‘In every crisis, there is an opportunity’ – Albert Einstein
The famous philosophy couldn’t be more apt right now. The COVID-19 outbreak has paved the way for a rapid take up of property technology (PropTech) platforms during early this year. Top companies started innovating like never before and the industry was welcoming them with open arms. One witnessed the surge in people utilizing the platforms to streamline administration, reduce manual processing, or even to enhance property presentation by providing 360-degree photos, video tours, and aerial photography, to name a few.
The current buzz-word or flavour of the season, whatever you may want to categorize it into, there is a lot more to this sector than just a technology solution. Megha S Anthony talks to experts in the industry on this sudden interest and the scope it has in the region.
ACCEPTANCE AND CHANGE IN OUTLOOK
When we look at the sector on a global front, the industry is far more advanced compared to the Middle East counter-parts. Unissu is an online global platform that connects buyers and sellers of PropTech and ReTech across the world. And according to James Dearsley, the Co-Founder of the company, the platform has companies that were created way back in the 1800s, “In particular security firms whose first 'innovation' was the door lock for example,” he says while adding, “In reality, PropTech is purely a marketing term for the new age, a frame of reference that people can gather around.”
However, in the Middle East, PropTech is growing at a rapid speed with more and more start-ups thinking beyond the box to cater to the challenges of the real estate industry. Part of this can be attributed to growth in digital transformation within the industry including areas such as asset digitization, predictive analytics in real estate asset performance, IoT in workplace management, and data analytics surrounding overall market performance. Says Mark Hamilton, Head of Digital Solutions, MENA at JLL, “Because many of these technologies are new it gives way for PropTech companies to develop and innovate solutions tailored to the specific technology subsets. Many developers and occupiers are excited about these technologies and have objectives of implementing these technologies within their real estate portfolios.”
Home Owners Direct (HOD) is an e-commerce property portal that has marked a regional first in the property sector with its comprehensive technology-driven platform that connects property owners with buyers and tenants directly for free. On this UAE based digital platform, they can meet directly to negotiate and reach private agreements on property sales and rentals. According to Martin Altmann, Commercial Director, hod.co, they are witnessing a growing relevance for peer-to-peer, innovative PropTech models and in turn making more informed decisions within the real estate sector. “Today the tech-savvy have access to information at their finger-tips. They research online, access peer reviews, interact and exchange information, all in real-time, and have a strong understanding of the value of investing in property. This means real estate marketers must have a strong online presence to increase their business. Obviously, a potential home buyer wants to see the home in person, but first, they will check about it online, which makes for a more informed buying decision,” adds Altmann.
Even closer home, in the UAE the government is focused on a smart transformation in all its sectors including the Real Estate. For example, the Dubai Land Department has announced its plans to deploy blockchain technology to create smart contracts that will enhance the speed of real estate transactions, which will be how future business will be conducted.
The real estate business model has primarily been dependent on interpersonal interactions between various stakeholders – sellers, agents, financial institutions. As the times change, the business has to evolve or perish, and the growing demand of the dot com generation resulted in the first wave of PropTech – property portals, which gave a unique platform for customers to view multiple properties without leaving the comfort of their home. Lynnette Abad, Director, Research & Data, Property Finder, has observed how consumers have changed the way they search for property.
Today they have a lot more information and data on their search along with features to ease their experience, she says. “We have seen significant advancements in algorithms and machine learning to assist with the consumer journey. We have also seen digitization efforts to make the real estate process a seamless online transaction and data has become an essential piece in all PropTech initiatives. This is where most of the advancements have been made and will continue in our region,” she adds. The real change, Dearsley notes is the fact that there has been more of a mentality shift than a technological change.
“I have seen significant, and global, progress in the last two years that something needs to be done about user experience and customer-centric approaches to our real estate industry. Our customers have jumped on the technological bandwagon long before us as a sector. We are now trailing our customers and they are getting frustrated. The market and our customers are now moving faster than we are and it is time to catch up,” adds Dearsley. Another main struggle that Hamilton observes within the industry is how to integrate these technologies to provide a clear Return on Investment and generate value for the end-users.
