Whenever there are questions about the economy, individual industries are scrutinized, and real estate is no exception. Following the COVID-19 pandemic and a slow, and for some non-existent, return to the office, there have been questions if an industry recovery is possible.
If physical assets are involved, such as real estate, there’s always a good chance for an industry to bounce back, proptech company Propy CEO Natalia Karayaneva recently wrote for Forbes. Existing and yet-to-be launched real estate technology is a main reason for Karayaneva’s optimism for the industry’s future.
“I believe the true disrupters of the real estate market have yet to emerge,” Karayaneva said. “As we’ve seen in other industries, it often takes young, agile tech startups to revolutionize consumer behavior and outmaneuver legacy businesses.”
Here are three key trends Karayaneva believes will transform the real estate industry.
Artificial intelligence (AI) could boost the real estate industry in a number of ways, according to Karayaneva. First, generative AI can create more accurate and precise representations of properties. It can also recognize different building types and create property descriptions based on buyers’ feedback and market trends.
Additionally, AI can automate document review and analysis. It can also create personalized real estate listings based on data from sources such as social media. AI’s automation capabilities can take certain tasks off of real estate professionals’ to-do lists so they can focus on more critical assignments without having to put anything off for later.
Karayaneva also warns of AI’s potential downsides — inaccuracies and bias. AI algorithms are trained on data and if that information isn’t correct, is incomplete or biased, those are the types of results the AI will produce.
Currently, traditional architects and interior designers are using AI tools to save time as they insert their ideas into 3D spaces. This practice could be used in real life real estate development and furnishing.
Decarbonization and Sustainability
The real estate industry remains one of the biggest causes of carbon emissions. This is partly the result of the energy it takes to heat and cool buildings, as well as how much electricity properties need to function.
More businesses and property owners are taking action to help decarbonize real estate not only because it’s beneficial to the environment but because it’s an incredible cost-saving measure. Being more conscious of a building’s carbon footprint can help lower energy bills and maintenance costs. The improved air quality makes a better living or working environment for tenants. Plus, buildings are more attractive to potential tenants as they’re increasingly seeking properties that are energy efficient and sustainable.
“The real estate industry is the single largest CO2 emitter on earth and explosion in real estate-related climate technology has also begun, covering not only software but also hardware and material technologies that can decarbonize the industry,” Brendan Wallace, co-founder and managing partner of proptech venture capital firm Fifth Wall, said. “The interconnectedness of automation and smart-building technology with decarbonization will become increasingly obvious as smarter assets can be more sustainable assets.”
More investments in proptech
Confidence in property technology, or proptech, from a financial standpoint has had its ups and downs in recent years. Global venture capital funding in proptech fell from $32 billion in 2021 to $19.8 billion in 2022 — a 38 percent decline, Forbes reports.
The proptech investment trend has gone up during the past five years despite this decline, according to Karayaneva. From 2017 to 2021, proptech funding went from $10 billion to $32 billion. The upward trend points to how important tech has become to real estate, especially when it comes to how properties are bought, sold and managed. Proptech investments are likely to increase as the market is projected to reach $94.2 billion by 2030, according to Grand View Research.
Proptech funding also presents the chance to enhance job creation and economic growth, according to Karayaneva. If it’s easier to buy and sell properties, the time that proptech saved all parties could be put towards other economic activities, creating opportunities for people to reach their financial goals.
“These trends have the potential to not only change the direction of the real estate industry but make significant changes to consumers’ lifestyle experience and financial stability,” Karayaneva said. “(Real estate) is one of the most significant assets in one’s life and it also contributes heavily to the carbon issue, and thus these trends must have the space to take effect and help society.”