New Tech that's Re­mod­el­ing Real Es­tate

Silicon Luxembourg - - IN FOCUS -

“CRE­ATIVE DE­STRUC­TION” REFERS TO THE “PROCESS OF IN­DUS­TRIAL MU­TA­TION THAT IN­CES­SANTLY REVOLUTIONIZES THE ECO­NOMIC STRUC­TURE … IN­CES­SANTLY DE­STROY­ING THE OLD ONE, IN­CES­SANTLY CRE­AT­ING A NEW ONE.” THE EX­PRES­SION IS MOST READ­ILY IDEN­TI­FIED WITH JOSEPH SCHUMPETER (1883-1950) WHO POP­U­LAR­IZED IT THROUGH HIS BOOK “CAP­I­TAL­ISM, SO­CIAL­ISM AND DEMOC­RACY”

(1942). WIKIPEDIA.

“Cre­ative de­struc­tion” is what we are wit­ness­ing in to­day's real es­tate world.

A mas­sive in­flux of pri­vate firms com­bined with de­creased pro­cess­ing costs and new tech­nolo­gies eroded the mo­nop­o­lies held by es­tab­lished com­pa­nies.

The trans­for­ma­tion of tra­di­tional busi­ness mod­els (“dis­rup­tion”) by in­no­va­tive star­tups has proved chal­leng­ing to the real es­tate value chain.

HOW TECH­NOL­OGY HAS REV­O­LU­TION­IZED THE TRA­DI­TIONAL MAR­KET

The real es­tate in­dus­try has turned a dig­i­tal cor­ner to meet the ex­pec­ta­tions of pri­vate in­di­vid­u­als and pro­fes­sion­als.

This im­pacts the en­tire value chain, from fund­ing, to home pur­chases to sub­let­ting.

DIG­I­TAL TECH­NOL­OGY HAS TRANS­FORMED HABITS, SUCH AS CON­SUM­ING, SELL­ING, RENT­ING OR BUY­ING (THROUGH AUG­MENTED RE­AL­ITY, ON­LINE VIEW­INGS, BID­DING ETC.), WHICH TRIG­GERED NEW OP­POR­TU­NI­TIES.

AU­TON­OMY/SELF-SUF­FI­CIENCY: RE­FLECTED IN SITES SUCH AS SKYSCANNER.COM OR BOOK­ING.COM

SKILLS & EX­PER­TISE: AS SEEN IN BIG DATA'S KNOWL­EDGE SHAR­ING

PROMPTNESS & RE­SPON­SIVE­NESS: SUCH AS CHAT­BOTS AND PRICE-COM­PAR­I­SON WEB­SITES

TRANS­PARENCY: AC­CES­SI­BIL­ITY OF IN­FOR­MA­TION

Thanks to in­no­va­tive, well-funded, mul­ti­pur­pose plat­forms, cus­tomers are in­creas­ingly re­al­iz­ing the value that tech firms bring to tra­di­tional es­tate agen­cies.

Fur­ther­more, they are more open to pay­ing fees as long as they get qual­ity ser­vice in re­turn. Con­versely, due to the medi­ocre rep­u­ta­tion of tra­di­tional agen­cies, cus­tomers are re­luc­tant to pay for stan­dard ser­vices.

Tech plat­forms are gain­ing ground, as seen in the pur­chas­ing process.

THE HUNT

Nowa­days, 90% of house-hunt­ing is done on­line (nearly 750,000 monthly on­line view­ings at Ath­ome.lu). It is one of the first ac­tiv­i­ties that quickly turned dig­i­tal. Po­ten­tial cus­tomers are armed with so much on­line in­for­ma­tion that fewer and fewer of them are call­ing es­tate agen­cies.

Cus­tomers have come to ex­pect ex­ten­sive on­line in­for­ma­tion about prop­er­ties for sale. Ads fea­tur­ing HD pic­tures (in­clud­ing lay­out, floor plans, etc.), videos (360°/Mat­ter­port or drone footage of ex­ist­ing con­struc­tions) and im­mer­sive view­ing of off-plan properites (Cog­ni­tyk Lux­em­bourg) re­ceive more re­quests for view­ing and more bids, re­sult­ing in quicker sales.

