Technology is increasingly playing an important role in the Indian real estate sector. Property technology, also known as ‘proptech’, made its presence felt in the Indian real estate market around 2005, when we saw the emergence of online real estate marketplaces such as 99 Acres, and more recently Housing.com, etc. These portals disrupted the way home buyers bought property, by allowing them to look for properties from the comfort of their homes and compare the specifications of different properties online. While these online real estate marketplaces have not completely replaced real estate agents, they have created opportunities for a more transparent and improved home buying process.
Typically, home buyers visit multiple properties, before deciding on the one they want to buy. However, this is a time-consuming process. Online marketplaces have started using 3-D modelling and virtual reality, which allows potential home buyers to do a virtual walkthrough of a property, without visiting it. A Goldman Sachs report says that by 2025, virtual reality will be a USD 80-billion market, with real estate accounting for USD 2.6 billion of it. In India, many technology start-ups and popular online real estate marketplaces, offer virtual reality tours of properties.
How artificial intelligence can minimise costs in real estate
While the real estate sector has not always been quick to adopt technology, the changing nature of the industry is forcing it to re-examine the way business has been traditionally done. The industry is now a lot more open to adopting technologies, such as artificial intelligence (AI), which has the potential to improve many facets of the industry. AI is the ability of a machine to solve problems by learning, over time. It has the potential to replace many routine tasks in the real estate sector.
In the pre-construction stage, AI can be used to ensure that there are no flaws in the construction plan, to avoid frequent changes in plan during the construction process. Data analytics has assumed a lot of importance in real estate. Real estate companies can use AI algorithms, to make sense of vast realms of data and improve areas of business, such as marketing, finance, accounting, etc.
AI-powered ‘chatbots’ on websites, can be used to handle routine queries from customers about properties. Globally, many real estate companies are incorporating ‘chatbots’ into their websites, to engage with customers. This allows companies to save on cost of servicing customers and optimise time spent on answering routine questions.
Artificial intelligence can also make buildings smarter and safer. AI-enabled security systems offer automated voice and facial recognition, which can improve the security of homes. AI can identify temperature levels and energy consumption of a building, thereby, helping in saving energy. It can be used to analyse the data of a building, which can go a long way in reducing operational costs and improving efficiency.
What is blockchain?
Blockchain is another disruptive technology, which can make a big difference to the Indian real estate sector. Blockchain is essentially about sharing databases and processes. It uses concepts such as artificial intelligence and internet of things, to make processes run by integrating databases in real time. For instance, if a user is working and editing a document on the web, another user can simultaneously work on the same document, without disrupting either person’s work. The document can be updated by both users in real time.
In blockchain, sharing of data is seamless and non-corruptible, as it is transferred in an encrypted mode. It is less prone to virus attacks, because the data does not sit in one centralised location. Blockchain technology can be used in the real estate sector in many ways. It can help in standardising and securing real estate data. In fact, wherever data comparison, verification, authentication and assimilation are required, blockchain can be applied. The technology can be used over the entire life cycle of a project, from the pre-feasibility stage to the execution stage and maintenance of projects.
Advantages of blockchain technology for real estate businesses
Many processes within the real estate development life cycle such as product specification, pricing, smart contracting, procurement, property registration information, project progress, customer profiling, product design, customer preferences, etc., can be processed through the blockchain technology to reveal realistic data, which can be used as business intelligence to drive sustainable operations.
The primary benefit of blockchain is that it can be a direct link from business to service and vice-versa, without any intermediaries, thereby, saving on cost, time and clutter. For instance, procurement of goods and services is always a complicated process for developers, because they do not know whether the price they are paying is the lowest and whether the source they are buying from is reliable. Blockchain technology offers real time transactional data on raw materials. This can help the buyer to choose the right source and the right pricing. The limitation of blockchain technology in real estate, depends on the user’s vision, which essentially means that it can have different implications for different users.
Transparency in land records
Another example of blockchain’s application in the real estate sector, could be in making a central land title database for the entire country, which can store historical land title records. Land records are critical to the property market, as it decides the ownership of property. Land title records in India tend to be fragmented and unclear. Blockchain technology can help buyers, in determining the title of land, ownership details of the land, number of transactions that have happened on the land parcels, land disputes, etc. This information can save time, cost and avoid fraudulent land deals. This will lead to improved transparency and protect buyers.
Blockchain can even enable crowd ownership of property. For instance, a group of people who cannot afford to buy a hotel on an individual basis, can come together through an online process, to buy a part of the hotel, as a share. Let us assume the investors put in money, according to their investment capacity and the hotel is bought in physical form. The hotel could then be given on lease to a company such as Airbnb and the hotel can start generating revenue. This revenue can then be shared among investors as per their investment exposure. Blockchain can make this entire process seamless and eliminate the need for intermediaries.
Similarly, the application of blockchain can lower the overhead costs for REIT listings. Blockchain technology can radically change the way real estate business has been done, by bringing in more speed, efficiency and global benchmarking. Organisations, which adapt and adopt blockchain technology, can expect exponential growth, because of the information and transaction edge that they will have in real time.
Technologies such as virtual reality, artificial intelligence and blockchain, will transform business models in real estate and those who do not keep pace with the changes, risk becoming redundant.
(The writer is head of training and product development, RICS South Asia)