Real estate is notorious for being slow to change, but it was only one of many industries that was quick to usher in the many benefits that digital transformation brought when faced with the global pandemic. Although elements of digital transformation had already been introduced over the last decade, the pandemic has not only fast-tracked the adoption of digital, but undoubtedly changed and revolutionized the industry standard.
According to a McKinsey report, most executives said their companies accelerated the digitization of their operations by three to four years, allowing them to meet many new business demands much more quickly than they would have thought possible before the pandemic. They also expect these changes to be long lasting and thus are now prioritizing funding for digital initiatives, because they realize that digitization is not merely a problem solver, but fast becoming a critical and core component of business practice itself.
In 2019, a KPMG Proptech survey reported that real estate companies were increasingly adopting digital technologies, with 58% of respondents confirming they had a digital strategy in place. However, in 65% of cases, there was no actual digital or tech specialist leading digital transformation in the company, and most digital strategies did not incorporate a working data strategy that enables the capture and analysis of the right datasets. By 2021, KPMG reported that 57% of real estate firms surveyed said their business setup now included a formal data strategy.
Real estate companies and those within them are realizing that digital transformation within their operations enhances better integrated technology architectures to address the many disconnects that were predominant for so long:
- The disconnect between disparate systems - with the automation and tech solutions that digitization brings, there is now the opportunity to drive and expand on types of data, data collection, reporting and much improved decision support services.
- The disconnect between brand and focus on customer experience - brokerages and agents are able to now harness digital tools and solutions to help mine for new data insights that gives a better and clearer snapshot of what the customer experience is like, what it’s lacking, and, importantly, what they can start doing to bridge the gap.
- The disconnect in customer behavior and customer expectation - Expanding on the last point, the industry is fully aware that the way people search for property has changed dramatically; they prefer mobile over desktop searches, they want to see their brokers’ social media pages before picking up the phone etc. Agents and brokerages realize that digital transformation is not just about the digitization of their day to day business operations, but very much about their online presence and persona as well.
Digital transformation has not only kept the inertia of the industry going over the last couple of years, but unlocked new growth areas. The adoption of digital solutions allowed for more robust data collection for analysis, more implementation of time-saving tools like chatbots and AV/VR capabilities; it allowed the enhanced use of AI, drone and even video conferencing tools that helped agents reach out to customers in their homes so that there was no breakdown of relationships in the process. Digital helped real estate players bridge the communication gap whilst informing clients every step of the way. The automation of data and ability to assess that data in a meaningful way meant agents could cut down on their decision making time and still make arguably better informed, targeted decisions than before.
As US Real Estate Leader at Deloitte Jim Berry says, ‘As memorable as 2020 events have been, 2021 and beyond will be telling.’ The company’s 2022 Commercial Real Estate Outlook survey revealed that 56% of CRE respondents said the pandemic exposed their companies’ shortcomings when it came to digital capabilities, with only 40% saying their company has a defined digital transformation roadmap.
This is all the more important because as much as the last few years have demonstrated the potential of digital transformation, remaining gaps and potholes were also accentuated. It is clear that while the industry has come leaps and bounds in closing the digital divide compared to prior, not everyone is stepping forward at the same pace. This is all the more concerning when statistics reveal the unlikelihood of processes returning to pre-pandemic patterns, as digital transformation has been so effective to the point that some shifts may now be too deep to reverse. As Berry puts it, ‘[2021 and beyond] is where leaders will be required to ‘walk the tightrope between managing costs and investing in the future’.