Over the past 30 years of being a real estate developer, I have seen a lot of changes. While technology hasn’t always played a major role in the industry, that has changed significantly over the past few years, especially for consumers. Here are four technologies that will continue to transform how we buy, sell, finance and invest in real estate moving forward.
Crowdfunding has democratized investment opportunities across the board. Historically, real estate developers have been limited in how we raise capital, but crowdfunding has completely disrupted the old rules. It initially attracted smaller developers who were not able to raise capital the traditional route, which made their propositions riskier for investors. Now, we are seeing major developers use crowdfunding platforms to fund commercial real estate projects all over the world.
A few years back, I created a fund platform called Participant Capital. Its name explains its purpose of allowing individual investors to participate in large-scale real estate projects side-by-side with developers, major institutional investors and lenders.
This shift is very advantageous to the individual investor, who can now invest in large real estate projects that were once limited to institutional investors. Having larger, more experienced real estate companies participate in crowdfunding platforms elevates the interest because investors have less risk with better returns.
Blockchain is playing a prominent role in the digitization of real-world assets. While a lot of people are still unfamiliar with how blockchain is used in the world of cryptocurrency, when it comes to real estate, it can bring security, clarity and efficiency to real estate transactions. One specific way blockchain can help the industry is through tokenization.
Tokenization refers to the usage of cryptocurrency for the division of a property, turning it into tradable shares or tokens that will be stored on a blockchain network. For developers, tokenization could allow for more freedom and flexibility to raise capital, investors can move their funds efficiently and property owners can manage their equity more effectively — especially in the case of selling fractional ownership where liquidity and transferability have always been an issue. The largest setback of real estate investments has always been liquidity. With blockchain technology and tokenization, there could possibly be secondary markets that trade these asset-backed currencies providing liquidity in real estate, which wasn’t possible in the past.
We recently started accepting cryptocurrency to purchase real estate. A lot of wealth has and will continue to be built in cryptocurrency, so real estate developers will have to adapt to the future, although every day we find methods of converting crypto back to fiat currency (dollars, euros, etc.).
DIGITAL HOUSING AND THE SHARING ECONOMY
The sharing economy has changed how people look at many types of purchases, including real estate. Instead of looking at property as a full-time residence, people are looking at it as a way to defray costs, build up equity and create generational wealth. Airbnb, VRBO and other web-based platforms have propelled this notion, and have made it even easier for individuals to market their properties as short-term rentals where the average daily rate can earn more than a traditional long-term lease. This flexibility for buyers has increased the demand for second homes in destination locations and was the driving force behind our new downtown Miami project that blends residential with hospitality.
From a consumer point of view, the renter can stay or vacation in a residence with a full-size kitchen, dining table and comfortable living spaces, but have all the services and amenities that come with a luxury hotel. It’s a win-win for both buyers and renters.
VIRTUAL AND AUGMENTED REALITY
Virtual reality (VR) and augmented reality (AR) technologies are some of the most prominent and popular trends in real estate. During the pandemic lockdowns, they were invaluable to us to keep business moving as usual. Our brokerage, like many others, was using both Zoom and VR goggles to show and sell properties to prospective buyers all over the world.
It’s one thing to see 3D renderings or a 3D model, but with VR, buyers can immediately transport themselves into the space. A lot of times people have a hard time envisioning what a rendering will look and feel like in real life. With these technologies, buyers can see the finishes, the scale of the space and even the views without having to go anywhere.
This technology will continue to change the way we sell real estate in the future. Imagine stepping out on a snowy day into a sales office and experiencing tropical resort living through VR, and then heading back to the cold — it makes it even more enticing to make a move.
Daniel Kodsi is founder and CEO of Royal Palm Cos., a Florida-based real estate and development company. This article was republished by permission of Forbes, which originally published the article here.