Industry’s emerging trends according to experts
This year, the report focused on the three main themes, all of which centered around the uncertainty facing the housing market due to technological disruption.
Below is the snapshot of the key themes unveiled in the report.
HIGHLIGHTS ON EMERGING TRENDS
Experts agree that the year 2019 is all about market uncertainty. How the industry adapts and reacts to these pressures will determine the fate, growth, and success of its participants. Those industry players that will choose to embrace the technological advancements - will flourish, and those that will fail to adapt might have to fight to survive.
The key emerging themes according to the panel of experts are: reinvent, rebalance and rethink. So what do these mean?
REINVENT – the need for real estate organizations to innovate boldly and embrace digital transformation in order to navigate market uncertainty effectively.
REBALANCE – the need to make better-informed decisions by leveraging data analytics when it comes to providing a better service to homeowners (a.k.a. finding innovative solutions to give people what they actually want).
RETHINK – the need to re-examine the housing supply in various markets and to properly plan for future housing needs.
HIGHLIGHT #1: SHIFTS IN EMBRACING THE DIGITAL TRANSFORMATION
Real estate industry has always been known to be a slow adapter of technology. In fact, compared to any other industry where 38% of CEOs are concerned about the speed of technological change, only 10% of real estate CEOs expressed a real concern. As PwC reports, companies are either unable or unwilling to adapt the advancements in technology, such as cloud-based computing and predictive analytics.
The good news is that things are shifting in 2019 and real estate companies understand the need to jump on board of the technological transformation. Jay Frenkel, an Agent Relations Manager at Only With comments" It's clear that companies like Google, Apple and Microsoft have been the biggest trend setters to date. And it's our job to adapt to the demographics that use all this new software and technology. Understanding how our end user is searching for real estate is something we take seriously and do so effectively. Our R&D department keeps us up to date on the latest technological advances available in our industry and beyond."
HIGHLIGHT #2: EVOLVING TENANT EXPECTATIONS
This one is interesting because we should’ve seen this coming. Think about your life and how it has evolved with the integration of technology. Think iPads instead of menus at sushi restaurants, home security and monitoring system that can be accessed via phone, or video conferencing and virtual workspace at work that has replaced the need for in-person meetings. All of these changes have placed a lot of pressure on every industry, and real estate is no exception.
Tenants expectations, pertaining to the housing market, are equally shifting. People are requesting a more personalized and unique experience and they are willing to pay for it. The need for real-estate-as-a-service is growing. According to Forbes, WeWork is a great example. It doesn’t have any office space. They sign lease agreements, then pack their spaces with occupants. Why they charge higher prices? Because that’s a unique and in demand service.
Landlords find themselves in a tricky situation where they not only must adapt to this shift in demand, but they also need to find creative and innovative solutions in order to keep up and stand out. The PwC report suggests, that landlords are looking at data analytics to determine the new rental models and builders are factoring in the new demand for smart home technology at the planning stage of housing.
HIGHLIGHT #3: SPECIFIC TECHNOLOGY TRENDS IN REAL ESTATE
As the technology advancements are slowly getting integrated into various corners of the real estate industry, some trends are getting more traction than others.
Drones: According to the respondents in the report, drones are the top real estate disruptor. They are often used to show a builder’s job site progress, as well as a real estate marketing tactic.
Drones are quite effective when featuring luxury properties for sale using aerial photography. According to Gartner, a research firm, almost three million personal and commercial drones have been produced in 2018, an increase of almost 40 per cent over 2016. This tells us that drones are not only here to stay, but as one real estate expert puts it, it’ll take the real estate to a new high.
Virtual and augmented reality: The Emerging Trends report suggests that VR and AR are already revolutionizing the industry in a big way, by letting prospective buyers virtually tour properties, removing the need to be physically present on site.
The benefit of VR and AR is to help users experience virtual environments in much greater detail, enabling a truly immersive experience. While entertainment industry and many others have long adapted these disruptive technologies, real estate industry is slowly catching up.
While VR and AR can never completely replace a physical visit to a property, it can certainly enhance the experience and add an innovative element and edge to a marketing strategy. The report also anticipates an increase in the use of these tools going forward.
Artificial intelligence: AI has been adapted by many different industries in order to automate mundane, repetitive and time-consuming responsibilities. PwC’s Emerging Trends report suggests that real estate industry should also embrace this innovation.
Industry experts estimate that the advance of AI in the real estate sector will have a significant impact on increasing efficiency and effectiveness. To brokerage firms, artificial intelligence can help prepare transactions with less manual input, speed up due diligence processes and make the entire transaction - from marketing to the sale - more efficient.
HIGHLIGHT #4: THE POWER OF PROPTECH
Proptech stands for property technology. What the Emerging Trends report suggests is that proptech has already began its integration into the real estate market by a way of new lending services, new real estate apps, innovative investment platforms, introduction of digital brokerages, etc.
All of these are the means to do business. However, proptech is not just about the means, but also about the leasing and sales process itself. Buyers for years have been using online tools to do research even before seeing a property in real life. And they do that via technology.
It’s worth noting, that it’s not the property technology alone that will be impactful. It’s a combination of the new ways of doing business, people’s changing behaviors, more sophisticated demands, and the actual technology.
HIGHLIGHT #5: TRANSFORMING HUMAN TALENT
The report revealed that 72% of real estate CEOs are concerned about having the right talent with the required digital skills employed in their organizations.
As real estate companies are often too slow and too cautious in implementing new technologies, they are putting themselves at a disadvantage by failing to attract the right personnel. Having a talent strategy that would attract and retain the diverse in skills and background people would be the key to success. Jay Frenkel, Agent Relations Manager at Only With says "Right At Home Realty Inc. is always improving it's digital footprint. Effective acquisitions of properly positioned brokerages mixed with online advertising. Updating the internal booking system to a more sophisticated one is just naming a few that the brokerage has implemented to further secure its' position in terms of technological advancements."
HIGHLIGHT #6: ABANDONING URBAN CORE FOR THE SUBURBS
It’s no surprise that’s one of the trends discussed by the experts is the current state of the housing market and its impact on millennials moving to the suburbs.
Between 2012 and 2017, we had over 142,000 people leave Toronto and move to other parts of Ontario where the housing is more affordable.
Even more so, a recent survey revealed that 42% of young professionals will most likely be leaving the GTA in the near future. The current forecast predicts Toronto, Vancouver and Montreal to experience the biggest loss of people to other areas of their province.
Another trend, a close relative of the one we just discussed has Canadians forgoing housing ownership altogether due to high housing costs, which puts rental housing for the first time in decades ahead of housing one.
THE FAST PACE OF CHANGE IS AS IMPORTANT AS THE CHANGE ITSELF
As the Emerging Trends in Real Estate report suggests, most of these trends aren't really new, but they are intensified as the industry is navigating times of uncertainty. And what's even more interesting is not the trends themselves, but the fast pace of the change and how companies choose to respond to them. The concern is when instead of picking up speed and embracing the change, companies choose to slow down and proceed with caution, hence earning the real estate industry its reputation of technology laggards.
At Only With, we keep our finger on the pulse of innovation and technological change. We believe that our strongest asset is our people, which is why our biggest investment is on mentoring and training of the right skills and abilities. If you'd like to join our team or have one of our agents help you find the right property, reach out to us on our website.
Read the full Emerging Trends in Real Estate 2019 report.