2021: Disruptions & Transformations To Set the Tone Of Realty While technology was already becoming part of the realty fabric in the country, pandemic-related uncertainties fueled the adoption of all things digital
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Year 2020 was a curious one. While the COVID-19 outbreak brought about unprecedented socioeconomic challenges for the world, it accelerated digital transformation at a massive scale across domains. The realty sector in India, an industry worth around $180 billion, also witnessed several major developments over the last 12 months. While technology was already becoming part of the realty fabric in the country, pandemic-related uncertainties fueled the adoption of all things digital.
This led to a particularly significant change: for many real estate businesses, technology became the driver of growth and an intrinsic part of their business model.
Here's a look at some powerful tech disruptions, trends, and policies that will set the tone for 2021:
Proptech leads the way for the Indian realty space
The proptech market had been quietly transforming the realty sector since much before the arrival of the COVID-19 pandemic. From enabling online property discovery to providing apartment management solutions, technology was being employed far and wide to create powerful disruptions in traditional realty processes.
Ironically, the pandemic has significantly catalyzed this transformation. Since the onset of the viral outbreak, most proptech companies (including NoBroker) proactively began working on innovative solutions to address hygiene, safety and social distancing concerns. For instance, society management apps (including NoBrokerHood) have introduced features such as touchless entry via facial recognition to do away with the need for fingerprint-based biometric entry systems in apartment complexes. This development has mitigated the risk of infection while enabling the seamless entry of guests, staff, and daily workers into residential complexes.
Similarly, leading society management apps have tied-up with grocery stores, banks and payment services to allow users to order essentials from the safety of their homes. They have also provided health trackers integrated with Aarogya Setu to keep users updated about COVID-19 cases around them, and the health and safety-related information of their visitors and employees.
The sector also witnessed the integration of digital payments in all aspects of the home buying and renting process, like paying rent, maintenance charges, and deposits. While their adoption was initially propelled due to pandemic-related challenges, the transparency and convenience offered by digital transactions will ensure greater adoption by more customers. In the future, the realty industry could see consumers using only digital payment methods to finalize their home buying and renting decisions.
Another major tech-enabled disruption has been the use of virtual and augmented reality for virtual property visits. At the onset of the pandemic, home-seekers surprised the realty industry by embracing online video walkthroughs. Our platform reported at least 200 deals wherein tenants finalized their homes without an actual property visit during lockdown. The quick adoption of these methods can be explained by the many benefits it presents for both the realty sector and its consumers, as they alleviate challenges of location, costs, and even time. With proptech companies working to further streamline the process of virtual property visits, the adoption of these methods will only accelerate throughout 2021.
Artificial intelligence, machine learning and blockchain
The realty industry has been warming up to artificial intelligence, with online players using AI-powered tools to aid home seekers in their search for properties using filters and customizations. But the scope of AI extends far beyond the management of online property search.
Take natural language processing (NLP)-powered bots, for instance. New-age realty players such as NoBroker.com are already employing voice and text bots to engage with consumers that show interest in buying or renting properties online. These bots can be trained in English, Hindi and vernacular languages to run customer relationship management (CRM) operations that include new user registrations, service requests, and even payments. When powered with big data, these bots can also be used to target and engage with users that show interest in buying or renting a home across multiple channels.
Other use cases of AI and ML include marketing and lead generation, property value prediction, property analysis (based on location, amenities, and other pros and cons of an estate, etc.) and comprehensive property management. The successful adoption of AI and ML will also lead the realty sector to leverage blockchain technology to optimize its operations and processes.
Andhra Pradesh, for example, has tied up with Swedish firm ChromaWay for a pilot project that uses blockchain to maintain a land registry and track the ownership of a property. Disruptions like these provide realty players with the opportunity to automate the entire process of home buying or renting. Similarly, the digitization of land records in Maharashtra—a state that accounts for a massive share in the Indian realty industry—presents significant opportunities for such automation using AI, ML and blockchain.
Analytics and data literacy
For many new-age realty players, big data and analytics are already playing a crucial role in identifying business opportunities and mitigating risks. In 2020, for example, CRE firms banked on big data to traverse through a highly unpredictable market landscape and gain a competitive advantage through better decision-making. The trend will continue to have a deep impact on the industry in 2021, considering real estate brands rely on data-driven insights to streamline workflows and inform their marketing and sales strategies.
For these reasons, data literacy is also becoming a priority for many realty players. By ensuring company-wide skills in data analysis and interpretation, realty players will be able to ensure that every decision, made by every stakeholder, is driven by data and executed with the highest efficiency.
Switch to digital marketing
Digital marketing tools have proven to be extremely useful for the real estate industry, with customers spending greater time online and on their mobiles. Furthermore, millennials, who are increasingly shifting towards home buying, prefer to make part of their buying and spending decisions online, such as the shortlisting process.
To reach these new-age buyers, realty players will need engaging social media initiatives on Facebook, Instagram and LinkedIn. Many realty players turned to these digital marketing tools to combat pandemic-related challenges in 2020; and the benefits they reaped indicate that the focus on all things digital will continue in 2021.
Offline on a steady decline
With benefits such as transparency and the elimination of brokerage costs, online housing portals were steadily reducing the market share of offline realty players since much before 2020. Data collected by our platform over the past four years indicates a consistent decline in the dependence on brokers by home-seekers. In our "India Real Estate Report 2020', which surveyed people from six cities—Bangalore, Mumbai, Pune, Chennai, Hyderabad, and Delhi-NCR—and found that 92 per cent of consumers no longer rely on brokers.
Pandemic-related challenges only accelerated this trend, which will only gain strength in 2021. While health and safety concerns have played a major factor in changing consumer behaviour, the ubiquity and convenience of digital processes have also had a significant impact in driving this shift. This represents a growing opportunity for brokerage-free portals such as NoBroker.com to increase their market presence and improve the real estate value chain.
Approaching projects as brands and not commodities
Indian realty players are also starting to recognize the need to take a 'brand-oriented effort' while working on new developments. A recognizable and reputable brand can go a long way in building customer confidence, driving aspirations, and directly influencing a customer's buying decision. To build 'branded realty', developers and real estate platforms will need to undertake a cohesive approach that ties in everything from nomenclature to the value proposition of a property with the ultimate brand identity. The process will make way for real estate players to cater to multiple consumer and market segments in an efficient and structured manner, command sustainable premiums, and create a brand that drives customer loyalty and referrals.
Short-term policy changes
The realty industry will also reap the benefits of significant policy changes triggered in response to the challenges presented by the COVID-19 pandemic. Interventions like the stamp duty and premium rate reduction in Maharashtra, albeit for the short-term, will influence property prices and sales for the next few months and give a significant boost to revenue for the industry. Steep cuts in home loan rates and the enhanced availability of credit finance for both residential and commercial customers will also act as a driving force for the real estate industry in 2021.
Despite the unprecedented circumstances it presented, 2020 proved to be a year of significant growth and transformation for the realty sector in India. This was made possible by increasing disruptions from proptech companies, technological interventions such as AI, ML, and blockchain, and a change in approach by agile realty players. These developments, coupled with well-thought and much-needed short-term policy interventions, will set the tone for 2021 as well as the larger real estate ecosystem in India.