Real estate in India may lag behind in plucking the fruits of enhanced technology - but globally, the field of technology has made immense progress and there is definitely much to leverage. In fact, there are at least six technology-driven changes which can potentially transform the sector.
Essentially, these evolutionary steps in technology can completely usher in an era of 'experiential' real estate for consumers, developers and consultants – and as a direct consequence, transform the way in which real estate business is done:
More and more real estate marketing is done via online channels these days, be it online portals or cross-platform mobile applications. There is a huge opportunity in more evolved automation of these online channels, where the updating of property listings could be carried out using advanced machine learning techniques. Listings and other stock real estate data is very dynamic in nature - and with more Indian states making lease data freely available, there is more scope for automation.
Also, since it is now mandatory for builders to notify all residential sales and similar project-related updates on the RERA websites, quick automation of data like units sold, localities where maximum sales have taken place and information on other upcoming projects can help close deals faster. To have faster access to such information can help brokers and consumers close transactions more efficiently.
Moving further up from automation, technology today performs tasks which require higher forms of intelligence. Artificial Intelligence (AI) tools allow computers and machines to function more intelligently. In the real estate sector, the increased use of machine learning techniques and deep learning will boost the quantity of information available, as well as the efficient processing of this information. Improved computation power of machines aided with smarter algorithms will make it easier to grasp 'moving parts'. The digitizing of data assets is becoming less cost and labor intensive with the help of AI technologies.
Information in the real estate sector is currently available in varied forms. If we look at commercial real estate markets, lease documents are often not standardized, presenting a challenge in evaluating one vs. another. Soon, advanced AI techniques (loosely known as deep learning) will enable machines to comprehend the various clauses and sub-clauses in such leases.
A lot of data is currently stored physically in the offices of builders and brokers. From brochures of upcoming projects to 'stacking' plans of malls or other buildings, legal documents, contracts, administration-related paperwork - all will gradually migrate to the digital format. From a client's perspective, the emergence of more online portals showcasing a higher number of commercial and residential properties will simplify the customer's journey towards a buy, sell or lease decision.
Drones to enhance the human experience:
Advancements in artificial intelligence, specifically in machine learning and deep learning, have contributed to the increasing use of drones. These are helpful in creating 3D images and videos of office spaces which help clients narrow down on property options. Drones are being used very effectively in America and Europe for marketing real estate properties with compelling and dramatic images. Such images help differentiate properties, especially on online portals, which are continuously competing for consumer mindshare.
While some form of drone-driven marketing is already happening in India, the scope for further expansion is massive. Drones can be used to highlight property features like landscaping, pools, walking paths, backyards, internal spaces, flooring, etc. to create a general sense of awe which cannot be achieved through normal, ground-based photography.
Virtual reality or VR technology - a mix of architecture design and gaming software - will soon enable consumers in India to get a real-time experience of living in their yet to be constructed homes. Through the use of special glasses, customers can view 3D videos of the properties they are interested in. This can help them to shortlist properties before making the final choice.
Since this is still an expensive technology, it is currently being used only in high-end property marketing – mostly while marketing luxury housing options to NRIs. However, the cost of technology is constantly reducing with faster adoption and mass production. Soon, Mr. Everyman may inspect his mid-range home options in the same way....
Internet of Things (IoT):
Internet of Things (IoT) is a giant network of connected factors, including people. The relationship could be of people-with-people, people-with-things and things-with-things. The use of sensors to track the movement of objects is commonplace today. With sensor technology getting cheaper, we will soon find a much larger use of sensors across office, retail as well as residential spaces.
This will become especially useful for the facilities management business. From small requirements like identifying the need for changing a fused bulb to larger issues like managing car park spaces in large office complexes, IoT is ready to take off in a big way. Retail departments can look at using display shelves linked to sensors which indicate when products need to be restocked. Residential spaces already use sensor driven lights and very often sensor-linked water flow in gardens. On a much larger scale, Smart Cities will have digital technology embedded across all city functions.
Information held on a block chain exists as a network of nodes. It is a shared, continuously reconciled database which is hosted by millions of computers simultaneously, and its data is accessible to anyone on the Internet. This is still an evolving concept worldwide, but block chains will soon play an important role in the storage of information for real estate transactions. For instance, we will see the evolution of Smart Contracts which make the execution of real estate transactions much more efficient.
As an example, let us take a person purchasing a property in the secondary sales market. Currently such a person is dependent on the bank for a basic due diligence on the property. As the bank lends a home loan, it bears all the risks related to the property including ownership risk, construction risk, litigation risk, etc. If, on the other hand, a loan is not required, other agencies must step in to verify all the property-related documents. Feedback from technical experts to address safety concerns regarding old structures may also be called for.
All this information could be stored in a block chain and easily accessed by a buyer, who can trust this encrypted block of information without physically examining the title or contacting prior owners.
Technology has already made inroads in the world of currencies – previously very much a 'physical' concept - as well. Bitcoin, the cryptocurrency which is the raison d'etre for block chain, is finding its way now into the investment world. In fact, it is one of the fastest-appreciating digital currencies.
Will we eventually see a time where real estate transactions are carried out through cryptocurrencies? Maybe not anytime soon – and definitely not until justifiably conservative financial regulators such as the RBI become comfortable with currencies like Bitcoin in India. However, given the massive evolutionary steps taking place on most other fronts, the future real estate marketplace in India may be open to this, as well....
Ramesh Nair, CEO & Country Head, JLL India