With chat­bots, AI gets the dis­cus­sion started and ad­vises the po­ten­tial buyer.

Sched­ul­ing prop­erty view­ings us­ing com­puter al­go­rithms can be ef­fi­ciently out­sourced (Flatsy). In gen­eral, cus­tomers can hardly tell the dif­fer­ence be­tween es­tate agen­cies nowa­days, mak­ing space for new play­ers to ap­pear:

RAT­ING AGEN­CIES LIKE IMMODVISOR MAR­KET­PLACES LIKE HOMEXPERTS IN LUX­EM­BOURG

REAL-ES­TATE AGENCY CER­TI­FI­CA­TION (FOR EX­AM­PLE, THE BRO­KER CER­TIFI­CATE IN LUX­EM­BOURG)

Low-cost agen­cies have now ap­peared (Pro­prioo, sin­gler­ate fee at €990), as well as on­line es­tate agen­cies with no phys­i­cal of­fice (ef­ficity). Some of these plat­forms even try to push the es­tate agent out of the deal (Noa­gent in Lux­em­bourg).

AC­QUI­SI­TION

A num­ber of new web­sites have emerged to help buy­ers find the best mort­gage on­line via a credit sim­u­la­tor. The aim is to com­pare of­fers in or­der to get the best one (as with air tick­ets, for ex­am­ple), es­sen­tially over­haul­ing the bro­ker­age busi­ness (Meilleur­taux).

If a fi­nan­cial guar­an­tee is needed, it can be pro­vided on­line ei­ther to po­ten­tial ten­ants (theguar­an­tors) or to the owner/ land­lord (Re­posit). Due dili­gence and doc­u­men­ta­tion can be out­sourced (lethq). MYNOTARY OP­ER­ATES A SMART DATA ROOM FOR DOC­U­MENT-SHAR­ING AND EX­CHANG­ING MES­SAGES BE­TWEEN PAR­TIES OF A REAL ES­TATE TRANS­AC­TION (REAL ES­TATE AGENCY, NO­TARY, BANK, IN­SURANCE COM­PANY, IN­SPEC­TION/AS­SESS­MENT FIRM).

FROM FIRST CON­TACT TO A PRE­LIM­I­NARY SALE AGREE­MENT, IT COL­LECTS VAR­I­OUS PIECES OF DOC­U­MEN­TA­TION (SUR­VEYS, BIRTH CER­TIFI­CATES, NEIGH­BOR­HOOD PLANS, ETC.). IT CAN ALSO SCHED­ULE AP­POINT­MENTS, ASK/AN­SWER QUES­TIONS AND PRE­PARE DRAFT AGREE­MENTS FOR FUR­THER DIS­CUS­SION.

MYNOTARY DIGITIZES A LINK IN THE VALUE CHAIN. THE CUS­TOMER CAN FOL­LOW UP HIS FILE AND TALK WITH THE NO­TARY OR REAL ES­TATE AGENT VIA A LIVE CHAT.

Le­gal sup­port is also avail­able on­line for con­tract draft­ing and sig­na­tures (Le­bon­bail), in­ven­tory on tablet (Homepad).

Data rooms are used to fa­cil­i­tate mul­ti­party di­a­logue, in­clud­ing the no­tary (Mynotary).

A thor­ough knowl­edge of the prop­erty is a strength and ex­ten­sive in­for­ma­tion can be col­lected from qual­ity plat­forms (in par­tic­u­lar the tech­ni­cal ones from BIM), com­ple­men­tary sites or open data re­sources (i.e. main­te­nance charges, cur­rent tax law, district map and pho­tos, neigh­bor­hood life, pub­lic trans­porta­tion, nearby shops and ameni­ties, etc.).

With an ac­cu­rate un­der­stand­ing of the po­ten­tial buyer's needs, the tar­get as­set can be more eas­ily spot­ted, re­sult­ing in faster de­ci­sions.

