Virtual reality tools are just now emerging as an effective communication and marketing tool for the real estate industry. More and more capital is placed into virtual reality and augmented reality technology, as the technology has potential for a significant impact in the real estate business. Virtual tours and virtual staging technologies have the capability to benefit both potential buyers and developers. For this reason, real estate players looking to stay ahead of the curve should look into rolling out a virtual reality experience.
How virtual reality is being used in the real estate industry
Virtual reality (VR) implies a complete immersion experience that shuts out the rest of the physical world. An example of virtual reality technology are VR headsets. By using a headset, users block out the outside world from their experience.
VR allows potential buyers or renters to go through a virtual tour of the property, thereby saving buyers both time and travel expenses. VR technology also allows for virtual staging. In other words, through virtual reality technology, real estate agents can show prospective buyers a fully furnished space, despite the space being empty in real life.
Augmented reality (AR) adds digital elements to a device, such as a smartphone or iPad. AR technology is changing real estate because it allows prospective buyers to experience a space, even if that space is not yet built.
For real estate companies, virtual tours allow real estate agents to market the properties with very little investment. Virtual reality allows real estate companies to market the finished project before construction completion as well. The technology allows agents to show both the interior and exterior of properties that aren’t yet built and also allows buyers to experience a space from the comfort of their home.
The major advantage of virtual reality technology in the real estate sector is it saves time for both buyer and seller. Additionally, VR technology is very convenient for the end user. Though the technology could prove cumbersome for older buyers to get used to, most young buyers on the real estate market are already familiar with doing business online, meaning properties equipped with virtual tours will be better positioned among this demographic.
Further, virtual reality technology provides a much greater outreach for marketers. These advantages put together should eventually culminate in financial savings. Any investor in the real estate business can benefit from incorporating virtual reality because the technology helps both find and keep tenants. The technology also supports real estate developers during the development stage.
Pros and cons of virtual reality in real estate
The first pro of using virtual reality is it allows real estate professionals to accurately visualize or understand a project, even before construction takes place. The technology allows brokers to show spaces with planned or contemplated movements.
Second, virtual reality technology saves time. Using virtual tours and virtual stagings, the search and review of a property can be done on a much quicker basis. Buyers and renters will no longer need to travel to a property’s physical site in order to get a feel for the property.
Third, VR technology cuts down on costly project marketing work. Combining these things together, VR has a strong potential to result in significant savings for landlords and other real estate investors.
During the development stage, virtual reality technology can also bolster operational efficiency, simulate training for onsite jobs, and increase construction workers’ precision and accuracy as they can constantly see a visual image of the final project plan.
Despite these positives, widespread adoption still lags behind because of complications in grasping the complexity of the technology. Although a VR headset offers the most realistic experience, the technology has failed to garner widespread interest. Adding to that, people may not want to share headwear gear because of contamination fears.
For these reasons, augmented reality, such as virtually showing a property through an iPad, could attract more interest. Further, commercial real estate organizations would also have to consider potential information and privacy risks as it relates to theft of intellectual property, such as development plans. In other words, the number one pain point for VR and AR technologies is that real estate companies would have to be prepared to share with their VR creator all the data and information needed to virtually build the project. That comes with data privacy concerns.
Lenovo (OTCMKTS: LNVGY) announced last year a partnership with Oculus (OTCMKTS: OVT), the market leader in virtual reality and augmented reality technology acquired by Facebook (NASDAQ: FB), to develop a more immersive VR headset. But augmented reality technology may attract more attention from investors, especially as people minimize interactions with others.
Driving factors of the growth of virtual reality in real estate
Expect continued growth of virtual reality in the real estate industry as investors keep pouring cash into proptech investments. Proptech funding is already off to a fast start this year, and though some of these investments cater to different segments of real estate, like rental search platforms, the rise in proptech funding highlights the real estate industry beginning to incorporate technology. The virtual reality market will be worth an estimated $80 billion by 2025, with $2.6 billion of that stemming from real estate, according to a Goldman Sachs report.
For example, the VR and AR technology will hope to tap some of the benefits of home staging. Forty percent of buyers agents said home staging had an effect on most buyers’ view of a home, and 83% of buyers’ agents said staging a home made it easier for a buyer to visualize the property, according to a home-staging report from the National Association of Realtors.
An increase in adoption of smart glasses in the healthcare sector is the major factor driving the growth of the augmented reality market. But expect augmented reality technology to gain even more interest, especially as people minimize gathering together.
Future use of virtual reality in the real estate industry
Along with its cost-saving benefits, virtual reality is revolutionizing real estate for its convenience. By using VR and AR technology, potential buyers are able to experience an area without having to travel to the property and tour the space with real estate agents. Real estate professionals can also market properties on a much wider scale, while still allowing potential buyers an immersive experience with the property.
This is especially useful for residential real estate, as the convenience of offering virtual tours will greatly shorten the time for prospective tenants to make a decision on a lease. Along with supporting the pre-lease stage, virtual reality technology also benefits workers during the development stage. As mentioned above, VR technology can bolster operational efficiency, simulate training for on-site jobs, and increase construction workers’ precision by way of a constant visual image of the final project plan.
The major pain point of VR technology is awareness. Interest has not spread on a mass level due to difficulties of access to VR headsets. For this reason, augmented reality, which uses a device such as an iPad to show renderings of a space, is a favorite to change the real estate industry.
As VR technology continues to become more cost-effective and the programs become easier to use, expect further adoption throughout the real estate community. Until then, AR technology is a particular favorite to gain interest among real estate players.