The Impact Of Technology On The Commercial Real Estate Industry

Impact Of Technology On The Commercial Real Estate Industry

• Over the years, the Indian real estate industry has experienced substantial transformation, owing primarily to technological advancements. Technology has completely changed how real estate is done in India, from property searches to transaction procedures.
• Since technology is changing the way we buy, sell, and manage real estate properties, its role in the real estate sector has grown significantly in recent years. 
• Technology is having an increasingly big impact on the industry as it develops further. In India, developers use various tech tools to enhance the customer experience, streamline processes, and increase efficiency.

What is Proptech?

• PropTech is a coined term for ‘Technology in Real Estate Properties’. Proptech, or property technology, is the integration of digital solutions, software, and technology with the real estate sector to optimise property management, marketing, research, and sale-purchase processes. 
• These solutions range from online marketplaces that facilitate all kinds of transfer of property, to property management platforms that connect landlords with potential tenants and manage their properties efficiently. The Indian PropTech industry, though in a nascent stage, has vast growth prospects. 
• In the end, cross-industry technologies will change how we interact with and access the Indian real estate market, making proptech a young but promising sector of the market.
• India’s ambitious goal of having a USD 5 trillion economy by 2025 is expected to be greatly aided by innovations and disruptions in the real estate and construction sectors.
• Banking on the strength of technology, Assetmonk has been a top player in the proptech industry and is striving to provide smart real estate investment options for the specific needs of investors.
• Let’s take a closer look at some of the ways technology is shaping the real estate sector in India.

Smart Homes

• The need for more secure and efficient homes, coupled with the growing availability of reasonably priced smart home appliances, is driving up demand for smart homes in India.
• A recent report by Markets and Markets projects that between 2020 and 2025, the Indian smart home market will expand at a CAGR of 18.4%.
• Smart homes are not only convenient for residents, but they also offer significant benefits to real estate developers. These residences are frequently promoted as premium properties since they provide a number of features and advantages that conventional homes do not match. In order to optimise building performance and monitor energy consumption, developers can also make use of smart home technology. This can save costs and have a less negative environmental impact.

Digital Tools

India’s real estate developers also employ a range of digital technologies to improve productivity and optimise their processes. One tool that can enhance a developer’s online presence and raise their visibility to potential clients is search engine optimisation, or SEO. Project management software is one of the additional widely used tools. 

Property management systems, which enable real estate managers to manage properties more effectively, rely heavily on technology. Numerous tasks, including maintenance management, lease tracking, and rent collection, are automated by these systems. Additionally, they give managers access to up-to-date information on occupancy rates, rental income, and property expenses, enabling them to make informed decisions. 

Technology-Driven Property Valuation and Transactions

In order to create property valuation models that are more trustworthy and accurate, artificial intelligence (AI) is being employed. To estimate a property’s value, these models incorporate information from various sources, such as demographics, market trends, and property records. Property valuation driven by AI-powered property valuation can help real estate investors make more informed decisions about buying and selling properties.

Real estate transactions are becoming more secure and streamlined thanks to blockchain technology. With the use of this technology, real estate asset ownership and transfers can be tracked in a decentralised and secure manner. Blockchain-based real estate transactions can boost security and transparency while cutting down on the time and expenses involved in conventional real estate transactions.

Customer Data

The ability of technology to gather and store consumer data has a big impact on real estate. Real estate developers obtain insights into their clients’ preferences, purchasing patterns, and feedback by gathering, storing, and analysing customer data with the aid of contemporary software tools and customer relationship management (CRM) systems. This information can be used to optimise sales strategies and improve the overall customer experience.

Regulatory Compliance and Due Diligence

In the PropTech sector, artificial intelligence (AI) and machine learning are expected to have a big impact on due diligence and regulatory compliance. Artificial intelligence (AI) tools can help automate a lot of the repetitive procedures and tasks involved in due diligence and compliance, which will save time and money.

• Streamlining Compliance: AI can help with managing the many regulations pertaining to payments, paperwork, real estate transactions, and much more.
• Enhanced Due Diligence: By automatically gathering and analysing important property data, artificial intelligence (AI) improves the due diligence procedure. They are able to spot any dangers or warning signs that need more research.
• Continuous Monitoring: AI systems routinely examine variables that may affect a property’s value or compliance, such as occupancy rates, tenant feedback, adjacent infrastructure projects, and market trends. Any issues are automatically flagged, enabling concerned parties to act quickly to address them. Constant monitoring also ensures properties remain compliant even as regulations evolve.

Challenges to PropTech in India 

The Indian real estate market is primed for technological innovation, and proptech holds the critical potential to completely transform the way properties are managed and transacted in the country. However, there are various challenges that the industry is currently at loggerheads with, inasmuch that the same are hindering the growth and adoption of PropTech:

Absence of Proper Digital Infrastructure: First and foremost, the lack of adequate digital infrastructure and connectivity in many regions of India is the largest obstacle facing PropTech. Only 43% of the population has access to the internet, and in many places of the nation, internet speed is incredibly slow and inconsistent, according to a report by theKANTAR. 

This is in spite of numerous government initiatives and technological advancements. This specific obstacle makes it extremely difficult for PropTech businesses to connect with prospective customers and, at the same time, makes it difficult for clients to use the services these businesses provide. 

