The future of real estate is technology
Technological innovation in the real estate industry is being compounded every year. The new real estate tech and digital services available are promising and should be explored by all investors. The future of real estate is certainly a technology-heavy one. Here are a few niches to keep an eye on.
Smart Homes: Investors will double down on a new wave of smarter home devices that will improve safety, utility expenses, and environmental sustainability. A rental property with smart- home devices will also be more appealing to a technology-savvy renter demographic.
Automation: Automating processes and tasks will become increasingly popular in the future of real estate. Financial reconciliation, rent payments, and maintenance checks through smart devices are only the beginning as more complex processes such as closing and underwriting are also becoming more automated.
Construction: There are already a number of startups disrupting the construction industry. These include material science, prefabrication technology, construction automation, modular buildings, and 3D modelling.
Blockchain Technology: A digital ledger can act as an official record for many aspects of real estate, including leasing, transactions, and legal title. There are several tech startups working on these types of platforms, which will reduce the need for traditional industry intermediaries.
The result of better technology is a rise in digital platforms, which will change the traditional brokers in real estate -- yes, this means the real estate agent, broker, and brokerages. If the rise of iBuying wasn’t enough, a legacy real estate professional will need to innovate to remain competitive and relevant in the coming decade.
Airbnb reduced the need for traditional travel agents, Uber changed how the taxi industry operates, Amazon disrupted traditional retail operations, and the list goes on. There are significant property technology (referred to as "proptech") advances that aim to disrupt all traditional intermediaries in real estate.
The closing process, finding tenants, buying and selling properties, legal paperwork, property maintenance, and so on will all require less human touch and rely more on digital platforms and technology to operate. In the future of real estate, connecting a buyer and seller through technology will only get easier.
If you’re currently a real estate professional who is an intermediary, you’ll need to adjust your technology game rapidly to remain competitive.
The future of real estate is accessible
Along with the rise in digital platforms on the service side, the future of real estate will see a continuation of the dramatic increase in accessibility of real estate investment vehicles in the coming years.
REITs: More than ever, Real Estate Investment Trusts (REITs) are booming and give a real estate investor the opportunity to invest in proven real estate businesses in specific industry niches. For instance, if you want to gain exposure to commercial real estate assets in the warehousing industry, then you can directly invest in REITs like EastGroup Properties (NYSE: EGP). Or, if you are bullish on data centers, you don’t need to spend millions of dollars opening one yourself, you can invest directly in a proven business like Equinix, Inc. (NASDAQ: EQUIX) or QTS Realty Trust (NYSE: QTS).
Investing at a distance: The future of real estate powered by technology is one where more and more investors can invest at a distance. By no means the only one, platforms like Roofstock offer turnkey manage-at-a-distance services for investors who want to explore different markets.
Investment platforms: Similarly, digital platforms like Fundrise give investors digital access to a myriad of vetted real estate syndications. We are seeing more platforms like Fundrise come online, giving investors more options on where to invest their capital.
Accessibility to real estate investments has been increasing over the years and will continue to in the foreseeable future.
The bottom line
Real estate is a legacy industry. This means it’s slow to change and innovate. The pandemic has fast-tracked many industry changes that were already underway, including remote work, technology adoption, and the rise of smaller real estate markets.
The future of real estate is a bright one and includes many advances that will improve how we as investors operate our businesses and deploy our investment strategies. The risk lies in not acknowledging and preparing for these trends, thus getting disrupted and left behind.