December 12, 2022
Abstract
Proptech refers to the use of technology to improve and innovate the real estate industry. This can include everything from property search platforms and virtual reality property tours to smart home technology and property management software.
Urbantech, on the other hand, is a term used to describe the use of technology to improve and transform cities and urban environments. This can include everything from smart city infrastructure and transportation solutions to waste management and energy efficiency initiatives.
Both Proptech and Urbantech are growing sectors that are increasingly important in our modern world.
As cities become more crowded and the real estate market becomes more complex, technology can play a vital role in creating more efficient and sustainable solutions for both property and city management.
Author
Sustainable City Analyst @Colouree
Sustainable Urban Planning and Policy Design expert, she deals with various aspects of urban planning, with particular reference to sustainable development and environmental aspects. She deals with the multidisciplinary aspects of geo-spatial analysis and planning applied to the promotion of the quality of the built environment, to shape a healthy and safe urban space for all human beings despite their age, gender and socio-economic status. He has gained research experience on sustainable urban development, nature based solutions, ecotourism and sustainability, urban regeneration strategies.
Content
Economic Aspects and Challenges of Real Estate Market
Disruptive Technologies in the Real Estate Market
Advantages of Digital Transformation in Real Estate
Location Intelligence for Precise Real Estate Insight
Customer Satisfaction in The Shade of Smart Real Estate
Millennials’ Intention in Adaptation to Smart Technologies
Smart Real Estate as Step Forward to Smart Cities
The relation between Smart City and Smart Real Estate Market (SREM), together with the principle characteristics of it; Data Source: Colouree
Economic Aspects and Challenges of Real Estate Market
In advanced economies, real estate is an important part of personal and household wealth , also due to its ability to generate income (rent). In fact, the real estate sector has represented an immense and essential part of wealth for thousands of years . As stated by Garay (2016), the real estate sector has undergone a radical transition which has seen the reclassification of the sector from institutional and proprietary portfolios, since the past centuries, to intangible assets in the contemporaneity. Recently, it is estimated that the real estate sector, on a global level, has attracted large
financial investments which place it as the main global asset class. Since urban planning, asset management and investment decisions are driving factors for the cities of the future, the main challenge of the real estate market is not only to have an understanding of the current and future supply-demand dynamics, and of the macro economic factors but also the correlation of economic metrics, such as gross domestic product (GDP), oil price and construction financing. These challenges complicate the demand towards the real estate market (Deloitte, 2022).
Main Challenges of Real Estate Market that Make Demand Complicated; Data Source: Colouree
- Deloitte. (2022). Real Estate Predictions 2022: Building a More Sustainable and Future-Proof Business with the Real Estate Predictions 2022.
- Garay, U. (2016). “Real Estate as an Investment.” In Kazemi, H.; Black, K.; and D. Chambers (Editors), Alternative Investments: CAIA Level II, Chapter 14, Wiley Finance, 3rd Edition, pp. 343-358.
Disruptive Technologies in the Real Estate Market
Transition from the traditional to the smart real estate market (SREM) The real estate sector needs to improve its ability to adopt disruptive technologies that accelerate its transition from being a rather traditional and "traditionalist" market towards Smart Real Estate (SRE). According to an executive summary article by Deloitte (2022), the genesis of using machine learning and artificial intelligence tools in real estate valuation facilitates the readability of historical data through the incorporation of tools or algorithms. This summary highlights the role that artificial intelligence tools will have in the real estate sector to obtain competitive advantages for those realities that will use valuation and location intelligence systems to support investments.
The study by Kabaivanov & Markovska (2021) further states that "given the abundance of information on real estate markets and transactions, artificial intelligence and machine learning can provide invaluable assistance in processing and analyzing the available data" .
The growth of the real estate investment and fixed assets market on IT-based innovation and digital technologies, instead of focusing on conventional transactions, attract more consumers and customers towards smart and ICT-based solutions in the real estate market (Kouklinou, 2022).
Such large investments and the readiness of some countries to embrace the technological revolution are encouraging the movement towards smart real estate (SRE), which is more sustainable and technology-enhanced. Statistical data in a study by Shaw (2020) demonstrates the nearly 6% increase in real estate investments for mid-2016 [29;41].
Adaptation of Machine Learning & AI tools in Real Estate; Data Source: Colouree
Advantages of Digital Transformation in Real Estate
Location Intelligence for Precise Real Estate Insight
The evidence from a study by Ullah et al. (2018) affirms that GIS and location analytics give customers greater confidence in their decisions to pick the locations that offer the least risk and greatest potential profitability. Esri Ireland identifies three ways in which Real Estate agencies could gain competitive advantages using location intelligence:
- Esri Ireland. (2022). Location Analytics for Real Estate. Retrieved December 25, 2022.
