The Efficiency of Digital Real Estate

| Last Updated: 4 August 2022


Technology is the element that is starting to change all the facets of the real estate industry. It can become a threat to those players and companies who failed to adopt new technologies and at the same time create beneficial circumstances to innovate. The real estate industry has seen the advantage of digitalization to improve efficiency and create value-added companies. Products provided by these technologies can be in form of dashboarding software that reduces the searching and administration costs. Dashboarding solutions are accompanied by other digital solution products solving complex problems occurring in real estate.  

Other sectors, like the financial sector, are already ahead of the adoption of digitalization, making the industry way more efficient than before. The advancement in information and communication technology was the beginning of the structural change where the internet was especially used as a marketing tool. The exceptional growth of technologies made it possible to automate data collection and analysis provides users with (near) real-time information and predictions. This change continues to happen in the real estate industry. In this article, we provide you with a more detailed explanation.  

The real estate industry 

The real estate market is complex and highly regulated. To complete a transaction, the involvement of many players is required. A transaction consists for example of search time and costs to determine the real market value of a property as well as the time to match buyers and sellers perfectly. If you take a look at the investment class of real estate, the offices, and the retail market, many variables are correlated with each other. The property value for example depends (in)directly on positive cash-flows, tenant quality, lease structure, tenants, space occupation, and the stability of rental income. This complex part of the industry will be positively affected by technological advancement. The technological advancement will affect all players, including property managers, real estate investors, estate agents, etc.  

The introduction of digital technologies 

PropTech is a widely used term that combines property and technology in one word, which refers to all aspects of innovation and how this affects the built environment. Software and hardware are included in this term, often offered by start-ups to help companies with their innovation to solve limitations in the real estate industry. The industry is starting with the adoption of its technological development, using data to decide on various key issues.  

Data on real estate transactions can be used by a property valuer to estimate the market value. Performance data can be used by real estate investors to decide on their investment opportunities. And data can be used to conduct market analysis as well as performance measurements. In short, it is the start of a data-driven industry.  

Due to the increase of computing power, the opportunity to use quantitative modeling in property market analysis is developed. Something that used to be impossible.  

As result, the real estate industry introduced with valuations software and property and portfolio management starts to depend on technologies, such as artificial intelligence (AI). This implementation provides opportunities to grow, control market information, and helps with lowering costs. Advancement in computing and networking technologies such as cloud computing and sensors can make this possible. As pointed out by research, evidence has shown the interest of real estate professionals (CBRE, Cushman, LaSalle) and traditional real estate firms to use technologies mainly characterized by start-up innovations and investments.  

Artificial intelligence  

One of the core technologies characterized by these innovations in the real estate industry is artificial intelligence. AI refers to the ability of a computer system to perform the intelligent function of the human brain. The enormous amount of data related to real estate, extracted from different sources, can be manipulated using various machine and deep-learning techniques to manage the analytical analysis. AI has extensive potential because of this data-intensive real estate industry.  

In the end, people think that technologies could have disruptive potentials, but multiple studies show that it can be seen as a complementary tool to make the industry and companies much more flexible and efficient. Also because of the natural characteristics of the real estate industry.  

Do you want to learn more about how artificial intelligence is used as digital technology in the real estate industry? And what our cloud-application platform can mean for you? Request a free demo or contact us.   

Read more on: Lizam, M. (2019). Digital Technology And The Real Estate Industry. Sinergi : Jurnal Ilmiah Ilmu Manajemen, 9(2). doi:10.25139/sng.v9i2.1811 

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