BY Chris Prasad
This may sound drastic, but if you are a real estate negotiator, a brokerage clerk or a telemarketer, it’s time to look for a new job or invest into a new skill set. Why? Because technological advancements and changing buyer behaviour are likely to make your trade obsolete in less than a decade, say researchers at Oxford University.
According to its study on the impact of improving technology, the potential for artificial intelligence (AI) computer algorithms to replace these jobs is estimated at between 97 per cent and 99 per cent – which doesn’t leave much leeway for an alternative outcome.
Local dailies in the United Kingdom reported that the recent research indicates that it is not just brokers but the entire real estate industry that has to rethink how new technologies, as well as shifts in demographics and behaviour, will impact real estate jobs, skills and business models.
Here are some of the key reasons why:
A new kind of consumer
Ever heard of the “sharing economy”? It is an ideology that predicts that more people will rent and borrow goods rather than buy them over the next decade – which isn’t a bad thing, because this rising culture could generate as much as US$355 billion (RM1.44 trillion) by 2025.
It is a consumer movement that has seen the rise of services such as AirBnB and shared working spaces among young spenders. These are facilities that are often directly marketed online.
At the other end of the spectrum, the ageing population is also becoming increasingly tech-oriented, preferring to subscribe to web-marketed assisted living services and facilities which not only offer a place to stay but also rich and fulfilling lifestyles. Gone are the days when they would depend on real estate brokers to help them find a suitable home close to amenities; in the future these will be purpose built.
These are just some of the new demographics determining future real estate success.
Changing jobs and skills market
According to a recent survey by the United States-based Pew Research Centre, a majority of respondents believe that robots and computers will undertake much of the work humans currently do within the next 50 years.
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) identified these six megatrends for jobs and employment markets over the coming 20 years:
- i) Robotic devices will perform many tasks more quickly, safely and efficiently than humans
- ii) Digital technology and “platform economics” will change employment markets and organisational structures. Jobs of the future are more flexible, agile, networked and connected.
iii) Real estate entrepreneurs will need to create their own job, requiring entrepreneurial skills and aptitudes.
- iv) The workforce is ageing as retirement ages are likely to be pushed back further; an organisation’s employee profile is likely to contain more diverse age groups.
- v) Automated systems require higher skill levels for entry-level positions. Income growth will be associated with increased educational and skill levels, as well as growing competition. Low skills will be automated.
- vi) Employment growth in the service industries is likely to continue into the future as we move to a knowledge economy. Service sector jobs requiring social interaction skills and emotional intelligence will become increasingly important.
All of the above will likely redefine what it means to work in the real estate business.
Virtual space versus real estate
Has the “location, location, location” mantra lost its power? Business Innovation will be driven by redefinitions of real estate space. The need for office space is already being dramatically challenged, as co-working space entrepreneurs and outlet owners are pointing out: the increasing interconnectivity, mobility and flexibility of work tasks are putting a big question mark on the need for static real estate.
The traditional office ideology is simply occupying too much space and putting pressure on urban centre infrastructure.
If you totalled up all the land devoted to parking in the US, it would roughly be 6,500 square miles, which is larger than the country’s state of Connecticut.
There is tremendous potential to use space more effectively: currently, almost 40 per cent to 50 per cent of office real estate is underutilised during working hours.
Similarly, utilisation inefficiencies can be observed in any other real asset classes, including housing.
The World Economic Forum’s Global Agenda Council on the Future of Cities recently ranked (Digitally) Re-Programmable Space at the top of their Top Ten Urban Innovations.
Hyper-connectivity has changed the real estate game. Location is still important, but in an age of improved mobility for businesses and customers, the relationship and interdependence between physical and virtual spaces have changed drastically. As technology continues to evolve, its impact on the real estate industry will get even stronger.
Virtual communication, virtual reality and virtual modelling such as Building Information Modelling (BIM) in real estate will not only change the business but also the demand for real estate.
The rise of FinTech
Traditional avenues to funding and finance are rapidly being overtaken by more convenient platforms. New types of investors and financial services innovations – the so-called FinTechs – will transform real estate via the use of internet technology and AI algorithms.
Without sugar coating it much, this might massively disrupt the financial industry as we know it. By cutting out the middleman, such as banks or investment managers, and lowering costs, they are able to make financial services far more efficient and consumer-friendly.
According to Bloomberg, robo-advisers, which use computer programs to provide investment advice online, typically charge less than half the fees of traditional brokerages. The asset classes managed by robo-advisers include domestic equities, foreign equities, fixed income securities as well as real estate assets.
Consulting group A.T. Kearney predicts these novel services will surge and robo-advisory will become a US$2.2 trillion (RM8.9 trillion) market by 2020.
Crowdfunding has already shown how technology can help investors and operators to raise capital, but its adaptation in real estate will significantly shake up how investments are made in the future.