- Ullah, F., Sepasgozar, S. M. E., Wang, C. (2018). A systematic review of smart real estate technology: Drivers of, and barriers to, the use of digital disruptive technologies and online platforms. Sustainability (Switzerland)10(9).
Customer Satisfaction in The Shade of Smart Real Estate
In the era of globalisation and continuous striving for sustainability in various sectors, it is imperative to eliminate or at least minimise the regrets related to various aspects of services and products, and the real estate sector is no exception to this." (Ullah & Sepasgozar, 2020)
Minimizing regrets is the mutual cause of customers' satisfaction, and is considered as the primary reason for success in real estate. Robinson & McAllister (2015) in their study has classified customer satisfaction into three levels of physical, functional, and psychological. Accordingly, Ullah et al. (2018) briefly explain respectively three factors of customer satisfaction, physical comfort involves temperature, lighting, sound, air, and safety; functional comfort revolves around consumers’ needs and their interaction with the environment through the intelligent design of space and technology, and ultimately as a representation by Spielman (2016) Psychological satisfaction referes to human lifestyles and needs, which is achievable through the smart integration of technology and space with a person’s everyday life.
Evaluated data by Trulia (2018) indicates the regret of 44% of real estate consumers in their decision making process. Ullah & Sepazgozar (2018) represent eight reasons of regret in buying or renting a house including not enough information (NEI), (BS), house size (HS), housing costs (HC), mortgage (MT), emotion (EM), agents (AG), and inspection (IP).
Eliminating consumers’ regrets is generally accompanied by some of the merging points for sustainability in real estate, which are prerequisites for moving towards smart and sustainable societies with affirmation on User’s Centeredness.
Paying attention to the aspects of cultural inclusions in residential buildings and resorts for smart real estate development and urbanization (Duboeuf, 2006), energy-efficient and green technologies introduction (Hobson, 2003), and development of sustainability indices for real estate projects (Dobrovolskienė et al., 2019) all are samples of smartness and sustainability in the Real Estate Market.
Eight Key Reasons of Regret from End-user’s Side on Buy/ Rent Process and Statistical Evaluation of them Data Source: Colouree; Ullah & Sepasgozar (2020)
- Dobrovolskienė, N.; Tamošiūnienė, R.; Banaitis, A.; Ferreira, F.A.; Banaitienė, N.; Taujanskaitė, K.; Meidutė-Kavaliauskienė, I. (2019). Developing a composite sustainability index for real estate projects using multiple criteria decision making. Oper. Res. 19, 617–635.
- Duboeuf T. (2006) Local power and land-use strategies in mountain resorts : sustainability of local tourism development and the challenges of governance. In: Revue de géographie alpine, tome 94, n°1. Gouvernance et stations de sports d’hiver, sous la direction de Françoise Gerbaux et Emmanuelle Marcelpoil. pp. 42-51.
- Hobson, K. (2003). Consumption, environmental sustainability and human geography in Australia: A missing research agenda? Aust. Geogr. Stud. 41, 148–155.
- Robinson, S., & McAllister, P. (2015). Heterogeneous Price Premiums in Sustainable Real Estate? An Investigation of the Relation between Value and Price Premiums. Journal of Sustainable Real Estate, 7(1), 1–20.
- Trulia (2018). Real Estate Regrets: Recovery Edition.
- Ullah, F., Sepasgozar, S. M. E., Wang, C. (2018). A systematic review of smart real estate technology: Drivers of, and barriers to, the use of digital disruptive technologies and online platforms. Sustainability (Switzerland)10(9).
Millennials’ Intention in Adaptation to Smart Technologies
Since millennials are comprised the largest group of Internet users employing the IoT in daily activities as well as future buyers of these products, identifying their attitudes seems essential to meet their needs.
Millennials consist greater number of home buyers and renters
Millennials represent over 60% of buyers, and they have been considered a unique segment of consumers by researchers and practitioners alike, due to their ability and propensity to adopt and adapt new media to their daily routine (Kouklinou, 2022; Riccioli et al., 2021). Accordingly, they believe that adaptation to smart technologies could promote quality of life by affecting one’s expectation.
High adaptability to Smart Technologies
Findings from the National Association of Realtors (NAR) on 2017 identifies 99% of Millennial’s Online search to receive information about homes and home buying.
Dependency of Millennials in Using Smart Technologies
Mohamad (2021) declares dependency of this generation to smart technologies in three reasons including perceived usefulness, perceived ease of use, and positive attitude on their intention to use smart home devices and appliances.
Adaptation of Millennial’s to Intern of Things (IoT) in Real Estate Market Data Source: (Tech Trends-Smart Home, 2017)
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