How technology has changed the real estate industry

Real estate used to be the type of industry that would barely budge its trends and processes. For decades, while the markets had their cycles and the properties themselves had their upgraded styles, the procedures and protocols that governed the way we bought and sold property were basically the same. 

But in recent years, global real estate has experienced shifts unlike any other in its history, and these transformations are due to technological advancements. 

These changes have influenced both residential and commercial property values, reshaping how properties are bought, sold and managed. Here are some of the biggest changes in real estate we’ve seen on this side of the millenia:

Office occupancy with the rise of remote work

COVID-19 fast-tracked the adoption of remote work, and in the wake of the pandemic lead to a notable decrease in demand for traditional office spaces. 

Major Aussie cities, especially the likes of Sydney and Melbourne, saw office vacancy rates reach levels reminiscent of the early 1990s recession. And while many major office precincts have rebounded (most notably in Perth, which seemed to buck the work-from-home trend of the east coast), the flexible workplace—thanks to remote working tools and technology—has never been more popular in the office culture. 

Some cities have seen reduced demand in certain precincts, which has exerted downward pressure on their commercial property values. This is of course particularly true in CBDs. City fringe markets, however, have seemed to remain popular with office workers, given their closer proximity to homes. If the ability to work remotely (thanks to digital technology) has given office workers anything, it’s the demand for work-life balance. 

Virtual Reality meets off-the-plan

Driving down Canning Highway in Como this week, I noticed a new apartment building site—nothing but bare land with a peculiar white hardstand in the middle—promoting a buying experience like no other: Virtual Reality. 

As is now the case in many precincts across the country (and indeed the world), VR is enabling prospective buyers the chance to walk through their potential future homes which haven’t even been built yet. With a set of large goggles and a precise boundary (that white hardstand I’d mentioned), you can experience what it’d be like walking through your front door, enjoying the layout and the furnishings, before steadying yourself in front of the marvellous views. 

VR, and technology like it, will only aid the sales process for off-the-plan offerings. Who knows, perhaps faster sales will propel developers to build more apartment buildings and thus balm the housing supply pains inflicting many Australians. 

Emergence of smart offices

Smart office technologies, incorporating the Internet of Things (IoT) and artificial intelligence, have revolutionised the way many commercial properties operate. 

It’s not uncommon to see features such as automated lighting, energy-efficient systems and advanced security measures to seriously improve tenant satisfaction and building efficiency. 

Buildings equipped with these technologies often command higher valuations due to their appeal to modern businesses seeking innovative and sustainable work environments.

Internet of Things (IoT) in industrial spaces

Beyond tech-heavy offices, the integration of IoT devices in industrial settings has led to far more efficient operations for tenants. 

We’ve seen industrial assets with IoT-enabled sensors installed to monitor equipment performance in real-time, reducing maintenance costs and preventing downtime. 

If industrial users adopt IoT it’s projected they’ll massively reduce energy costs and enhance space management, with some sources citing maintenance expenses could be reduced by up to 30 per cent. 

Properties leveraging IoT technologies are often more attractive to both new landlords and new tenants. And of course, these technologies only have a positive impact on property values.  

Growth of online e-commerce and its effect on retail spaces

The surge in online shopping has made traditional retailers think far more about their operations, from adopting an online presence to promoting the physical shopping experience (over the intangible e-commerce one). 

Shoppers are increasingly prefer e-commerce platforms for certain types of items. It’s caused certain retailers to reduce their foot print in bricks and mortar stores, or at least adopt a serious online presence as well.

eCommerce has indirectly bolstered the industrial market too. After all, distribution centres and warehouses are crucial to support e-commerce logistics. As we’ve seen in recent years, industrial property values went skyward in line with this growing trend.

Online real estate listings

The advent of online real estate platforms has transformed how Australians buy and sell properties. Whether it’s realestate.com.au or domain.com.au, buyers can now access as much information on properties that the typical real estate agent could have in the nineties.  

For realtors, offering virtual tours and providing comprehensive property data online means that residential and commercial assets are more accessible for interstate and international buyers. Renters, buyers and sellers barely need to leave the comforts of their homes to secure or sell a property. 

Digital listings have hugely increased market competition, and means more accurate property data, property valuations and potentially increased property prices due to heightened demand.

Tech is here to stay

Technology has changed the Australian real estate landscape forever. It’s even changed the way humans interact with property, thanks to remote work arrangements and even automated elements within the workplace. 

And of course, the biggest changes are undoubtedly yet to come. While we speculate what the future has in store for us—from driverless cars to digital currencies—the real estate sector has proven it can adapt to technological changes, and will prove itself time and time again as this technology evolves.

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Properties & Pathways is an investor-first commercial property syndicator in Australia, providing transparent investment journeys through managed property funds. 

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