Digitization and PropTech: New Opportunities Arise in Real Estate

Known as one of the most stable investments, the real estate industry is feeling the impact of digitization. Similar to ride-hailing’s impact on the automotive industry, the gig economy is causing a shift down in demand for commercial real estate space. As technology enables people to work from any location, including from home, the economy requires less office space. The co-working commercial real estate sector is expected to experience 22% annual growth, posing an additional threat to traditional commercial real estate players.

AI and data collection have also impacted the industry, particularly in the brokerage sector. Technology has enabled more accurate property valuation, which has previously been unreliable and required cumbersome and expensive assessment by professionals. Digitization will disrupt the brokerage industry as property information previously only held by realtors is unmasked to the consumer.

Additionally, wifi-connected technology has had a large impact on the personal appliance industry, as seen by smart appliance revenue growth. Smart appliances, ranging from fridges to coffee makers, provide the opportunity to collect detailed data on occupants. As with connected cars (Teslas for example), smart appliances enable firms to sell new services throughout the lifetime of a product. Additionally, smart home technology and appliances allow for more efficient building management and upkeep. Similar to the automotive industry, cost is a primary obstacle to smart appliance adoption, indicating adoption growth as the cost of production is expected to reduce as well.

As technology improves and customers’ expectations evolve, real estate investors who adapt have the opportunity to seize new revenue streams and minimize costs.

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Sources:

• https://www2.deloitte.com/us/en/insights/focus/future-of-mobility/micro-mobility-is-the-future-of-urban-transportation.html?id=us:2ps:3gl:confidence:eng:cons:42319:nonem:na:nhRV7UOl:1149484916:344865936403:b:Future_of_Mobility:Micromobility_BMM:nb

• ftp://public.dhe.ibm.com/software/pervasive/info/tech/gsoee203.pdf

• https://www.forbes.com/sites/unicefusa/2020/02/12/if-we-want-these-children-to-stay-safe-there-are-no-shortcuts/#5616b804190c

• https://www.bisnow.com/national/news/office/developers-keep-developing-but-the-future-of-office-demand-looks-to-shrink-more-102197

• https://builtin.com/consumer-tech/real-estate-technology

• https://www.statista.com/statistics/886153/share-of-households-with-connected-car-in-the-united-states/

• https://www.ey.com/Publication/vwLUAssets/ey-disruption-digitalization-disintermediation/$File/ey-disruption-digitalization-disintermediation.pdf

• https://www.ey.com/Publication/vwLUAssets/ey-disruption-digitalization-disintermediation/$File/ey-disruption-digitalization-disintermediation.pdf

• https://www.mckinsey.com/industries/travel-transport-and-logistics/our-insights/travel-and-logistics-data-drives-the-race-for-customers