BIM (BUILD­ING IN­FOR­MA­TION MOD­EL­LING) IS A RE­AL­TIME BUILD­ING PROCESS BASED ON A SHARED DIG­I­TAL MODEL, WHICH IS FED BY ALL THE PAR­TIC­I­PANTS IN A BUILD­ING PROJECT. AN UP­COM­ING EURO­PEAN DI­REC­TIVE WILL MAKE BIM COM­PUL­SORY, AT LEAST FOR PUB­LIC CON­TRACTS.

The same plat­forms would al­low the cus­tomer to pay rent on­line, get the re­ceipt, ask ques­tions and carry out other ad­min­is­tra­tive tasks. The cus­tomer can in­ter­act with the man­age­ment com­pany, the owner or the neigh­bors (Sy­ment Lux­em­bourg), as well as tem­po­rar­ily rent out a park­ing space (Prendsmaplace) or cel­lar (Co­s­tock­age).

Cus­tomers can re­port tech­ni­cal is­sues and fol­low up on their smart­phones (Sy­ment Lux­em­bourg).

THE ROLE OF STAR­TUPS IN ALL OF THIS

In a 2016 sur­vey of Amer­i­can cor­po­ra­tions (Imag­i­natik & Mass­chal­lenge), more than 75% be­lieve that co­op­er­at­ing with star­tups is es­sen­tial, with 25% declar­ing that it has be­come ab­so­lutely nec­es­sary.

These huge com­pa­nies, along with many oth­ers, need to keep up with out-of-the-box im­prove­ments, which are less ex­pen­sive and quick to ap­ply, while meet­ing new mar­ket ex­pec­ta­tions. By working with star­tups, they tap into new busi­ness mod­els, new tech­nol­ogy and up­grades for clients.

The ma­jor­ity of large French cor­po­ra­tions has ded­i­cated pro­grams for star­tups in the form of in­vest­ment funds, in­cu­ba­tors, ac­cel­er­a­tors and shared workspaces. Modes of startup sup­port have been di­ver­si­fy­ing, so they are less in need of new funds.

Among star­tup­pers to­day, only a few strive to be ac­quired by larger com­pa­nies. The ma­jor­ity pre­fer to have just one “low-key” share­holder.

They see part­ner­ships as strate­gic and as a means to reach the mar­ket. How­ever, the in­creased im­por­tance of Deeptech may dis­rupt this ap­proach since tech­ni­cal needs, as well as in­dus­trial, com­mer­cial and hu­man ones, have be­come largely more im­por­tant than Proptech.

MOST RE­CENT IN­NO­VA­TIONS IN PROPTECH

DEEPTECH REFERS TO TECHNO-SCI­ENCE PRO­CESS­ING.

FOR EX­AM­PLE, KONIKU HAS DE­VEL­OPED A HY­BRID SMART-CARD COM­POSED OF A NEU­RAL NET­WORK OF 64 LIV­ING NEU­RONS (OR BRAIN TIS­SUE), WHICH IS DE­SIGNED TO EX­PLORE SEN­SORY CA­PA­BIL­I­TIES OF NEU­RONS FOR IN­DUS­TRIAL US­AGE.

All in­dus­tries are ex­pe­ri­enc­ing prod­uct in­no­va­tion and suc­cess arises when con­sumers are at­tracted by the ser­vice or prod­uct.

There are ap­prox­i­mately 20 uni­corns in this field, most of which are based in China.

Among the new­com­ers are Open­door, Com­pass (on­line bro­kers), Wework and Ur­work (dy­namic cowork­ing spa­ces), Homelink (home ex­changes), ten-x and auc­tion.com (on­line real es­tate mar­ket­places), SMS As­sist (uber-iz­ing house main­te­nance) and Katerra (end-to-end build­ing ser­vices provider). Uni­corns in the Proptech seg­ment, there­fore, cover a wide area, from on­line real-es­tate bro­kers to prop­erty man­age­ment tools, and from home­pages and com­puter al­go­rithms to on­line mar­ket­places.

