The future of real estate: marketing
The marketing and sale or renting of property has long been one of the core roles of estate agents at all levels, from the local to the global. That role is now been challenged by the rise of PropTech (and FinTech) applications.
The most notable area of innovation has been in relation to the growth of the ‘shared economy’ (also known as ‘collaborative consumption’) in which owners of property rent out the whole or part of a property they are not using, such as a house or office. This fits the trend, mentioned in the previous Step, towards property being conceived as a service rather than a product.
The residential/accommodation sector has led the way. For example, Airbnb, with over four million listings, is now the biggest hotel chain in the world. However, the model is increasingly being used to provide flexible work and storage space in the commercial sectors of office, retail and even manufacturing and warehousing.
In terms of PropTech, the shared economy is defined as technology-based platforms which facilitate the use of real estate assets. These can simply provide information for prospective users and sellers of space, or they can more directly facilitate or manage rental payments or fee-based transactions. More widely, information technology can be used to support marketing activity through:
indoor mapping (eg models using 3D renderings and visualisations),
virtual or augmented reality and
on-line estate agency services for property sales, such as sales and brokerage.
Virtual Reality view of what the IQL development will look like. © Lendlease.
In the FinTech side of the industry, property marketing is also being affected by innovations in the area of transactions. According to Professor Baum’s research, 75% of the applications in FinTech are focused on improving transactions. The main areas of activity have been:
the development of on-line property search engines
increasing use of online transaction processes and
virtual reality viewing platforms.
In the residential sector, firms like Zoopla, Rightmove and Zillow are providing increasingly sophisticated information on individual properties and local market areas, whilst Purple Bricks is an example of a totally on-line, technology-enabled estate agent. On the commercial side, CoStar and Geophy provide a package of property market research and information to clients. And there are moves towards the use of machine-learning and artificial intelligence taking over areas of professional advice, by matching households or firms to available property, and finding comparable properties to aid (or even do) valuations for the clients.
Another innovation to speed-up the buying and selling of property is for PropTech companies to step-in and purchase property from sellers prior to selling it on to buyers. Open Door have started to do this in the residential sector whilst companies like Global Alternatives and IPSX are similar examples in commercial property.
Blockchain is another innovation that is likely to impact on marketing and sales. By bringing all the parties involved in property transactions into one seamless and integrated ‘chain’, Blockchain technology should be able to improve the efficiency and speed of the marketing/sales process.
A virtual reality view of the green wall on the IQL development. ©Lendlease.
Although sustainability has not been mentioned in relation to property marketing so far, it’s obvious that the location, supporting infrastructure and building quality will continue to be significant factors affecting demand for residential and commercial property. We’ve already heard of the rise of the ‘green building premium’ in which the sustainability of property assets will influence their price and the marketing process more generally. The discussion of green buildings is widening to bring-in the more general concerns including:
supporting facilities and
issues of health and well-being.
These are also important considerations for the knowledge-based firms and workers who generate economic activity in the global city networks.
© HBS and RREF