The future is already here, even in a traditional industry like real estate, where a whole raft of innovations are shaking up the sector’s foundations.
The real estate sector does not usually come to mind in conversations about disruption – quite the opposite in fact. Some analysts point to the example of South Korea and Spain, two countries of a similar size in terms of population and GDP, which chose – although it is not really a question of actively “choosing” such strategies – different paths. While Spain chose to focus on property, South Korea opted for technology, with obvious consequences. Today South Korea is home to some of the largest technology companies in the world.
The world of real estate is, however, like all businesses, also dependent on innovation. If we take a look at the three key elements of digital transformation, (interface, internal processes ad business model), everything points to major changes taking place, changes which will determine winners and losers in the sector.
In terms of customer relations, it is clear that an increasing number of clients are going online to find properties they are interested in, to the extent that developing the right kind of interfaces for both computers and smartphones is key for any builder or promoter. From visionaries like Idealista, the Spanish property portal which some years ago converted its app into one of the main sources of added value for users, to promotions that have substituted the oft used show house with virtual reality apps that try to enable the potential client to visualize their future home, the interface is acquiring the kind of key role that was unthinkable in the past for such a traditional sector.
In terms of internal processes, an increasing number of companies are using Building Information Modeling (BIM) systems, which have now become the equivalent of integrated management systems or ERP in other industries. BIM systems play an increasingly important role when it comes to developing management control processes in an environment in which this kind of thing has always been managed in a relatively “artisan” fashion, and deviations were par for the course. The use of technologies like 3D printing or the use of construction robots are also worth mentioning, given that they are developing at an ever impressive rate.
With regard to the business model used, we are seeing more and more ideas that seek to exploit the platform models that are so typical in the post-transformational phase. Possibilities like the integration of post-construction management services such as cleaning, maintenance, management of infrastructures, community management, etc., follow the models used in other sectors, and bring opportunities to extend profit streams beyond delivery of the home or complex.
Anyone who thinks that the world of real estate is going to miss out on digital transformation and disruptive innovation should think again. As in every other sector, the future of real estate is already here.
Enrique Dans. Professor. IE Business School