potential of the real estate sector as well as the immense opportunities that lie ahead of us. Digital communication is becoming the norm and efficiency, safety and hygiene are of paramount importance, with the technology of Prop tech, buyers and sellers of real estate are enabled to access information and consult online. Online catalogues, video/virtual tours of the property, online transactions are some of the parameters that the real estate industry has begun adopting using technology for making processes swifter, more efficient and user-friendly.
The industry has begun adopting innovative processes that digitise traditional ones, enabling the realtor to analyse more data, be accessible online and real-time, while in this context, the Government extended the Digital India Land Records Modernisation Programme (DILRMP) up to 2020-21 for building upon the common features existing in land records in different States and developing an Integrated Land Information Management System (ILIMS) across India, enabling States to add their State-specific requirements. The aim is to ensure uniqueness in all transactions and keep land records up-to-date for establishing a link of all property transactions.
Innovative construction
These include architectural benefits or enhancements in construction materials and processes (e.g. 3D printing and modular building). One area that is still quite nascent but holds promise is 3D printing of structures. Technology can play a key role in helping India achieve the mission of ‘housing for all’, under the Pradhan Mantri Awas Yojana (Urban), or PMAY (U) which, as per current estimates, requires erecting a staggering 60 million houses by 2022. In fact, even start-ups are beginning to bet on this technology, and one IIT Madras-backed enterprise has been reported to have showcased its 3D printing technology with the construction a house at the institution’s campus.
The enterprise employs a concrete 3D printer that works on a computerised two-dimensional design and builds a 3D structure in a series of layers by extruding flow able concrete-like building material. The resultant ‘automation’ reduces construction lead time drastically, and if the technology is accepted, it could go a long way in helping achieve the ‘housing for all by 2022’ deadline.
Time and cost overrun is a major real estate challenge. AI facilitates ‘smart construction’ through drone surveys, 3D maps and models, extracting blueprints, and simulating project schedule optimisers that contemplate options for project delivery and augment overall project planning.
Prime Minister Narendra Modi has laid the foundation of the Light House Projects (LHP) under the Global Housing Technology Challenge-India (GHTC-India) across six States. The GHTC-India programme would help build over 1,000 houses in each city in these six states within 12 months. Key feature of the LHP includes people being provided sustainable housing which are economical and strong and have been built using special techniques. The beam-columns and panels of these houses are made in factories and brought to construction site for assembly.
Flexible workspaces
With the advent of ‘anywhere’ and ‘anytime’ workplace, realtors require being flexible in time, location and environment for leasing commercial properties. Workplaces can be allocated ‘anywhere’ and ‘anytime’. Realtors are hiring data scientists for procuring information from building management systems, tenant feedback and swipe card to assess, develop and introduce flex operational models into their portfolios to ensure optimal use of the commercial properties.
Healthy workplace and residences
Covid-19 has changed the way we think about our health and safety in public spaces. Density ratios, touch less technology, sensors to monitor air pollutants, robots for cleaning activities for the post-pandemic workplace can enable a healthy work environment.
Internet of Things (IoT)
IoT links multiple devices, systems and/or buildings with the aim of making real estate more efficient, sustainable and user-friendly. The technology is useful in a world that is fast moving to the new norm of remote or virtual access, as opposed to physical presence.
Virtual reality and 3D mapping
These technologies replicate an environment using computer simulation. Drone technology allows users to create an alternative reality (e.g. building information modelling)
Adoption of virtual reality or 3D mapping technology for providing digital walkthrough allows prospective tenants, buyers or managers to undertake property inspection online. The technology merges images and videos of a property and creates a digital space that is essentially indistinguishable from the real property. This potentially provides new exclusive experiences for investors, and hence the chance to differentiate from competitors. Pre-construction architectures can be viewed with minimal clicks.
Conclusion
Many real estate organisations today lack fully-integrated, end-to-end digital capabilities required to compete in today’s industry. It’s important for realtors to leverage technology for higher long-term value and better decision-making.
