It may be years before technology fully transforms our cityscapes into scenes from Blade Runner, but 2018 already has a pronounced otherworldly flavor that hints at profound changes to come at the street level.
An alphabet soup of tech-oriented buzz-phrases dominates conversation in and around real estate, an industry historically slow to innovate. Artificial intelligence, natural language processing and virtual reality will transform the way landlords market to and cut deals with tenants and sharply curtail the need for brokers, real estate tech specialists say.
Robotics and 3D printing on building sites could streamline new construction and do away with much of the traditional labor force. "Once someone figures out how to 3D print a wall unit with insulation, it's game over for the industry," Zach Aarons, co-founder of MetaProp NYC, said.
Today, blockchain technology — the decentralized digital, encrypted public ledger of transactions — is the most hyped new tech in the real estate sector, Aarons and other experts said. However, the majority of landlords still do not fully grasp its implications for the real estate business, according to Ashkán Zandieh, founder of research company RE:Tech.
"It is still, for them, just a buzzword," Zandieh said of blockchain.
Blockchain's use cases in real estate can be loosely grouped into three categories: title registration, which a handful of governments internationally have already begun to implement; property transactions; and the financing and servicing of assets.
Financing and servicing real estate via initial coin offerings, or ICOs, whereby developers tokenize physical property and sell tranches of it for fractional shares on the blockchain, will be the "trickiest" blockchain use case to achieve, according to MetaProp's Aarons. ICOs are still mostly unregulated, and the real estate offerings the market has seen to-date have essentially been capital raises — the old way of doing business, but on the blockchain — without any added utility framework that would facilitate faster, better or cheaper transactions.
"What I'm interested in is a true-utility real estate utility token that, yes, allows you to raise money … but also allows you to do things with your real estate in a new and innovative and streamlined way," Aarons said.
Some say blockchain and artificial intelligence sooner or later will abolish the need for real estate brokers, but Zandieh does not think that is likely, at least on the residential side. "It's an emotional acquisition," he said of home buying. "With that you want a little bit of hand holding. It's kind of like having an agent in sports or acting. You don't really need one to succeed, but you want one."
Other dimensions of real estate's near-term future may look more familiar. Steve Weikal, head of industry relations at The Massachusetts Institute of Technology's Center for Real Estate, said 2018 is the year that co-working space establishes itself fully as its own distinct asset class, propped up by the confluence of new technology, the growth of the sharing economy, and the rising costs of living for a generation of people "more comfortable with using other people's stuff."
"In the early days, it was just a modification of office, but we've got a lot of evidence [for] it as a distinct product type," he said. "It's vertical urban farming."
Weikal expects more proliferation of co-working businesses worldwide in 2018, alongside other examples of real estate "fracking," where assets are broken into smaller pieces and reconfigured into higher-margin uses. What Airbnb Inc. has done for hospitality in the so-called on-demand economy, the startup Clutter is doing to self-storage, Spacious is doing to restaurant space, and Recharge is doing to luxury hotel space. Traditional landlords, including the big real estate investment trusts, will look to partner with third parties if they do not undertake the necessary innovation in-house to accommodate the new incremental demand, he said.
"The real estate operators and owners are starting to recognize that they ... need to form these partnerships with the people who get the technology," he said.
