Why Real Estate Players Are Going Digital and You Should Too
Disclaimer: By now we are all fed up with blog posts urging us to go fully digital because of Covid-19, so we have decided not to bother you with another article covering the pandemic and its consequences. Alright, we briefly mention the pandemic’s impact, but the article’s main focus is on motivations for going digital which are independent of Covid-19. So please enjoy this (almost) Covid-free piece.
It is no secret that Covid-19 has accelerated the adoption of digital technologies for many industries all around the world. From restaurants, which have no choice but to improve their online presence to increase sales from delivery services, to banks, which are moving almost all interactions with customers online, the need for digitalisation is real. And for those of you who still have doubts: Since the pandemic, Europe has seen a 72% increase in the use of fintech apps (EY, 2020). This is not to say that Covid-19 is the sole reason for companies to become digital. In fact, even before the pandemic, many players had already recognised that adopting new, disruptive digital technologies is crucial to staying competitive. The pandemic merely acted as an accelerator to the digital wave which was already in motion long before.
However, while many industries were already riding the digital wave long before the pandemic, reports of CB-Insights (2016) and Warburton (2016) found that the global real estate industry is trailing five years behind the technology curve. Although real estate is one of the largest sectors in the world, innovative information technology (IT) tools are still not as developed as in other industries (Ullah, Sepasgozar and Wang, 2018). Nonetheless, real estate players have started to realise that they are lagging behind and are now trying to close the gap. This article shall illustrate why you too should hop on the digital train.
To understand how technology can drastically improve real estate businesses, let us first look at some of the challenges the industry is facing. First of all, post-purchase or post-rental regrets experienced by consumers constitute an increasing concern for the industry, with 44 per cent of real estate consumers regretting the purchase or rent decision they made (Trulia PR, 2017). These regrets are mainly caused by the lack of information about properties and the complex nature of the purchase process, often hiding some key information such as fees (Ullah, Sepasgozar and Wang, 2018). With real estate being a customer-centric business, improving customer satisfaction should be the number one priority. Furthermore, as there are many parties involved over the whole lifecycle of a real estate project, proper communication between all parties can pose a significant challenge. Even for property developers themselves it can be difficult to efficiently exchange information within the organisation, due to the large number of employees and complex tools that are needed to work on a single project. Last but not least, traditional tools are simply outdated in terms of cost-effectiveness and environmental impact. Just think about the amount of raw materials needed to print thousands of pages of paper to set up contracts, send out invoices, etc. The good news is, however, that many of these challenges can be solved, or at least improved, through the adoption of disruptive technologies.
In addition, networking tools, which are facilitating communication between digital devices, represent another essential part of the digital revolution. A number of tools exist, such as cloud computing, IoT and SaaS. According to Mladenow et al (2015), storing data in a cloud significantly decreases costs compared to traditional data archiving and storage, and it also facilitates information access to agents, consumers and owners, which ultimately leads to better communication and reduced consumer regrets. By allowing companies to integrate multiple solutions into one platform and enabling remote access to these solutions, Software as a Service (SaaS) provides huge benefits to all areas of real estate. In fact, due to their collaborative nature, these technologies lead to humongous advantages in terms of project management, customer relationship management, financial analysis and much more. They have the ability to improve communication within an organisation, provide a clear and centralised overview of the project, and facilitate the sharing of information about the property, maintenance, security, invoicing and other areas. All of these factors lead to reduced costs for the organisation and increased customer satisfaction (Ullah, Sepasgozar and Wang, 2018). In its SnapShot! report in 2016, KPMG confirms that such networking tools increase efficiency for businesses and significantly benefit clients by enabling uncomplicated, transparent and cost-effective processes. Additionally, it is safe to say that these digital tools also benefit the environment as they move everything, from drawing construction plans to signing documents and sending invoices, online.
Finally, we should not forget the importance of digital dissemination platforms, such as websites, apps and social media sites, which are used to share information online. In fact, poor dissemination platforms can limit the reach of technology, hence lead to financial losses and reduced consumer appeal (Ullah, Sepasgozar and Wang, 2018). Think of it like this: If consumers are not attracted by the content a company displays on its website or social media, they won’t even think about buying or renting a property from that company, hereby making all other tools, which are to a large extent used during and after the project, redundant. A study by Zillow.com found that 51 per cent of those surveyed claimed that the hardest part of the buying process was finding the right property using website information. To improve online information and attract more customers, Ullah (2017) recommends that businesses should include disruptive technologies like 3D visualisation, VR technology, 360-degree images and cameras into their dissemination platforms.
To wrap up, one can see that the digital wave has clearly reached the real estate industry, and organisations need to keep up with the trends if they want to stay relevant. Nevertheless, it is important to note that digitalisation does not equal removing the human factor. Digitalisation in real estate simply means that humans should make use of powerful digital tools in areas that benefit them the most by facilitating specific tasks and improving work efficiency. It is also worth mentioning that the digitalisation process, while being of huge importance, can be quite challenging for organisations. You cannot simply choose the first best solution you come across and think that it will solve all of your problems. Especially nowadays, there are thousands of “shiny new toys'' on the market that look promising at first glance but turn out to be quite useless for your specific use case once you take a closer look. Therefore, it is essential that you take the time to set up a clear strategy, reflect about the current challenges your organisation is facing and what areas should be improved, and thoroughly analyse the tools before making a decision. Choosing a trusted and competent IT partner may take time and effort, but it is the key to a successful digitalisation process. Now you might ask yourself what specific factors you should pay attention to when making this choice? Well, that is indeed a great question, and who knows, maybe we will provide some more guidance on that topic in another blog post...
By largely replacing heterogeneous tools and inefficient workflows, kodehyve effectively is a collaboration tool (SaaS) allowing real estate professionals to more efficiently manage their construction and commercialisation projects as well as the property and client relationship management during a property’s lifetime.
Through the careful selection of powerful modules, such as document storage, document exchange flows, e-signatures, KYC and AML checks, task management, billing, live chat and many others, kodehyve enables real estate professionals to build their unique collaboration tool so as to maximise its value for their specific context and use cases.