Slow Pace of Regulatory Reforms: The slow pace of regulatory reforms in the real estate sector and the government’s indifference to putting effective reforms in place to address the concerns of the PropTech sector and the general public at large present the second challenge facing the real estate industry, and more so the PropTech industry. 

Although the government has taken steps to simplify and streamline the approval process for real estate projects, due to the lack of proper infrastructure and cooperation between the Central and state Governments, there is still a lack of clarity and transparency in many areas. 

Resistance to Change: Thirdly, cultural resistance to change, advancement, and development in the real estate sector is also a major challenge to the growth of PropTech industry. Initially, the real estate sector depended on in-person contacts and interpersonal bonds between different stakeholders to operate. These days, a lot of important parties are hesitant to accept new technologies that could in any way interfere with this conventional approach. Further discouraging the general public’s adoption of PropTech is their belief that technological solutions are costly, complex, and require a skill set that they do not believe they possess.

This ideology is primarily due to the firm belief of the population at large that given the lack of digital infrastructure in place, there may be a possibility that utilizing technology for transactions pertaining to real estate might adversely impact their financial strength, owing to the steep rise in fraud and cheating cases through technology. Moreover, most Indians believe in or prefer to conduct business using liquid cash in all real estate-related transactions, which unintentionally hinders the growth of proptech in India.

Should You Invest in Real Estate Proptech?

• According to Colliers’ APAC trends Investor Outlook 2023,  India’s real estate market has become the most sought-after location for foreign investors in the Asia-Pacific region, drawing in over $23 billion since 2018. This amount accounts for 77% of all investments made during this time. 
• Property real estate technology is an ever-changing landscape.  What’s popular right now might not be in a few years. But being at the forefront of any field requires not just risk-taking and perseverance, but also adaptability. 
• You can quickly determine if you should invest by examining the data and comparing the risks and rewards. In addition to reasoning abilities, business intuition is necessary to distinguish a profitable investment from a passing trend. 

Future Of Commercial Real Estate In India

• This has been said quite correctly, and the commercial real estate market is prepared to embrace this development. You read correctly. The commercial real estate market is evolving; in the near future, and soon it will be all technology driven, when social distancing will play a key role.
• Experts say that now is the ideal time to invest in the commercial space for greater returns in the near future, given the market’s promising future.
• It is anticipated that in the upcoming months, the commercial real estate market will also be significantly impacted by emerging technologies like artificial intelligence (AI) and virtual reality (VR). And if experts are to be believed, technology appears to be an integral part of the future.
• Tools such as virtual tours and e-registration of properties will become the one-stop shop for running businesses smoothly and effectively.
• While metaverse is a new trend and leaders are experimenting with its possibilities, it will unlock exciting opportunities for consumers to buy real estate and make digital wallet payments in the future. Investor interest in the proptech industry has grown as a result of all these exciting developments; the market is expected to reach USD 1 trillion by 2030.

Is Real Estate a Good Investment in the Future?

• It’s a good time to invest in the real estate market, given the outlook for the next five years. The market has a promising future, presents chances for capital gains, gains from supportive regulations, and may see long-term value growth.
• Affordable housing developments and rising rental property demand will probably present attractive investment opportunities in the upcoming years. To avoid market risks, however, thorough thought, research, and risk analysis must be done before making any investment decisions.
• For home buyers and investors, the Indian real estate market offers both opportunities and challenges as we move into the second half of 2023 and beyond.
• The industry is set for change because of the way that technology is driving innovation, the growing emphasis on sustainability, and the availability of affordable housing. Even though real estate is still a good long-term investment choice, wise investing decisions will require careful market research and an awareness of new trends.

Bottom Line

Going forward, emerging technologies will continue to disrupt the Indian real estate sector. Properties will become even more intelligent, automated, and connected with the growing use of drones, IoT, 5G, smart homes, and cloud computing. This will increase returns on investment and establish new standards for customer service and experience. Overall, technology is playing a defining role in the transformation of India’s real estate market into a more transparent, efficient and future-ready industry.

Assetmonk is striving to provide smart real estate investment options for the specific needs of investors. With high long-term earning potential of 14 to 21% p.a., Assetmonk’s fractional ownership options present an excellent chance for long-term retail investors to gain exposure to the CRE market. With its upcoming fractional ownership project AM whitefield in Bangalore, Investors can invest with just 25 lakhs and can earn an enticing expected IRR of 16.07%. 

FAQs

Q1. How technology impacts real estate?

A. Technological developments have made it easier for buyers and sellers to obtain current information about property values and market conditions, which has increased market transparency. 

Q2. What are the benefits of digital transformation in real estate?

A. The listing, searching, and management of properties are all being changed by digital transformation. Technology solutions help automate and ease every aspect of buying and leasing, which leads to greater client satisfaction.

Q3. What is the trend in commercial real estate in India?

A. Integration of Technology: Technology plays a pivotal role in the real estate sector. Virtual and augmented reality have revolutionised the home-buying process by enabling buyers to virtually see and explore potential homes from a distance. These technologies are used by real estate developers to provide a customised and engaging experience for prospective buyers.

Co-living and shared spaces: As urbanization grows, the demand for affordable housing options rises. When looking for affordable, comfortable living arrangements, young professionals and students are increasingly choosing co-living spaces and shared accommodations.