So, are tech com­pa­nies dip­ping into real es­tate or is real es­tate go­ing dig­i­tal?

OPEN­DOOR ASKS OWN­ERS WISH­ING TO SELL THEIR PROP­ER­TIES TO FILL OUT A DE­TAILED AP­PLI­CA­TION FORM, WHICH IS COM­PLETED WITH A DOZEN AP­PLI­CA­TION RE­QUESTS FROM OTHER DATA­BASES (BIG DATA). THE COM­PUTER AL­GO­RITHM IS THEN ABLE TO SET A PRICE WITHIN HOURS. IF THE OF­FER IS AC­CEPTED, THE OWNER IS PAID IN A SHORT TIME.

ON THE SELL SIDE, OPEN­DOOR FA­CIL­I­TATES THE PROCESS BY EN­ABLING APART­MENT VIEW­INGS 24H/DAY, THANKS TO A SPE­CIAL DE­VICE SEND­ING A VIS­IT­ING CODE BY SMS.

SIG­NIF­I­CANT EVOLUTIONS TO COME

Ac­cord­ing to CB In­sights, since 2012 the Proptech in­dus­try has raised more than $6.4 bil­lion and funded more than 800 star­tups. Im­pres­sive num­bers since this ac­tiv­ity was prac­ti­cally in­ex­is­tent just four years ago.

Af­ter a KPMG sur­vey in 2016, in­vest­ment in this field could reach about $20 bil­lion an­nu­ally by 2020.

It is dif­fi­cult to fore­cast sig­nif­i­cant evolutions, es­pe­cially since the whole real es­tate in­dus­try was lag­ging be­hind.

(A 2015 Mckin­sey Sur­vey demon­strated that the real es­tate in­dus­try ranked no. 7 in terms of dig­i­tal­iza­tion).

Among evolutions which seem to be un­avoid­able are full dig­i­tal­iza­tion (as we are still very far from achiev­ing), and the fund­ing process, (as tra­di­tional play­ers are still call­ing the shots).

Re­gard­ing dig­i­tal­iza­tion, we will start with the dig­i­tal model BIM for all, which com­bines build­ing pa­ram­e­ters and de­scrip­tions of the item used (com­po­si­tion, prop­er­ties, ag­ing process). This will in­clude the dig­i­tal­iza­tion of all ac­tiv­i­ties (con­struc­tion works, main­te­nance, clean­ing, im­prove­ments etc.) whether man­u­ally (izigloo), or through IOT and RFID tags.

IOT will per­mit home au­to­ma­tion at af­ford­able prices, as well pro­vide sta­tis­ti­cal data on per­for­mance (Vi­voka). It will also of­fer ac­tual con­sump­tion and pre­dic­tive main­te­nance.

In ad­di­tion, en­vi­ron­men­tal data and as­sess­ment, such as acous­tics, air qual­ity (plume­lab), odor mea­sure­ment (Ru­bix), so­lar ac­tiv­ity (Solen) and lo­cal ser­vices in real time (mo­bil­ity, con­ve­nience stores), will be pro­vided. The owner and the ten­ant will be­come full con­trib­u­tors into the prop­erty sur­round­ing (Sy­ment).

They can eas­ily and di­rectly ex­change views with their neigh­bors (through a so­cial net­work for the neigh­bor­hood), pro­mot­ing a shar­ing econ­omy, pro­duc­ing and pur­chas­ing en­ergy (smart grid and blockchain), and car­ry­ing out main­te­nance and ren­o­va­tions smoothly (VTS or SMS As­sist).

In terms of fund­ing, the real es­tate busi­ness runs a whole value chain, which is quite frag­mented be­tween the prop­erty in­vestor, the real es­tate de­vel­oper and the build­ing con­trac­tor, each one gov­ern­ing its own data. That's a lot of par­tic­i­pants claim­ing their dues.

