Nov 24, 2023
11 Future Trends in Real Estate: Insights and Predictions for an Evolving Market
This blog post aims to provide insights into the evolving real estate landscape, focusing on the transformative role of AI and technology in key markets like New York, Dubai, and the UK. For real estate agents and marketing agencies, adapting to these trends will be key to future success.
The real estate landscape is evolving rapidly, driven by technological innovation, shifting market dynamics, and changing consumer preferences. Today we dive deep into what I think the future trends shaping the real estate industry are.
Leaner Teams, Greater Efficiency:
The trend towards smaller, more efficient real estate teams is being driven by technological advancements. Deloitte's 2021 Real Estate Industry Outlook highlights how technology, particularly AI and real estate software, are streamlining processes, reducing the need for large real estate teams. This doesn’t necessarily mean fewer real estate agents but might in fact mean an increased use of AI-powered assistants supporting administrative, sales, and marketing efforts to a much more significant degree than it is today.
Modular Living Gains Popularity:
There's a shift towards smaller, modular living spaces, impacting real estate market dynamics. The 2020 report by the National Association of Home Builders reveals a significant increase in demand for modular and tiny homes, influencing agent commission structures. An average agent makes about 2.5% on a sale & gets paid purely on commission, when this changes to modularised living for a significant portion of the developing economies & even underserved parts of developed economies , it would be interesting to see how interest in selling real estate with all the effort that we see today may be more concentrated on higher value properties. This virtually creates room for marketplaces to build AI agents to go after the mid market tier in a more aggressive way without conflicting with its users as much as they would today.
Data-Driven Client Personalization:
Advanced data analytics are enabling realtors to better understand and cater to client preferences. Salesforce's State of the Connected Customer report (2020) found that 76% of customers expect companies to understand their needs. In real estate, this could be as simple as issuing neighbourhood guides on the basis of changes in patterns of buyer interest from an individual as they progress from being bachelors to then having families & being able to be first in detecting that they have the buying capacity & have high intent in purchasing real estate. If we could replicate the equivalent of what open finance & open banking has done in the context of enhancing commercial bank offerings in the real estate space, there could be some significant damage done here.
Remote Work's Impact on Commercial Spaces:
The rise in remote working is reshaping the demand for commercial real estate. CBRE's Global Occupier Sentiment Survey (2021) indicates a notable shift in office space requirements due to increased remote work trends. There is a major reckoning happening in this space & more flexible models of work & retail experiences will be key to the survival of the category. This is oversimplifying but creating the calendly equivalent for real estate space in the most usable & legally compliant manner will lead to significant improvement in demand at these large properties. On-demand real estate will be a thing, especially in the context of retail experience— perhaps even segmented on the price front between independent brands & large corporates running activations. Companies like Leap (NYC) are interesting to watch in this space.
Digital Savvy in Real Estate Marketing:
You don’t need a statistic to tell you that distribution is king. It’s really quite simple, if you leave your real estate agency today— what do you walk away with? A phone book full of clients & no other real tangible data — legally speaking at least. If you have a social media, you’re constantly building that client book & portfolio & reaching people you would never even think of in your immediate horizons. Tools like Kendal enable real estate agents to focus on doing what they’re good at. Selling. And leave the editing, initial strategy, generation & distribution to a tool that runs largely on autopilot with a few inputs from you at the start. This perhaps only the first of many versions of what could be a digital assistant for all things marketing, sales, client support & administrative support.
Expanding into Non-Western Markets:
The global real estate market is seeing increased interest in non-western regions. Knight Frank's Global Real Estate Outlook (2021) highlights a rise in cross-border property investments, necessitating localized marketing strategies. Multi-language support both on the technical interface alongside some form of usage/need based immediately available support for clients who speak a completely different language. As AI evolves, you’ll have a several tools that comprehensively translate in real-time for you so that transactions are easily done.
Beyond Selling Properties: Realtors Diversifying:
Realtors are branching into diverse fields like coaching, content creation, consulting, property management, affiliate marketing & more. Diving specifically into affiliate marketing here because this isn’t covered as well in my opinion in the Real Estate space as it is in the tech world. ADVSR.AI effectively allows agents in one part of the world or country to become the discovery layer for agents everywhere. ADVSR effectively enables agents generate personalized micro-sites that advertise properties globally. They leverage the fact that transactions happen on the basis of trust as opposed to simply fundamentals on paper. Imagine earning 1% of a transaction for being the discovery layer by leveraging distribution you’ve built in industry across professional networks & social media.
