Social commentators in the early 90s made one major speculation: That the digital revolution, which was gaining traction at the time, would make cities obsolete. These speculations were based on the belief that people would be able to work irrespective of their actual physical location. They might have got it right that people would interact more than ever before on the Internet. But what they completely misjudged is the bit about cities disappearing.
Almost three decades later, we know that urbanization is taking place at a pace cities and public infrastructure are struggling to keep up with. In fact, the UN predicts that by 2050, the population living in cities around the world will equal the entire world population recorded in 2002. In other words, nearly 3 billion more people are going to migrate to cities around the world and there isn’t enough time to create new real estate to accommodate all of them.
Tech startups around the world are reinventing how we tackle this problem by innovating how we use what we already have. However, their success is disrupting how conventional industries like banking, real estate and automobile dealership operate. In fact, a study by Oxford University shows that there is a 97-99 percent chance of computer algorithms with artificial intelligence replacing jobs in these industries. It means that, sometime during this decade, your real estate agent might actually be a smart computer; and, the kind of properties shown to you may be very different from what they are today.
Cold But Essential
The idea of a computer replacing real people might seem cold and impersonal. However, research has shown that now is the time to redefine the real estate industry to seamlessly incorporate new technologies. Real estate agents and their companies need to reinvent themselves such that the shifting demographics and consumer behavior positively impact their business models. Real estate agents might disappear but that’s not necessarily doomsday for the entire industry.
With buildings being responsible for 40 percent of all energy consumption around the world, the real estate industry is now on the brink of an immense revolution towards better and energy-efficient utilization of existing resources. Unlike the industrial revolution, which is at the root of many of our woes today, agile and lightweight Internet technologies will guide this coming revolution.
The technology will help the industry shift focus from a linear economy to a circular economy that views products like services and utilizes them to their maximum capacity. Here’s our list of five ways in which technology will rewrite the rules of real estate this decade.
1. Digitally Re-programmable spaces
For cities of the future, less will have to be more. Already prominent cities, world over, are taking steps to reimagine how buildings and public infrastructure can be utilized round-the-clock and with more inclusivity. The good news is that, the technologies that are making this possible aren’t heavy and clunky like that of the 20th Century. Knowledge-based, clean and digital in nature, they are easy to integrate into the existing fabric of cities everywhere.
In the foreseeable future, we can expect buildings to be equipped with technologies that allow for innovative ways to organize work done in a building; different patterns of occupation and a variety of production spaces. Smart buildings that can be digitally programmed, for instance, to switch between being a gym, a restaurant, a community center or a pub, will soon be the norm. Such buildings are aimed at reducing the global urban footprint. Vancouver, Glasgow, New York and Melbourne are some cities that are already making efforts to reduce their urban footprint.
2. Unleashing Spare capacity
Today most people are aware of how startups like AirBnB and Breather have reinvented the use of residential and office buildings. They made renting out spare space viable – an idea that is probably going to have major impact on people’s decisions, when it comes to buying real estate, be it be residential or commercial.
Tying into the concept of a circular economy, these websites not only help in reducing wasted capacity, but are also helping people experience something different with every renting. In a similar vein, the renting of underused or dormant office spaces is perfect for the growing number of startups and their knowledge workers, who need only their laptop, some high-speed internet and good coffee to make their living.
Imagine extending the sharing of spare capacity to institutional, social and recreational buildings – like schools being co-located with child health services or state sports parks to not only use facilities more intensively, but also achieve better outcomes.
3. Rent Auctions
The coming decades will see the real estate industry turn increasingly favourable towards the buyer. But landlords needn’t fret, either. A startup out of South Africa has created a website where prospective renters, pre-screened when they sign up, can make bids to landlords. The reserve rent is set by the landlord. The idea cashes in on the differences in the value renters see in a particular property. On the long run, the true market value of any rental property will emerge – less desirable units will fare worse than properties that have better amenities and so on. London, too has a rent auction system, albeit one that’s not yet online. The idea is gradually making in-roads into the U.S. as well.
4. FinTech Companies
A new breed of investors has been born, thanks to startups that offer creative and transparent financial services that are disrupting both the financial and real estate industries at the same time. Dubbed FinTech companies, these startups leverage the power of the Internet, combined with artificial intelligence computer algorithms, to cut out the middlemen – a.k.a., banks, real estate agents and investment managers. These companies have already helped small time investors, like you and me, break into the closed and high-stakes circle of investing in commercial properties, with their crowdfunding business model.
5. Virtual Reality to help buy property in far away places
Believe it. People are now investing in properties that they’ve not physically checked out for themselves. Welcome to the power of interactive, high-resolution and 3-D virtual reality. In fact, virtual reality tours of properties on sale, gives buyers a host of information that not even a physical tour could hope to provide. Like, the amount of natural light that enters a house at not just different times of the day, but during different seasons of the year. And, consider how helpful it would be if the buyer could actually see how their furniture would look in the particular property they are virtually touring.
Increasingly, online brokers are offering such virtual reality tours that interested buyers can check out by the dozen, without ever leaving the comfort of their homes. It might still be in its early stages, but virtual reality has the potential to flip everything we know about buying and selling real estate on its head. It is going to enable more and more people to venture beyond their vicinities to invest in properties around the world.
Rest assured, there is more to come by way of high-tech solutions, that will soon make conventional real estate jobs and offerings obsolete. The world may be full of people trying to find their own, sweet little spot – but the coming decades will completely revamp how they find it.