Phrases like ‘IoT’ and ‘Industry 4.0’ are being used excessively today indicating how technology has drastically changed the way we think, live and work. Let us take a moment to properly understand these terms before analysing their impact on the real estate sector.
The ‘Internet of Things’ or ‘IoT’ is a concept that promotes the idea of everyday physical objects being connected to the internet and henceforth, being able to identify themselves to other devices. It aims at embedding automation and technological processes in devices beyond laptops, smartphones and other electronics. While ‘Industry 4.0’ refers to a new era in the Industrial Revolution that focuses mainly on the inter-connectivity of systems, automation, machine learning, and real-time data.
With technology embedded into our everyday lives, the impact is all pervasive and can be seen across all sectors of business. In this piece, we will be analysing how real estate as a sector has also felt the impact of technology transformation and to what extent. We will also discuss how digital innovation is changing the way business is done in real estate.
Technological disruptions are affecting all sections of real estate assets as future-ready technologies continue to transform offices, residences, retail stores, warehouses, logistics, etc. Real estate frameworks are undergoing a major change as the way the general public work, shop and live is changing.
E-Commerce vs Physical Stores
E-Commerce players provide features and services that include high discounts, flexible delivery options, personalised suggestions, and a wider array of products that are attracting the majority of the crowd. Discounts and promo offers are the prominent reasons for half the shoppers to buy online, as per a recent analysis provided by PWC. The escalating preference for online shopping is evident from the inception of online retailers like Amazon.in, Flipkart, and Myntra in India.
Even in the United States, around 140 departmental outlets belonging to the American retail giant, J.C. Penney have been shut down before 2018 – 14 percent of the total stores. This decision was taken in response to the advent of E-Commerce. Similarly, Macy’s also has decided to shut down 68 of its stores in 2017 after closing dozens back in 2016. This pattern has been adopted by other big retailers in America, as earlier in May 2017, luxury fashion brand Michael Kors announced it would be closing 125 of its 800 stores until 2020.
Online Property Listing and Digital Trading
In its simplest form, digital marketplaces started off as a platform for listing residential, commercial and retail properties. New platforms have now been developed which facilitate online trading and transactions. REX and CREXI are online platforms that provide buying and selling services at a nominal fee, compared to those charged by traditional brokers. Build-Next is a start-up business from Kerala which offers comprehensive solutions for all construction needs. It is an online platform providing best offers in building materials at reasonable rates across India. Similarly, Livspace is a Bangalore-based home design business. It is a technology that clients can select from a plethora of interior designers and contractors. Currently, it has expanded its operations across metros like Delhi, Bangalore, and Mumbai. These inceptions have significantly reduced the role of brokers and physical real estate agents.
Smart Homes And Automation
The Internet of Things, as explained above, is already shaking up the real estate industry at a building level. Homes now have devices which can be remotely controlled via the internet or through Wi-Fi connectivity. This concept can be expanded to neighbourhood level and district level as well under smart cities programmes.
Is it observed that millennials are willing to spend more money on a place with smart home technology already implemented. People are amazed by smart home technology like smart thermostats, leak detection sensors, and home security. As homes have gotten smarter, so has real estate. Smart tech enables homes to run much smoother while making users’ lives much more convenient. This tech is steadily branching out to real estate, making houses not only more convenient but much more attractive to potential buyers – basically future ready.
The traditional real estate business in India is gradually being replaced by new concepts and business models. The real estate service providers will have to analyse ways and methods to innovate their services. If they don’t, some of the current players may have to shut down or form strategic collaborations. In today’s era, it is of utmost importance to speed up the application of innovative and disruptive technologies in the real estate sector to keep up with dynamic business needs and solutions.