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The IT market in real estate was valued at USD 6.16?billion in 2019?and is expected to reach a value of USD 12.11?billion, by 2025, at a CAGR of 12.2%, over the forecast period (2020-2025). IT is becoming a driving force necessitating a change in the way real estate companies market products to their clients. The shift from physical records to digital-based records and documents has been the initial stepping stone for the adoption of technology in the real estate sector. According to the Profile of Real Estate Firms 2016, by the National Association of Realtors, commercial real estate managers are lagging behind their residential peers in technology adoption.
Blockchain technology is going to make a bigger impact with platforms, such as i-house Token, becoming widespread. The blockchain technology jointly manages the database that records Bitcoin transactions. It is set to change the way of doing business, and real estate transactions may most definitely fall into this category.
As software in real estate aids in increasing visibility and efficiencies within an enterprise, real estate solutions can effectively support the realities of a business and propose effective solutions to any issues encountered by a company.
Increased funding has been fueling the growth and bringing startups and small-sized organizations to scale. The market studied is expected to be consolidated with acquisitions and mergers of new market entrants by market incumbents to remain competitive. This is expected to drive the formation and growth of the real estate technology landscape.
Scope of the Report
Risk mitigation is an essential part of the way Big Data is transforming real estate. Open data across the internet and a variety of Big Data tools added strong force for analysis in the decision making of choosing the right property or home. It equipped customers with valuable information by extracting the data and cross-analyzing it. Big real estate agencies such as Realtor, are pioneering those tools and provide an estimated forecast of the property value from 1 to 10 years. Additionally, they provide information about the neighborhood trends, estimate mortgage payment, cost of ownership, history of the property and current value. The calculation is based on a variety of public data records, market information, user data points by using Big Data analysis formula developed in-house.
Key Market Trends
Cloud Type of Deployment to Account for Significant Share
Digital transformation has created a growing demand for connectivity. The explosion of big data with the Internet of Things (IoT), and constant technology innovations to efficiently manage the complex real estate portfolio require simply connected IT solutions.?Deployment of these solutions on-premise requires different servers to be purchased for a different solution, which not only adds to the redundancy, but also leads to the requirement of additional employment, which further increases the cost-to-completion of the project.
Thus, with a cloud-based solution, such as SAP Cloud for Real Estate, facility managers and lease administrators can manage real estate lease agreements, with all payment and valuation postings being recorded in real time within SAP S/4HANA, providing real estate vendors with a holistic solution to manage operations without additional infrastructure and employment costs.
The stakeholders in the real estate industry are highly reliant on physical paperwork and are required to carry the documentation on-the-go. While employees can access their digital library of files while on-premises (unless the company has not digitized its records), realtors are weighed down by this problem when away from the office.
A further development in the market are platforms for smart contracts and issuing and transferring assets through a blockchain. For instance, ChromaWay, which has partnered with LHV Bank to develop such systems. Thus, leaders in the documentation market, like DocuSign are expected to soon invest actively in the aforementioned technology.
North America Region Account for the Largest Share
The real estate industry in North America seems to be on an accelerating disruption curve highlighted by rapid changes in tenant dynamics, customer demographic shifts, and ever-increasing needs for better and faster data access to allow improved service and amenities.
In the United States, investor sentiment related to real-estate remains positive but has weakened over the past year, owing to uncertainty over economic policy and rising interest rates.
Demand for the multi-family sector remains steady with demographic pressures from millennial and a strong labor market. Moreover, with vacancy rates in the U.S. industrial market at 4.6% as of Q3, 2017, rents have increased significantly across core markets. Also, as per Q2, 2017, CBRE Economic Advisors reported an average net asking rent of USD 6.8 per square foot – the highest level on record.
Apart from that, investment volumes decreased year-over-year by 8% due to tightening monetary policy and uncertainty over economic policies.
World’s most innovative real estate companies, such as Bowery, Buildium, Enertiv, among others, are headquartered in this region. In cities, such as San Francisco, New York, and Boston, 60% of the residents were tenants in 2017. The growth in rental demand has resulted in strong demand for property management services.
Automated interiors also play a key role in real estate. A few companies have started catering to this market and have also sought funding. For instance, Hutch, the virtual interior designer app, raised USD 10 million funding from Zillow in 2017.
Some of the key companies in the market studied include SAP SE, IBM Corporation, Oracle Corporation, etc. These players have significant expertise in the market and are complemented by their robust geographical reach. They have established their platform offerings through innovative real estate management solutions.
With the presence of a large number of international conglomerates and newly emerging PropTech startups, the competitive rivalry in the market is expected to intensify further over the forecast period, and beyond.
Hence, the competitive rivalry in the market studied is high, over the forecast period. Some of the key players in IT Market in Real Estate are SAP SE, Sage Group PLC, Yardi Systems Inc. Some of the key developments in IT Market in Real Estate are as follows:
SAP SE collaborated with Accenture, Capgemini, and Deloitte, to accelerate customer adoption of SAP S/4HANA cloud (one of the most deployed ERPs), in the process manufacturing, discrete manufacturing, and service industries.
Sage launched an independent study that revealed the significant savings made by businesses in three major industries, after the implementation of Sage Business Cloud Enterprise Management. The study objectively examined the potential return on investment (ROI) that organizations may realize, by deploying Sage Business Cloud Enterprise Management (formerly Sage X3).
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