The work-life-play expectations of millennials are changing property preferences. For example, some buyers seek eco-friendly properties. They’re willing to pay more for homes that harvest rainwater and produce as much energy as they consume.
Macro-level uncertainties are affecting CRE fundamentals, including vacancy rates, leasing activity and investment. But opportunities remain if you’re agile, forward-thinking and understand local, asset, and macro-level nuances.
Tokenization
Tokenization is a new real estate innovation that could significantly impact the industry. It uses blockchain technology to create a digital representation of property that can be bought and sold on the market. This allows more people to invest in real estate, while also reducing costs and boosting transparency.
Real estate is traditionally illiquid, and this can be a big barrier to entry for new investors. Tokenization changes this by transforming property into small digital tokens (or “shares”). These can be traded on digital exchanges, making it much easier to buy and sell. Additionally, it can allow for fractional ownership, meaning that investors can purchase a very small slice of a property. This opens the door for many more people to invest in property, and it can help them diversify their portfolios.
One of the reasons why tokenized real estate is gaining so much traction is because it offers renewed liquidity opportunities. This can be especially beneficial for smaller investments, as it can reduce minimum investment amounts. Additionally, it can help reduce administrative costs by removing the need for traditional middlemen. Finally, it can increase transparency by allowing investors to view the history of transactions and ownership records. This will make it easier to verify authenticity and prevent fraud.
Moreover, tokenization can offer improved efficiency by automating transactional tasks and improving the quality of data. This can help real estate companies improve employee productivity and cut operational costs in the long run. According to a recent report by Deloitte, the potential of tokenized real estate has fueled interest in blockchain-based solutions.
However, it is important to note that these innovations are still very early-stage and may face significant challenges. For example, the regulatory landscape can change quickly, and it is not always clear how these technologies will be incorporated into existing real estate operations. Therefore, thorough research and careful consideration are essential before investing in any tokenized asset.
The blockchain is the key to this emerging technology, and it provides a number of benefits for real estate. For starters, it provides a secure, immutable record of ownership. This eliminates the need for intermediaries, and it ensures that the information is unbiased and transparent. It is also a great tool for reducing risks and costs, and it can be used to manage complex transactions that require multiple parties.
Smart Homes
As the tech boom continues to reshape lifestyles, it’s also revolutionizing real estate. Smart homes — abodes fitted with gadgets that allow control of lighting, ventilation, security and entertainment systems from a central hub — are becoming more desirable for buyers and investors alike. As a result, developers are taking note and designing spaces with built-in smart features.
In 2025, expect to see homes that feel more connected and custom-made than ever before. This is thanks to IoT technology and smart gadgets that connect with your home and offer an automated, personalized experience. Smart plugs, for example, transform ordinary wall sockets into remote-controlled devices that can be controlled via apps or voice assistants like Alexa. They can automate fans, lights and even appliances like slow cookers or curling irons. Smart lightbulbs can also detect occupants, adjust lighting levels and even turn on based on daylight availability.
Homeowners will also enjoy the convenience of controlling their appliances and utilities via a mobile app or their voice assistant, making it easier to stay on top of things when they’re away from home. And by scheduling appliances to operate during off-peak hours, consumers will be able to save on energy costs and reduce their carbon footprint.
Not to mention, smart homes are super slick and add that wow factor to a property, so they’re sure to catch the eye of anyone shopping for their next home or investment. Several studies show that homes equipped with smart tech sell faster and at higher prices than those without these nifty gadgets.
Smart tech isn’t only changing the way we live, but it’s also reshaping the way we work and play. From savvy property valuators to AI-enabled chatbots, this tech wave is crashing the party and changing up everything from how we communicate with one another to how property management takes care of its tasks. For instance, smart devices can help make viewings less stressful for homebuyers by enabling them to tour properties from the comfort of their couches. And savvy firms are tapping into these technologies to streamline the inner workings of their businesses, boosting productivity and customer service.
Virtual Reality (VR)
Virtual reality (VR) is a technology that creates an immersive environment for its users. It can be used in a number of ways, from entertainment to business and education. It can also be a valuable tool in real estate. VR can help potential buyers visualize the space and make a more informed decision about the property. It can also be used to train employees in safety and security protocols.
VR has gained popularity in the past few years and has many applications. However, it is important to remember that this technology is still new. VR headsets are expensive and can cause physical strain on the user. Additionally, they require a lot of data storage and have high power consumption.
One of the biggest uses for VR in real estate is 3D virtual home tours. These are becoming increasingly popular among skilled real estate agents. This allows buyers to tour properties from the comfort of their own homes. This is especially helpful for international and out-of-state buyers.
Another use for VR is architectural visualization. This technology can transform paper-based plans into 3D models. This can allow designers and builders to visualize the property and identify issues before construction. It can also reduce design time and save money. It can also be used to improve communication between designers and clients.
VR is also useful for training and simulations. It can be used to teach students how to handle stressful situations, like an emergency situation at work. It can be used in a safe environment, which will help students build confidence and skills that they will need in the workplace. It can also be used for training in a range of industries, including healthcare and manufacturing.
In addition to its use for training and virtual reality, augmented reality (AR) has become an important part of the real estate industry. It can help with marketing, showings, and customer engagement. It can even bring 2D floor plans to life through apps on mobile devices. It can also help with building projects by allowing construction workers to access the plans through AR glasses.
Artificial Intelligence (AI)
Artificial intelligence (AI) is being applied across the real estate industry to streamline operations, automate tasks and enhance the customer experience. AI is used in asset management, data analytics, building design, sales and marketing, leasing and more. The technology is becoming more and more popular as it is proven to increase efficiency, save time, and make businesses more profitable.
Traditional AI uses machine learning algorithms to perform complex calculations or analyze historical data to make predictions or decisions. It’s known for its precision and reliability, making it ideal for repetitive tasks such as analyzing market trends or conducting due diligence. It’s also used in areas where human error is risky, such as animal control or handling explosives. AI can also be used to perform dangerous work in remote locations such as deep ocean water, high altitudes or space, eliminating the need for humans to put themselves in harm’s way.
Gen AI is a more creative subset of the technology, using data to identify patterns and create new content, designs or solutions. The goal is to improve quality and increase innovation. Gen AI is a fast-growing category, with investment in the sector reaching $34 billion in 2023.
Across the industry, the potential benefits of AI are numerous. According to a JLL survey, nine in ten C-suite leaders believe that their companies will accelerate investment in AI over the next five years. However, it’s important to be aware of the risks associated with implementing this technology.
AI can be prone to biases in training data that may not be intentional, but create outputs with real consequences. It can also have trouble with recognizing ambiguous information, misinterpreting context and responding to complex questions. And finally, if an organization relies too heavily on AI, it could face privacy and security concerns, data loss or other business disruptions.
Despite its drawbacks, there are many opportunities to leverage the power of AI for real estate. Companies that embrace early proofs of concept and orient their tech stacks to enable use cases will be in the best position to take advantage of this transformative technology. But the industry must also address questions surrounding ethical use, data transparency, cost and risk, to ensure that the benefits of AI outweigh its downsides.