Real es­tate crowd­fund­ing has been grow­ing sig­nif­i­cantly as prop­erty de­vel­op­ers find it more and more ap­peal­ing be­cause it al­lows them to in­de­pen­dently raise funds.

(In 2015, real es­tate con­sti­tuted $3.5 bil­lion or 10% of the to­tal amount of crowd­fund­ing. World­trade Cen­ter)

Iron­i­cally, bank­ing in­sti­tu­tions have started to en­ter crowd­fund­ing plat­forms.

Ac­cord­ing to Robin Ri­va­ton, Gen­eral Man­ager of Paris Re­gion En­ter­prises, the plat­formiza­tion of a large part of the busi­ness will add value. It al­lows de­creased op­er­at­ing costs and en­hanced cap­i­tal flows by re­fin­ing in­for­ma­tion on mar­ket prices (com­par­ing es­ti­mated sale prices from prop­erty de­vel­op­ers with ac­tual sale prices).

Ver­ti­cal in­te­gra­tion is an­other ad­van­tage of these plat­forms, as they en­able chan­nel­ing of in­for­ma­tion. Up un­til now, the real es­tate de­vel­oper iden­ti­fied the prop­erty and the prop­erty in­vestors ac­knowl­edged this ex­per­tise and knowhow.

Star­tups can now ac­cess the data (Kel­foncier digitizes all ur­ban mas­ter­plans in France, and keeps them up­dated), while the crowd­fund­ing plat­forms can take ad­van­tage of it.

In the fu­ture, these plat­forms will gather data and will be able to know more (just like IBM Wat­son in on­col­ogy treat­ments). Once in­for­ma­tion asym­me­try has been dealt with, crowd­fund­ing plat­forms can act as prop­erty de­vel­op­ers (Lymo).

WHAT WILL THE FU­TURE ES­TATE AGENT LOOK LIKE?

“The fu­ture of real es­tate is in Proptech.” HERVÉ PAR­ENT

HERVÉ PAR­ENT IS THE OR­GA­NIZER OF THE AN­NUAL FAIR RENT (REAL ES­TATE AND NEW TECH­NOLO­GIES).

WHAT CAN WE EX­PECT TO SEE?

BIG DATA TO IDEN­TIFY ES­TATES BLOCKCHAIN TO RECORD TRANS­AC­TIONS

3D PRINT­ING FOR SWIFT PROP­ERTY CON­STRUC­TION, ALMOST WITH­OUT BUILD­ING WORK­ERS

SALE PLAT­FORMS FOR MAR­KET­ING WITH IM­MER­SIVE VIEW­INGS (THE AS­SET, THE BACK­GROUND, NEIGH­BOR­HOOD AND LO­CAL SER­VICES, AV­ER­AGE POP­U­LA­TION AGE, CON­VE­NIENCE STORES, TRANSPORTATIONS, TAXES, ETC.) BY MIX­ING VIR­TUAL RE­AL­ITY AND AUG­MENTED RE­AL­ITY.

In this ex­treme case, the es­tate agent is ob­so­lete, though this is still un­likely in the near fu­ture.

Even if the dig­i­tal as­pect grows sig­nif­i­cantly, it does not seem re­al­is­tic to get rid of all hu­man in­volve­ment. For the agent, the aim will be to seek complementarity be­tween hu­man and al­go­rithm, us­ing dig­i­tal tools to in­crease knowl­edge, pro­duc­tiv­ity, ef­fi­ciency and trans­parency for new in­no­va­tive ser­vices that will be re­spon­sive and avail­able 24/7.

BLOCKCHAIN CAN PO­TEN­TIALLY RE­PLACE ALL CEN­TRAL­IZED TRUSTED THIRD-PAR­TIES (NO­TARY, LAND REG­IS­TER), WITH A DE­CEN­TRAL­IZED COM­PUT­ER­IZED SYS­TEM. GHANA, HON­DURAS AND SWE­DEN HAVE STARTED TO EX­PER­I­MENT WITH THIS.

Newspapers in English

Newspapers from Belgium

© PressReader. All rights reserved.