The Government’s Union Budget is welcomed by the real estate fraternity. With a strong focus on the affordable housing sector and infrastructure development, the Union Budget 2022-23 announcements seem enabling and futuristic. The real sector has seen activity towards recovery from COVID 19 challenges on the back of regulatory and liquidity support. This budget may help further to accelerate this momentum and support overall economic growth. The Budget Announcements 2022-23 were aimed at providing relief to the affordable housing sector and subsidiary industries such as construction and Cooperative societies. There were few citations during the Union Budget announcement which provide indirect stimulus for all the key real estate asset classes – commercial, residential and warehousing:
Boost to Affordable Housing: With an aim to provide a boost to the affordable housing mission, the finance minister has recommended that over 80 lakh affordable houses will be constructed and delivered by the year 2023. These houses will be constructed under the flagship housing development scheme “Pradhan Mantri Awas Yojana” (PMAY). It will provide an opportunity for the economically weaker sections of the society to own a house at an affordable cost. In addition to this, the Finance Minister has also recommended an allocation of Rs 48,000 crores of outlay for the PMAY scheme will definitely boost the affordable housing sector and the announcement of 5 Centres of Excellence for Urban design and planning is a positive step that will complement the overall growth of the real estate sector The heightened and continued focus on the affordable housing sector will help revive the construction and allied industry related to the real estate sector. Although there has been a booster for the affordable housing by providing a package of 48,000 crore empaneling Prime Minister’s Vision of Housing For All, a standard definition of 60m and 90m affordable home would have given a bigger boost to the entire housing industry which indirectly supports 260+ industries across India.
Gati Shakti – Giving potential rise to real estate industry: In the Union Budget 2022-23, the Union Government has increased its focus on infrastructure development. Under PM Gati Shakti, the National Highways will be expanded by 25,000 km during the next one year. To improve connectivity, the Government intends to implement the National Ropeway Programme in Public-Private Partnership (PPP). Highlighting the seven engines under PM Gati Shakti viz Roads, Railways, Airport, Ports, Mass Transport, Waterways, and logistic Infrastructure. Gati Shakti framework that will focus on the development of multimodal logistic parks and cargo terminals can be noted as great initiative for the warehousing sector. The focus of transit oriented infrastructure development will definitely pave way for more employment hubs thereby, unlocking the residential and commercial build up potential in the key micro markets of a city.
Boost to Tax payers: Budget 2022 proposal will allow individuals to update their income tax returns (ITR) within two years from the end of the relevant assessment year by paying an additional tax of 25-50% on tax on interest as proposed in Budget 2022.The intent of the proposed Section 139(8A) is to allow genuine taxpayers to file an updated tax return where complete details of certain incomes could not be incorporated in the tax return due to shortage of time provided for filing belated/ revised tax return or due to any other reason. The opportunity of compliance is not intended to be provided to taxpayers who are currently under scrutiny by the tax authorities or who have already availed this opportunity once for a financial year.
Urban Development – Focus of Budget: The Union Budget 2022-23 highlighted the need to develop Mega Cities and an increased focus on Tier 2 cities and Tier 3 cities. These cities are planned to be developed into economic powerhouses in the near future. The Government intends to support and work with the states for urban capacity building. To bring a paradigm change in the ‘Urban Planning’, the Union Government has announced the constitution of a high-powered committee for making suggestions on policy matters and capacity building related to urban infrastructure development. The Finance Minister opined that Urban Planning could not continue with a business-as-usual approach.
Cooperative societies – Impact of Budget: With an aim to reduce the burden on the Cooperative societies, the Union Budget has proposed to reduce the Alternative Minimum Tax from 18.5 percent to 15 percent. The surcharge has also been reduced to 7 percent for having income from Rs 1 crore to Rs 10 crore. Currently, cooperative societies are required to pay Alternate Minimum Tax at the rate of eighteen and one half per cent. However, companies pay the same at the rate of fifteen percent. To provide a level playing field between co-operative societies and companies finance minister has reduced the surcharge
Infrastructure Development – the grant of the infrastructure and energy storage systems showcases the seven engines under PM Gati Shakti i.e. Roads, Railways, Airport, Ports, Mass Transport, Waterways, and logistic Infrastructure. The will boost the infrastructure and construction industry across the country
Digitisation of land records – The adoption of National Generic Document Registration System is aimed at enabling a uniform process for ‘anywhere registration’ of deeds and documents. The facility for transliteration of land records across any of the Schedule VIII languages will help to realise the country’s economic potential, including livelihood opportunities for the demographic dividend.