Digital disruption has property sector in its sights
From floorplans to appraisals, sales to construction, proptech has become a lucrative, disruptive force, writes Lauren Pow — but is the Perth property industry ready?
The property market isn’t immune to the disruption of technology.
As with every other sector, the use of artificial intelligence, robotics, automation and machine learning are changing the way things have are done, and that can make some in the industry uncomfortable.
Property has always been a long-term play, from the five-plus years needed to develop to the 20-year cycle for many investments. But with technology shifting on a more rapid cycle, it is moving at a pace that many in the sector aren’t used to.
There’s also the inevitable cycle of tech, where expectations and excitement, and a flurry of early adoption and investment, can give way to what is known in tech circles as the Trough of Disillusionment — and there’s evidence that this is the case already with some proptech ideas.
But proptech is arguably an enabler rather than a disruptor, and works to the expectations of the customer, if not the service providers.
Gone are the days where home buyers travelled from agency to agency to scan the available properties on the office windows. Now, it can take someone less than 10 minutes to find their ideal home online, take a virtual walkthrough of the property and access accurate stats on the surrounding area.
It seems only natural that the speed and convenience those buyers take for grant translates into innovation elsewhere in the sector.
And with $7.6 billion invested in proptech globally since 2011— 70 per cent of that venture capital investment occurring in the past two years — this is not a trend likely to go away soon.
How is proptech turning the real estate industry on its head?
1. Data, data and more data
“In God we trust,” American engineer William Edwards Deming once said, “all others must bring data”. And the industry agrees — some 53 per cent of respondents in a KPMG Global Proptech Survey rated big data and analytics as the emerging tech innovation their business was most likely to adopt in the next three years. This isn’t surprising. Data is causing a shift in the way both buyers and realtors are making and observing decisions, moving away hunches towards certainties. Processes like appraisals, which were once reserved solely for the experienced minds of real estate agents, are now freely available to anyone with a computer or smart device (or at least in the form of a best guess). Instant evidence of what others are doing increases social proof. Being able to study past sales and yields, unlock detailed maps of proposed infrastructure or even school boundaries, makes any investor feel like an expert.
2. Re-imagining property listings
We may be able to view property listings faster and more easily than ever before, but anyone who has viewed property online knows the frustration of listings with inaccurate, inadequate or just plain terrible photos. Proptech company Matterport creates virtual reality experiences (which are expected to treble by 2020), by combining high-definition images to produce digital floor plans that can be virtually walked-through. Augmented reality is also playing a part in the tech shake-up of the property sector, with companies such as Augment bringing brochures and floorplans to life on smartphones and other devices. For companies that need to make floor plans and detailed diagrams of existing spaces, GeoSLAM offers a unique solution. Their technology uses a handheld laser scanner to capture complex spaces and produce 3D models. Real estate companies are already utilising 3D printers to accurately create to-scale models for new developments, as it eliminates human error and is relatively time efficient.
3. Digital mortgage brokers
While most real estate agents will argue that artificial intelligence can never replace the experience and intuition of an agent, technology can invariably help. People can now apply for mortgages online using Habito, which uses robo-advice and artificial intelligence to scan the market for the best products to suit customers’ needs. Taking robo-real estate one step further is Zenplace – a tablet-wielding robot connecting home buyers to an off-site agent video-streaming advice.
Wanting to invest in property but don’t have lots of money bags lying around your home? BrickX is a fractional investing company that allows investors to own a piece of a home, by dividing properties into 10,000 units or “bricks” for buyers to share in the property’s growth and expenses. Not surprisingly, this investment model has been very popular with young buyers, with the company revealing more than half of users are under 35. At the sales end, there is also change. UK company Nested guarantees a minimum sale price for your home and guarantees to pay it 90 days after listing, even if it hasn’t sold, giving buyers a certainty not offered by traditional listing. In the rental space, groups like Europe-based Spotahome have made finding a long-term rental property more like finding a holiday home. Rentberry allows competitive bidding between tenants for sought-after apartments and Canopy is trying to roll out an alternative to rental deposits through a one-off insurance premium that covers renters, reassures landlords and acts as virtual credentials as they move between homes.
The trend of cutting out the middleman in real estate transactions is one thing — but paring back of the many trades and steps needed in building property is another. Construction is picked as one of the sectors ripe for disruption, with researchers and companies investing in everything from quick healing concrete to robot architectural builders. A more traditional method, modular building, offers a hybrid option for builders, letting them automate some processes and build off-site, while still using a range of readily available, traditional trades to build and assemble modules on site. The process allows for construction time to be shortened, less waste created and safer working conditions. For homes being built on-site, a Perth company has designed a one-armed bricklaying robot, claiming it can build a home every two days, while there is growing interest in 3D printed homes. One Chinese firm is reported to have printed an entire apartment building in 2016.
Whichever way you slice it, change is coming for the WA property sector – whether you’re in the commercial, residential or construction space. Understanding what lies ahead, what it means for your business and how to capitalise on opportunities will help determine whether you ride the next property wave or get left behind – talk to us for a look at what the future holds, and how to make it work for you.