8 real estate technology predictions for 2019
Real estate technology predictions for 2019 will continue to build on the progress made over the past year. As we look forward to what the future holds, be prepared for some unsurprising trends, including more uncertainty, increased momentum for tech in the real estate industry, and a clear drive toward open platforms offering true integration.
1. Multifamily (Residential) goes global
The property management technology that is inherent to the US multifamily market is now crossing borders to fill the void of growing markets in Europe and Canada. In the UK, homeownership is constrained by rising housing prices, and the expanding Private Rented Sector (PRS) now makes up one fifth of households, according to research from CBRE.
As the build-to-rent market continues to expand in Europe, tried-and tested business practices and enabling technology from the US multifamily industry are now being adapted to fit the needs of property managers, owners and operators in EMEA. Developing properties from the ground up places a new importance on the benefits of amenities and the long-term value of property assets. There’s also potential uncertainty in the wake of Brexit regarding whether it will impact rental prices or hinder access to funding for the development of properties. Construction and development could be more challenging if the cost of materials and labor increases.
2. Macroeconomic unrest
The continuing trend from last year is that uncertainty is the only real certainty. But, this unpredictable outlook drives real estate firms to focus more acutely on capital planning and risk mitigation. Big data and big data analytics were certainly in their infancy at the time of the global financial crisis in 2009; however, today’s savvy real estate analyst has greater insight into trends impacting portfolios. One can utilize technology to mitigate risk through more holistic planning capabilities and perform scenario analyses to assess the impact of factors such as increasing interest rates or falling occupancy. In the present climate, more efficient processes and technology to control costs will also become increasingly important.
3. Conflict between innovation and regulation
Ironically, the innovation happening in real estate tech and the new regulations established in 2018 are at odds. For example, the General Data Protection Regulation (GDPR) recently enacted in Europe (with similar legislation in California) has a far-reaching impact on technology globally. Emerging technologies, such as blockchain, that are gaining traction in the real estate industry may stall out if they don’t adhere to the new guidelines on collecting consumer data. Imagine if blockchain had taken off a few years ago and become widely used – it would have crashed and burned when GDPR went into effect. Since the blockchain will inevitably contain personal data, it would not be in compliance with the new privacy regulations.
4. Cloud-based services pave the way
Real estate firms that have embraced cloud services will truly benefit from the range of applications available to them. SaaS environments present opportunities for organizations to more readily adopt technologies and cutting-edge apps that help improve business efficiencies. Cloud-based services have moved squarely into the mainstream and will continue to gain momentum. Single sign-on (SSO) and multi-factor authentication (MFA) will alleviate security concerns that once burdened in-house IT staff, making it easier to manage cloud services so that the business can reap the benefits. 2019 will bring greater opportunity to leverage tools that differentiate your firm, without creating liability for your team.
5. Fall of single stack continues
As we foreshadowed last year, the tech industry at large continues to recognize the value of open platforms. On a macro technology scale, this is evidenced by IBM’s acquisition of Red Hat and the Salesforce.com purchase of Mulesoft. In real estate tech, we see continued consolidation as well as the re-emergence of third-party bodies whose charters are aimed at interoperability at an industry level (such as OSCRE and RETA). This shift to openness is expected to continue, which points to a world where true integration capabilities are required to stay relevant.
Even the CRE tech startup scene is a testament to this trend. There’s currently a lot of noise in the space created by the tech disrupters, but it’s clear that the startups who are able to offer real business benefits and play well with other software providers will succeed. Startups are driving future innovations, but many are not yet mature enough to bring value to their clients.
6. Open is the way forward
Application interoperability and data sharing is a must in today’s fast changing environment. Modern apps are designed with interoperability in mind, and will grow more capable to address the new demands that hybrid cloud environments bring. Emerging technologies will still use an open and connected approach, because apps need to exchange data with each other. These apps no longer require significant manual effort to integrate into the environment, and the intelligence in the apps more easily maps into an organization’s business processes.
7. AI, machine learning, and bots… oh my
While artificial intelligence, machine learning and robotics process automation (RPA) are already being used in the real estate industry, 2019 will see these technologies continue to gain momentum. At MRI, we’ve seen reasonable adoption across some of our class-leading clients, resulting in significant business value for the organizations. As these technologies become more accessible and easier to adopt for mid-market companies, we will likely see more widespread use throughout the industry.
8. Beyond IOT: Predictive analytics
The Internet of Things (IoT) can enable efficiencies for operations and maintenance, but it’s the promise of analytics that offers the most business benefits. The capability to leverage big data and gain business insights from it can be a game changer. The enhanced technology around analytics detects patterns and trends, allowing you to make more intelligent decisions about the business moving forward. Uncertainty is driving firms to look toward best-in-class innovations that offer predictive analytics, fueling the demand for long-term portfolio planning, risk mitigation and streamlined strategic planning.
While we aren’t economists, it’s common knowledge that a downturn is expected to happen, likely in the next two years. Firms that can establish practices today that enable them to benefit from predictive analytics tomorrow have a much better chance of weathering the storm.
So what’s the point? Technology must be designed as a solution to an issue – it can’t simply exist in its own right. That’s why you need software designed by experts that understand the real estate industry, not just tech people who are trying to be disruptive.
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