“We will see a major trend within the next two years where the value proposition and integration of data will become standard in the industry and hence there will be much wider adoption of Digital Twins. Once this occurs we will see major growth in both the role of Prop Tech within the industry and overall digital transformation,” he adds.
Impact of Pandemic
The pandemic has been the fuel on the fire for digital transformation. Dearsley says that in the pre- COVID era one could see that the real estate market was adapting to technology at different speeds and facing different challenges. “The pandemic created a level playing field to an extent. Customers and industry professionals were all taught a significant lesson and this mentality shift was suddenly accelerated, irrespective of geographic location,” he adds.
In the region, Hamilton says that pandemic has caused a lot of changes in the Real Estate Technological Applications. And this can be seen in many ways, including, the implementation of remote working. “This has impacted at least in the short term how office space is being utilized and has led to an increased demand for IoT based occupancy and movement sensors and even temperature reading devices,” adds Hamilton. Additionally, due to the change in workplace occupancy patterns; increased emphasis on workplace wellbeing; and initiatives to further cut costs due to an economic slowdown related to the pandemic – operational efficiency and building sustainability begin to play a much larger role. “This includes IoT devices for CO2 monitoring, optimizing the performance of mechanical equipment due potentially less densely occupied offices or non-traditional hours and finally ensuring sensors and automated energy-saving fixtures and devices are installed wherever possible,” says Hamilton.
For platforms like hod.co and Property Finder, agility was the key during the pandemic. “By integrating PropTech thinking into how we operate, many firms have been able to remain focused,” says Altmann. He goes on to add, “Buyers and sellers are using this time to research the market in more depth and use technology to explore further. Stay at home protocols have been mitigated by live online viewing capabilities and virtual tourism has kept interest from international markets afloat and in some sectors, thriving.”
Altmann also observes that developers have made great gains in ensuring that the market has a healthy supply of affordable homes. “For many expats, uncertainty about conditions in their home countries may lead to greater interest in investing in the UAE market. The UAE has been very proactive in getting ahead of the Covid-19 issue and this should inspire longer-term consumer confidence. As the government has looked to mitigate the spread of the disease and at the same time, shore up businesses affected by the pandemic, the market should be able to navigate these choppy waters,” he adds.
Abad says that innovation was at its peak for them and ended up creating some very useful products for both B2C and B2B clients. “One of our B2C products, which we created very early on in the crisis stage, was called Live Viewings. This technology was created internally in eight days and integrated with YouTube technology which allowed real estate agents to stream a live viewing of a property where consumers can see the viewing in real-time and interact with the agent during the viewing all through the Property Finder website.
This technology proved to be extremely useful during the lockdown, deals were closed via this product during the crisis and it also became and still is a very useful tool for consumers to narrow down their property search in the comfort of their own home, without having to go and visit each and every property,” she explains. While on the B2B side, they made use of webinars with over 500 participants every week. “Data beats opinion and we provided our clients with valuable data to help them through the crisis and to fully understand the trends in real-time. We also offered our B2B real estate data platform called Data Finder for free to all our clients during this time so they could have access to the data at any time,” she added. Regardless of the outcome, the challenges associated with the pandemic have forced many industries to change and in many cases become more efficient. Ultimately, this efficiency can drive improvements and many of these improvements are associated with the utilization of technologies.
Scope for start-ups
The UAE, Egypt, and Saudi Arabia emerged earlier this year as the top 3 for MENA startups. And the UAE has long been known to encourage entrepreneurs and give confidence to international investors. Regionally there have been several businesses who have had to tighten their belts or shutdown and this, Altmann says will bring opportunity for start-ups to rise from the opportunities left behind. “Looking at the UAE's real estate sector, it in itself is undergoing a massive change with technology at the forefront of innovation in various parts of the sector.
The inevitable disruption has created a niche for every segment, from traditional buying and selling of properties to maintenance and management, short-term rentals, and holiday homes, among many others,” he adds. Innovate, innovate, innovate… that is the mantra advised by all experts for start-ups to have a sustainable future in the region. “Startups need to be disruptive and offer a service that currently doesn't exist and that eases pain points for the end-user. In real estate, we still have many pain points, especially for consumers. The company that can ease or solve these pain points wins,” sums up Abad