Real Estate: the challenges of digitisation in the housing ecosystem
Category: real estate, technology, business, digitalisation
Category: real estate, technology, business, digitalisation
The time has come for the Spanish real estate industry.
Alongside early macro indicators that herald the cooling of the economic boom cycle, the demands for change arising from the digital context anticipate a comprehensive repositioning of the map of players and value propositions in the sector for the next 10 years.
At The Cocktail we have accompanied our clients in their internal reflection processes to anticipate the transformation of their sector; adapting their traditional business models to the risks and opportunities generated by technology and the new needs of users:
Innovation in Real Estate has little to do with owners, the process of buying, selling or using a property; but rather, with everything that surrounds it and what a user calls 'home': its administration, its protection, its 'neighbourhood', its day-to-day life?
In this context, four key challenges for traditional real estate players are identified:
1. Demand hunting - or how to understand different users in order to adapt traditional 'business models' to their needs.
The real estate industry has traditionally been product-focused and has failed to generate relevant intelligence around user needs. This has resulted in a lack of sophistication in its commercial processes, as well as a postponement of digital transformation and personalisation.
In a digital environment, and especially during occasional and painful journeys such as Real Estate, users demand 24/7 attention; a 'happy path' that consistently exceeds their expectations in any interaction. Understanding users' particular needs and actively pre-managing them becomes a key part of the business relationship.
In this sense, any agent needs (at least) to develop a 360º vision of its users, manage a productive digital lead capture, install more agile tools than the traditional ones to measure and streamline its commercial processes (CRM), rethink the model of the analogue era where 'offices' were the nerve centre of its activity, etc.
2. Journey' mapping - or how to understand customer experiences as a starting point for the revision of internal company processes.
Regulation and 'legacy' ways of doing things have generated processes that are excessively bureaucratic, tedious and, most of the time, not very justified or user-friendly.
In the face of these experiences, the forms of user interaction in a digital world (Amazon, Google...) form the minimum expected standard. Around these platforms and 'copying' their functional standards, the new propTechs have built their internal processes.
In this context, traditional players must review their historical ways of operating in a new light: what processes can I automate to make life easier for my user? (negotiations, contract signatures, incentives); is all this information really necessary; can we simplify or make interactions more user-friendly through self-management or digitalisation; what role should we reserve for human-to-human interaction in the real estate journey?
3. USP or how to find a value proposition or service that is truly understood as a differential by users.
The atomized Real Estate market tends to commoditization, so beyond the investment in the brand, it is difficult to differentiate the value proposals. Users end up basing their decisions on basic hygiene variables (price or personal knowledge of the provider).
This context has become an excellent breeding ground for the development of an ecosystem of startups that take advantage of this lack of customer focus, offering experiences that become differential without needing to be particularly sophisticated, as they focus their value proposition precisely on user-oriented business models (transparency, self-management, speed...).
The challenge for traditional agents lies in finding and legitimising their differential and unique value: differences in the customer management model, offering packages or turnkey solutions, extension of the service offer to new segments and/or services (co-living, integrated housing management, sustainability, crowd-funding...).
4. Ecosystem connectivity - o which vertical/horizontal we intend to occupy within the ecosystem of liveability.
As has been the case in other sectors, we anticipate an integration of players to manage users at the end-to-end, avoiding cross-platform crossovers.
To date, there is no platform that aggregates all these services and no player that has managed to capitalise on the full customer lifecycle to exploit the value around buying, selling and renting: removals, refurbishment, insurance, etc.
But, starting today, we can think about the role that the different actors will want to play in this ecosystem and prepare their systems, people, data and processes for this purpose (by simplifying their tools, exposing and sharing information, automating their processes...).
Regardless of the selected positioning and the greater or lesser impact of the different challenges... there will always be a common element blocking the transformation of all companies: the human element of 'embracing' change.
Until now, there was no 'need' for change and no apparent benefit in being 'first' in the race. However, the paradigm has changed. The demands for change are external and the response to them much more agile on the part of new players that have either the resources (funds, VCs), or the information and knowledge of the client (banks, insurers) or the agility derived from the absence of legacy and inheritance from the past (PropTechs) that make their entry into the sector occur at dizzying speeds and impacts.
In conclusion, the digitalisation of the Real Estate sector is no longer an option, but a moment of decision. It is up to the players to choose which positioning to select and how to tackle the commercial, operational, value offer and place challenges in the digital ecosystem they want to occupy; always understanding that embracing change is the first obstacle before a true comprehensive reform.