Real estate tech has gradually emerged as a major start-up segment since the global recovery from the economic crisis of 2009. The property boom in real estate hotspots such as Hong Kong, New York and Dubai has funneled funds into the industry. London corporate finance has also been happy to finance local real estate start-ups as the capital has undergone surging property prices over the past two years. Business transfer agents are keeping their finger on the pulse of this dynamic market, although offline players continue to have significant influence over real estate as a whole.
The emergence of major global players is maturing the market
Online property platforms are making rapid headway. When US real estate site Zillow purchased its competitor Trulia for $3.5 billion in July 2014, a global giant was created, demonstrating the liquidity among online players and their hunger for expansion. The growing number of consumers coming online globally and especially via mobile handsets is driving demand for a greater level of property transactions to be completed online.
Industry digitalisation set to provide next growth spurt
Rising access globally to faster broadband Internet speeds is enabling property businesses to offer consumers a more immersive real estate experience. 3D online home viewings, navigational map tools (such as Google Earth) and real-time bidding platforms for commercial properties are helping drive online what is still a relatively antiquated industry. Demand for innovation in the segment is strong, underlined by real estate tech start-ups attracting $700 million of financing from 2012 to mid-2014 according to trade sources.
Urbanisation and newly formed middle classes in emerging economies offer huge opportunities
Economic growth and modernisation is pushing an enormous demographic shift in the developed world: urbanisation. Population inflows from rural areas and a growing middle class are spearheading surging demand for housing in cities and, subsequently, greater opportunities for the online real estate market.
Economies such as China and India are home to huge populations and a growing rural-to-urban demographic transfer, while Internet usage is still low and rapidly expanding. Online property players are in a strong position to benefit from increasingly tech-savvy consumers ready to find housing deals online. According to a report by Google, some $43.0 billion worth of real estate transactions were being directly influenced by the web in India in mid-2014.
Traditional structure of agents and commissions provides a barrier
Despite the liberalising impact of the web allowing consumers and businesses to bypass middlemen when finding a home to buy or rent, traditional agents still have a strong grip on local real estate markets, especially in emerging economies. Removing such monopolies where they exist is complex because agents are backed by associations and a cycle that has been in operation for many years. Disruption in real estate is much harder to achieve because agents provide legal and financial services to letters and sellers that have not yet been adequately replaced by online-only offerings. However, as short-term rental platform Airbnb and taxi services app Uber have demonstrated, traditional payment models can be broken up with a mainstream price-conscious offering.
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