Shared Ownership and Predictive Analytics:
Fractional ownership is on the up & up. Gen-Z unfortunately has been dealt a hand where rates & inflation ( for living expenses etc) are through the roof & first time home ownership has become something that they can only dream of in their 20’a & 30’s. There’s also a trend of marriages & children that happen much later on which are typically part of the reasoning for home ownership. Despite these trends, financial independence & a diversified portfolio is still a strong trend amongst both Gen-Z & Millennials. The closest form of home ownership then is a couple of solutions, one where you could fractionally invest in property like you can on platforms like Stake. Alternatively, you can also rent through platforms like Roots — where rent turns into equity in homes.
Property Management in the Digital Age:
The U.S. Census Bureau reports a steady increase in the number of households that rent, creating more opportunities for property management. Furthermore, the integration of technology in property management, such as online rent payments ( even being able to use credit cards for payments — see Bilt or even rent now pay later platforms like Keyper), virtual property tours, and automated maintenance requests, are enhancing efficiency & the sheer amount of rise in property management services. Not to mention the stability of income that’s on offer here.
Eco-Friendly Real Estate Practices:
Climate change is a topic of conversation in every CSR & Board Meeting— it’s extremely important that property developers are building with some form of mitigation measure for extreme weather events and beyond. If that’s not enough, well then it’s worth considering that customers care about it. A survey by the National Association of Realtors (NAR) found that a significant percentage of buyers consider energy efficiency and sustainability important in their home purchase decisions. Consumer demand here is further evidenced in findings by certification programs like LEED (Leadership in Energy and Environmental Design) becoming increasingly popular. According to the U.S. Green Building Council, LEED-certified buildings are in high demand, with a reported increase in LEED certifications annually. It’s also worth mentioning that these certified properties tend to do better on value.
Alternative Real Estate Models Emerge:
Non-traditional real estate models like co-living, short-term rentals are gaining ground. I’d like to break it down into 3 primary parts.
a) Shared Living and Investment Models
Co-Living Spaces: These spaces are increasingly popular in urban areas, driven by the appeal of community and affordability. The Global Co-Living Index reports significant growth in co-living startups, especially in cities with high rental costs.
Real Estate Crowdfunding: This model is expanding access to property investment. Transparency Market Research forecasts substantial growth in the real estate crowdfunding market, indicating its rising popularity among investors.
Short-Term Rental Platforms: Platforms like Airbnb have revolutionized temporary accommodations. Statista reports that Airbnb listings worldwide surpassed 7 million in 2019, highlighting the model's rapid expansion.
b) Niche and Lifestyle-Focused Models
Tiny Homes and Mobile Living: The global tiny homes market is projected to grow significantly, with Technavio estimating a CAGR of over 7% from 2021 to 2025, driven by the demand for affordable and sustainable housing.
Senior and Assisted Living Communities: With the aging population, these communities are on the rise. The National Investment Center for Seniors Housing & Care notes that the senior housing occupancy rate in the U.S. was around 88% in 2020, underscoring the demand.
Eco-Villages and Sustainable Communities: The interest in eco-villages is growing, aligning with the sustainability trend. The Global Ecovillage Network lists hundreds of eco-villages worldwide, reflecting this model's expanding footprint.
c) Integrated and Inclusive Housing Models
Mixed-Use Developments: These developments are becoming more prevalent in urban planning. The Urban Land Institute reports that mixed-use developments contribute significantly to urban revitalization and efficient land use.
Workforce Housing: Essential for maintaining a balanced urban workforce, this model is gaining attention. The National Housing Conference highlights the need for workforce housing in high-cost areas, emphasizing its importance for community sustainability.
The real estate sector is witnessing profound changes. For professionals and investors in this field, understanding and adapting to these trends is key to future success. Hope this post by a non-expert tech bro looking from the outside in provides a glimpse into the future I foresee. Let me know what you think— more than happy to do a part 2 to this blog.