Why is Big Data expected to change the real estate industry?
Jadd Elliot Dib, Founder and CEO of Pangaea X, writes how big data is changing the world with insights and analysis that were impossible to obtain a decade ago. The Real Estate industry is one of the many that is expected to significantly evolve with the use of Big Data. Here is how Big Data can catalyse this evolution.
The real estate industry has been one of the biggest drivers of economic development in the world. Today, the industry has various segments that cater to numerous areas including housing, hospitality, and entertainment among others.
While the sector has provided crucial economic stimulus in the century, it has broadly remained unchanged. However, the 21st century, equipped with the excellence of the 4th industrial revolution will ensure that customer empowerment will radically change the sector.
Real estate developers that have in the past based their decisions on customer preferences according to their comprehension of the market will now be able to provide customers exactly what they want as they base their decisions on hard facts stemming from Big Data.
The advantages of Big Data are many and can act as crucial catalysts in the evolution of the real estate industry. The UAE’s real estate sector is booming post-pandemic and investors from around the world are looking forward to investing in this growing market. Big Data can provide investors and developers the tools to enable consumer-centric offerings that lead to further investments and economic development in the UAE.
For investors, developers, agents, and others involved in the real estate sector, the accuracy of data could mean the difference between making a fortune or going bust. For decades, such stakeholders have relied on human intelligence to determine opportunities and related risks.
However, without hard facts, several developments have shown poor results. With the use of Big Data, key differentiators for the development of property such as price appreciation, economic development, visitor statistics, and crime rates can be easily extracted. This data can be analysed and be used to make crucial decisions for a company or government. The data can map out opportunities and known risks in the area and allow decision-makers to make more informed choices.
Property valuation is perhaps the most significant issue big data can solve. Valuations are, while based on some intelligence, subjective in nature as individuals and companies comprehend growth prospects differently.
With such partial accuracy and arbitrary techniques, real estate value can be hard to determine and may not provide fair value estimates. Big Data can provide accurate datasets that can be fed to predictive models that can set an average value of real estate properties. The real estate sector can greatly benefit from such fair value estimates and provide a better understanding of supply and demand trends that further empowers stakeholders in the sector.
Real estate transactions
Finding the target audience for a property is a challenge for developers and agents as consumer preferences keep evolving and the right customer is hard to find for the right property.
With Big Data tools sellers or brokers can analyse customer preferences and target their people by matching their inclinations with the property’s key selling points. For instance, a person looking for a terraced apartment in the heart of the city can be accurately targeted by sellers marketing similar apartments. Such targeted marketing improves return on investment for sellers and facilitates a simpler pathway for buyers.
Risk and insurance
Risks are an important aspect of any investment. Real estate developments can have significant risks such as natural calamities and crime rates in the areas. While most evident risks can be mitigated or factored in the pricing, accurate risk assessment can be difficult to estimate.
Insurance due to such risk factors can force owners to pay unfair premiums resulting in loss of wealth and property value. With Big Data, predictive analytics can analyse a wide range of risks pertaining to the investment and provide an accurate estimate. Insurance companies can accurately estimate risks using Big Data and help the prospective buyer to make the right assessment of the property.
The adoption of the technology is still in its nascent stages but as the advantages become evident, more stakeholders are expected to adopt Big Data for their real estate ventures.