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Blog Jul 27, 2016

Top 5 Innovations in the Real Estate Industry

Between towering stacks of contracts, high investment risk, and misleading property photos, the multi-billion dollar real estate industry has long been plagued by challenges. It’s no wonder that advancements in technology are now largely impacting this important sector by facilitating cost savings and more informed decision-making.


Just as FinTech and HealthTech have become household terms in their respective industries, PropTech (property tech) is quickly gaining momentum in popularity and investments. The first quarter of 2016 saw $428 million worth of investment in real estate startups across 56 separate deals.


The umbrella term PropTech covers many different types of startups, and perhaps more importantly, the technologies behind them. Propelled by the success of pioneering companies such as Zillow and Zoopla – and now supplemented by the creation of industry-specific accelerators like Pi Labs – innovation trends are beginning to take shape that empower consumers, lawyers, and property developers alike.


Let’s take a closer look at five key areas of real estate innovation.


Deep Learning and Artificial Intelligence

Real estate contracts require meticulous reading and analysis, which often prove time consuming and costly. Deep learning technology, a subset of artificial intelligence (AI) characterized by a set of algorithms that mimic functions of neural networks, unlocks a world of potential for analyzing property contracts.


The amount of ownership documentation often increases over the lifetime of a property – and sometimes, this documentation is never even read from front to back. Today’s deep learning technology is able to analyze and extract unstructured data (i.e. text in a contract) with a high level of efficiency and transparency, drastically shortening the otherwise lengthy process of document assessment and due diligence, all while increasing thoroughness and decreasing risk. LEVERTON is such an intelligent information extraction and management platform.


Investment in AI and deep learning is certainly growing, as more venture capitalists are seeing the benefit in long-term research and development for these technologies. Approximately 300 investment deals were made with AI companies in 2015, and the number is expected to rise in coming years.


Crowdfunding and Investments

The crowdfunding craze is making its mark on a wide variety of industries – real estate included. Investors can now directly give money to real estate projects of their choosing, which eliminates the oftentimes costly and tricky middleman. The high risk associated with indirect investment no longer has to play a role in real estate; this means it’s now easier than ever to connect project organizers with the most enthusiastic investors.


Crowdfunding has potential to grow and change along with the evolving real estate landscape. The next step may be for real estate developers to embed crowdfunding capabilities directly on their project websites, facilitating investments with just a few clicks. There’s certainly enough capital floating around in new crowdfunding ventures: investment in this sector is expected to increase sevenfold from $1.1 billion in 2015 to $8.2 billion by 2020.


Big Data Analytics

Big data is more than just a buzzword in real estate innovation – it’s a key branch of technology that has already begun to disrupt the areas of selling and searching for property, conducting investigations of properties, analyzing assets, forecasting trends, estimating property value, and more. Increasing numbers of companies are taking note of big data’s value in their operations: as of this year, 51% of enterprises intend to invest more in big data.


Property search, for example, is one of the more widely used applications of big data in PropTech. Consumers can input their preferences on one of the numerous advanced property search websites available today – but the search customization doesn’t stop there. Big data technology enables these websites to pull and analyze information about the consumer via their social media channels and search history to more easily present them with their ideal property matches.


Smart Homes and Wearable Tech

The Internet of Things (IoT) is expanding by the second, and your wireless router is no longer the only point in your home that’s connected to the web. Whether it’s your thermostat, your bedroom light, or your front door lock – most objects you interact with daily can now be replaced by connected devices. Wearable technology and beacons play a large role in the functionality of smart homes, as designers and technologists work closely together to deliver the most convenient ways to program and interact with domestic surroundings.


Although the devices in these “smart homes” present new and increased security risks, the convenience afforded by ever-present connectivity is difficult to ignore. That’s why the smart home industry is expected to grow from $46.97 billion in 2015 to $121.73 billion by 2022.


Virtual Reality and 3D Cameras

How many times have you misgauged the actual size, quality and characteristics of something based on a photo? 3D cameras and virtual reality (VR) drastically reduce the chances of these errors, saving time and money for all parties involved.


VR and 3D cameras are great tools for showing off properties; since most prospective buyers choose to browse properties online until they are absolutely ready to commit to an in-person viewing, VR can reduce costs associated with making homes “stage ready.” Property hunters can “walk” through homes without leaving the comfort of their couch, using only their smartphones. A natural side effect of this technology is a diminished active role of real estate agents in disseminating information to prospective buyers, as most of this information is now available online.


Money is surging into the VR sector – in fact, $1.1 billion was invested within the first two months of 2016 alone – so we expect to see continuously bigger and better applications of VR in real estate.

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