14 Jan
Consumer demand is growing at a rapid rate, leading to many real estate industry trends and challenges taking shape and affecting the global economy. It is estimated that the global real estate industry is worth $US14–17 trillion.
Many sectors of the real estate industry are expected to see rapid growth over the next 5 years due to emerging trends that are likely to shape the sector for the foreseeable future. For example, AR and VR are increasingly being used in real estate to showcase properties. Real estate agents and service providers are using AR and VR tools to showcase 3D home maps and host tours online. The use of such technologies can result in a significant reduction in the time and effort required to handle potential customers.
Despite the massive potential for the continued growth of numerous sectors, there are plenty of challenges ahead for the current real estate markets. Due to the rise of digital real estate platforms, real estate agents are facing stiff competition from online channels, proptech startups, and virtual realtors. Many homebuyers and sellers are finding each other online without the help of a brick-and-mortar real estate agency. Moreover, there are online portals that eliminate the aspect of brokerage. These factors are creating huge competitive pressure on traditional real estate agents.
In this article, we will elaborate on some of the major trends and challenges expected to impact various sectors of the real estate industry.
What is the Real Estate Industry?
Before we dive into the future trends and challenges of real estate, it is important to define the industry. BizVibe’s platform contains close to 300,000 real estate companies which are segmented into 8 categories. Each category is being transformed by its own set of trends and challenges that will greatly influence the direction of real estate companies in the coming years. Below we will discuss the trends and challenges influencing some of the major categories in the real estate industry.
Offices of Real Estate Agents and Brokers
Emerging Trend – Long-Term Attractiveness of Housing as an Asset
The global housing market has been steadily growing due to increasing demand from an increasing population. Housing prices have grown faster than any other market in many countries. As a result of these rising prices, ownership of a residential unit is generally considered to be an attractive investment. Housing constitutes the most significant component of wealth for many people, and therefore the demand for residential buildings will stay true in the longer term.
Major Challenge – Rent Defaults Creating a Mini Crisis
The economic slowdown due to COVID-19 has led to severe rent collection issues for lessors and landlords. Many are skeptical in onboarding new tenants as financial liquidity has become a big question mark. Moreover, they are expecting real estate brokers and agents to perform a more in-depth screening on a prospective tenant’s risk to default.
Lessors of Real Estate
Emerging Trend – Use of Advanced Technologies Like AR, VR, and AI
New technologies such as AI, VR, AR, automation, and robotics are introducing changes in the real estate market. For instance, AR and VR tools are being increasingly used in the real estate industry to showcase 3D home maps and tours online versus actually having to schedule an on-site visit. These technologies are currently more in use with agents and sales personnel but hold significant opportunities for property managers and other real estate-related service providers as well. AI is being used in digital real estate platforms to get an understanding of which neighborhoods are up-and-coming and which are heading for a potential downturn.
Major Challenge – Increased Cost of Operations
The increase in minimum wages across the world is a cause of concern for property lessors, as this increases the cost of expenses such as property maintenance and facility management staff, as well as housekeeping personnel located at leased facilities. Moreover, building cleaning and sanitization episodes have significantly increased and have become more elaborate, which is creating additional cost pressure on lessors.
Activities Related to Real Estate
Emerging Trend – Use of Drones
Property managers and appraisers alike are using drones to inspect buildings for various purposes. Property managers are using drones for general facility inspections as well as surveillance, whereas appraisers are taking advantage of them for roof inspections, measurements, and thermal imaging of properties.
Major Challenge – Rent Collection Difficulties
The economic slowdown due to COVID-19 has led to severe rent collection issues for lessors and appointed property managers. Many tenants are expressing their inability to pay rent until the economic situation improves. Governments in various regions are also protecting tenants and asking lessors to defer rent collection. Even those tenants whose liquidity has not been affected much are trying to gain an advantage due to these developments.
Real Estate Companies on BizVibe
BizVibe’s platform contains close to 300,000 real estate company profiles which are free to view. Each profile consists of in-depth company insights comprising 50+ data points, including full industry trend and challenge analysis for 8 real estate categories.
BizVibe company insights help provide answers to questions such as:
✓ How will industry challenges impact specific geographic regions?
✓ In which regions will emerging trends be the most prominent?
✓ What are a company’s major product and service offerings?
✓ Who are the company’s key executives and what are their roles?
✓ How is a company positioned financially?
✓ Who are the company’s major competitors?
✓ What is the risk level of doing business with a given company?
✓ What is the latest company news?
Additionally, BizVibe enables users to connect with real estate companies and includes a feature that allows businesses to send and respond to RFI/RFPs directly on the platform. There are real estate profiles of companies from over 200 countries on BizVibe, with free access for users to discover, analyze, and connect with these real estate companies.
