Major disruption is coming to the real estate industry with the advent of 5G networks, blockchain, smart contracts, and artificial intelligence.
A panel of experts discussed how these technologies will change the industry at the Urban Land Institute breakfast last week at the Park City Club in Dallas.
Historically, real estate has resisted rapid change to the point that it ranks second to last behind agriculture in terms of technology adoption, said J.J. Williams, regional vice president of Prescient. The government and health care industry rank higher.
Real estate is the last frontier with nearly $8 billion invested in new technology in 2017.
“You’re seeing a huge, huge influx of capital coming into our industry focused on technology because it’s low hanging fruit,” Williams said.
Here’s a look at the future of real estate:
NEW 5G NETWORKS PAVE THE WAY
Telecommunication companies and startups, including Allen-based based Phazr, are working fast and furious to make 5G networks a reality in the next few years.
AT&T announced plans last week to bring 5G wireless service to Dallas this year. Dallas will be among the first three U.S. cities to receive the service.
This network of the future will be 100 times faster than the current 4G network with 1,000 times the capacity. For the real estate sector, this means the Internet of Things will grow at a rapid rate. Smart devices and sensors will become omnipresent, communicating and producing data constantly.
“We’re moving from a people-based internet to a things-based internet.”
“You’ll see all kinds of new devices popping up and you’ll no longer need wires to connect them,” said Chris Garrick, senior partner at Dialexa in Dallas.
This alone could change real estate’s ranking in technology adoption.
“With 5G and IoT and devices in buildings everywhere, it will get there fast,” Garrick said. “We’ll probably move right up there to the top.”
Ashley Glover, executive vice president and chief operating officer of Richardson’s RealPage, said the days of humans being data collectors is coming to an end.
“We’re moving from a people-based internet to a things-based internet,” she said. “I just want people to spend less time plugging data into Excel and more time seeing the results and making decisions. If I can make somebody more efficient and rebalance their time away from data collection and more into decisions, insights, and asking questions then I make their job more valuable.”
NEXT COMES BLOCKCHAIN
The distributed ledger known as the blockchain also has the power to shake up the real estate world. But the majority of the real estate applications are still in the concept stage, said Courtney Naudo, a principal at Deloitte.
She started by explaining what blockchain isn’t.
“It’s not cryptocurrency and bitcoin, it’s much more than that in terms of what it can do and what it enables,” Naudo said. “It’s like saying the internet is email. Same for blockchain, it’s not just cryptocurrency. What the internet is to information, blockchain is for value.”
For real estate, it’s about digitizing smart contracts quickly, efficiently and, arguably, more accurately, without the need for third party verification, she said. That could cause massive disruption to the title industry.
“What the internet is to information, blockchain is for value.”
“It’s a lot of change, how does it affect me? People get scared,” Naudo said. “The more that you can be informed about it and figure out how you fit into that puzzle, the better off you’ll be individually and collectively.”
RealPage is already using digital contracts for apartment leasing, but it’s not on the blockchain, yet.
Another useful application of blockchain will be handling international payments from banks all over the world. Currently, if someone has a vacation house in Paris, RealPage handles the payments from banks in Britain or the United States, so the landlord doesn’t have to do it.
“It’s a very intensive process on the back end to settle globally for all of our customers,” Glover said.
Someday, blockchain could handle these microtransactions and payments from different currencies easily.
“This is the next step beyond what we’ve done at RealPage,” Glover said. “That’s where the blockchain component will go and actually drive value.”
ARTIFICIAL INTELLIGENCE GIVES REAL-TIME DATA
Office and apartment landlords are combing through mountains of data to find real-time market rates — a process that’s much better suited for artificial intelligence, Garrick said.
“This will change commercial real estate when you can start to get that information in real time.”
Having an AI system that can look at digitized leases and come up with up-to-the-minute market rents would revolutionize the industry.
“This will change commercial real estate when you can start to get that information in real time,” Garrick said. “It will be based on transactions happening at that moment. This gives a broker a chance to earn more business rather than processing data.”
The end goal will be filling up the building faster, he said.
Updated 10:04 a.m. Feb. 27.
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