In recent years, we have been amid a digital revolution that is dominating all aspects of life. However, when we look at the global real estate industry, which is more traditional and outdated, the industry has not yet embraced technological changes. Even though the field of real estate demonstrates constant growth, with more capital flowing into real estate investments which represent an increased demand due to the significant population growth, it can also be said that the process of purchasing a property has hardly changed over the past few decades.

Imagine the following situation: you have saved money from various jobs and investments, and you want to start investing in your future. You put your details into a smart financial planning software where it draws your financial information from several sources –current income, expenses, various savings, options for taking financing, etc., and considers the goals you have previously defined. It then offers you alternatives to investment, including the option to invest in real estate overseas. Upon receiving this option, you are interested in purchasing or investing in the suggested real estate property but are unable to fly to the destination and physically examine it, yet you want to obtain as much information about the property as quickly as possible. You turn to a virtual real estate firm, which knows how to identify and locate properties using Bigdata software and smart algorithms that locate the right property for you. A virtual real estate agent meets you and allows you to use virtual reality glasses to see the entire property, accompanied by an avatar character that gives you a virtual tour of the property.

Assuming that this is a property that is still in the development stage, the agent will provide you with smart simulations of the property and expected architectural design, giving you a realistic visual of the property. Ultimately, after receiving all the necessary information and deciding to move forward with the purchase, you choose to pay for the property through a cryptocurrency, by digitally transferring it to the property owner.

This entire process is completely technology-based, from the first stage of the initial interest in the property to the final stage of the purchase. This process is considered "Proptech", which represents various technologies for the real estate industry. This is one of the hottest topics in the world of real estate right now, but it is a vision that has not yet been fully realized. The tangible real estate world still has a long way to go to make the transition to the world of digitalization, but you can already see sparks of change.

One such spark was the recent acquisition of the Israeli company Skyline by real estate giant JLL for about $100 million. Skyline uses artificial intelligence and machine learning algorithms to process information quickly and generate operational insights for real estate experts. This move is expected to enable JLL customers to better assess the value of assets, reduce expenses, identify promising investment opportunities, and make critical business decisions (such as when to raise rents, when to make improvements to the property or sell an asset). Other areas of technology-based investment can be seen in the financial services industry, where several firms have invested heavily in financial management tools and automation programs. When it comes to smart financial management software, there are several companies operating in the field, including Betterment, a global financial management company, and Moneytor.

In addition, earlier this year a huge deal was signed in Miami, in which a local penthouse was sold to an anonymous buyer for $28 million – and was paid for entirely in cryptocurrencies. There is great anticipation that blockchain-integrated real estate will be significantly assimilated into the existing real estate world as early as the next few years. Blockchain technology offers unparalleled speed by producing smart contracts that can be executed directly between the purchaser and seller with an almost immediate transfer of assets.

I am a big supporter of the integration of innovative technologies into the real estate world. I think it should be an aspiration of every major player in the field who wants to continue to be relevant and maintain a competitive advantage. Such adaptations from physical to virtual interactions were dynamically introduced during the COVID019 crisis where personal meetings were replaced by telephone conference calls or video meetings, the handshake became an elbow-tap and virtual open houses led to the purchase of properties that had not been seen before by the buyers.

The implementation of new technology in a traditional industry requires a deep understanding of the organizational culture of each company and the nature of its customers. Real estate companies should hire innovation managers whose job is to formulate a clear and long-term innovation strategy. These managers would be tasked with looking for new opportunities in the market and finding start-ups that have developed interesting technologies, which can be embedded into their company and provide added value.

Simultaneously, the customer side must be considered.

Current consumers in the real estate market are more focused on the tangible asset, with confidence built through strong rapport and relationships, rather than a company's digital presence. Today, a private citizen who wishes to purchase property still prefers to physically see the asset, meet with their real estate agent with whom they have created a trusted relationship, and receive a human response for any question that may arise throughout the purchase process. However, as time passes by, the gaps between physical and digital will narrow and those technologies will prove themselves in the field, giving each potential buyer the confidence required to adopt them into their investment strategy.

Written by Matan Pertman, Co-Founder and CEO of RM Group