The days when people spent their hard earned and/or borrowed money for their only dwelling to escape the hardships of moving from rental to rentals are far from gone. Back in the day, lands were purchased and houses built with the help of skilled laborers with as many cost savings possible. In a household with a single earning member, the family scrambled to raise nesting money for their growing members. A major part of the world, mired in poverty still go through this. Many are homeless due to a myriad of reasons.
In spite of this, a part of the world has seen more changes in economic growth, surplus production, better employment opportunities and superior infrastructure and logistics to access everyday needs that were hard to get to, in certain geographical areas. The struggle of our ancestors have paved the way for advanced industrialization and technology that create efficiencies of scale, thus making it easier for us to have affordable lifestyles.
The growth in information technology has been surreal in the past two to three decades. There is tremendous thrust on the online marketplace and internet has allowed e-commerce to thrive even in the remotest corners of the world. Financial markets including banking, insurance, mutual funds, stocks and shares have all found their niche in the online space. Commoditization of specialty products is made possible with centralized warehouses and selling on the web. Is it any wonder then, why real estate technology is attracting so much investment to go through the technological road for creating a much efficient process of purchasing property?
Focus on cost, transparency and scaling up are the primary goals of real estate industry. Technology will enable all this through (i) competitiveness (ii) clarity through data analytics and (iii) consolidation. Home buyers will enjoy better user experience through drones (360 degree views of building photography), augmented reality (AR) and virtual reality (VR). Extracting value such as mapping, logistics and customer service from Big Data will impact positively on particularly those who are capable of analyzing it.
Implementing the right technology across enterprise resource planning, project management and customer service are crucial for the business. Builders and developers across the world allocate anywhere between one to three per cent of their project costs as the budget for efficient software technologies. Two years ago, a mammoth 28 billion dollars has gone in funding of nearly 1300 PropTech companies in a dozen categories in over 60 countries and more such companies are mushrooming across the world. Clearly, that’s an indication of a game changer.
Being a sub-category of FinTech or Financial Technology, Real estate technology (RE Tech) or Property Technology (PropTech) deals with an asset group with sizeable investment. As mentioned earlier, people struggled to own houses. But today, other than for own stay, property buyers who are also investors generate income and capital gains by investing in different categories of Real Estate properties over time. Mostly, they are residential, commercial and industrial. Almost, invested as an Insurance for the future or with a Portfolio of properties in varied locations, real estate is relatively a safe bet with long term stability and lower risk, provided there is valid documentation.
In the Middle East, UAE leads as the most highly penetrated countries among GCC in online technology. Being one of the hottest property markets of the world, Dubai has some of the most advanced PropTech companies doing their business in the city including MyVilla.com. These companies target all the stakeholders of the property market, from Developers to Real Estate Agents in order to onboard agents, showcase listings, guide prospects and close deals.
The digital real estate market brings in the much needed transparency and ease of doing business for both, the seller and the buyer. Dubai Land Department is launching Real Estate Self Transaction (REST) by 2020, a smart move to make investors from every corner of the world to buy properties in Dubai with ease.
The residential market will also benefit hugely from such initiatives as home buyers save time in their busy schedule by skipping the initial screening of properties which used to be a manual, time consuming process. A buyer can easily look up their favorite neighborhood such as Palm Jumeirah for a luxury villa with a large backyard and swimming pool. A renter can quickly scan through properties to see if it fits their budget for a Downtown home, closer to work area.
With these many benefits, it is no wonder that the real estate technology market is growing at an accelerated pace and receiving plenty of funding. With properties flying off the shelf like hot cakes, it’s obvious that RE Tech a.k.a PropTech is here to stay. And what we said here… it’s just the tip of the iceberg.