Data is what serves as the most important ‘raw material’ of the real estate industry today. From planning products and policies depending on the insights gathered from different surveys to relying on it for the generation of buyer leads. Or gauging the performance of a given company to analyze how successful a particular product/service was, so as to decide on the next course of action, data science in real estate has developed as a whole new discipline of study.
Data science applies advanced level analytics and machine learning models to evaluate information and enhance decision-making in the developmental process of the real estate arena. With its help, consumer behaviour can be understood, business strategies can be optimised, emerging market trends can be assessed and any predicted risks can be artfully evaded and handled. Hence, the benefits of this field of study promise to influence customers, investors and agents alike.
From asset management and property analysis to value appreciation and improving marketing strategy, data science opens up novel avenues for the growth of any real estate company. In the paragraphs below, we will shed light on how PropTech, particularly data science, is bringing major changes into the whole industrial setup by helping real estate professions make data-driven decisions.
1. Analysing Data to Predict Market Trends
Data science in real estate helps to forecast property market trends and any risks that might exist in the investment. By using data that consists of a combination of different variables and predictive analysis implemented to that, data scientists understand and analyse how-
- consumer groups have been behaving overtime
- what type of properties have been in demand
- the kind of leisure activities consumers are involving themselves in
- facilities that can be integrated with residential spaces to enhance consumer experience
- evolution in the rents being charged
These factors play an important role in determining how well or bad an investment would be able to perform.
2. Formulating the Property Price Indices
One of the most significant applications of data science in real estate is to collect and leverage information relating to the adjoining local areas. These include, supermarkets in the vicinity, educational institutes, business and commerce hubs, traffic in the neighbourhood, crime rates, cafes and restaurants, and physical infrastructure. These qualitative and quantitative variables play in to influence the pricing of individual properties. Furthermore, these variables also work to give us a sense of what areas might emerge as popular centres in the future.
Additionally, through data science in real estate, a system can be deployed wherein the individual variables work as additions. For example, there can be an average price set for the properties in one specific building. Now, the variables affected by the floor number, size of rooms and the view from the window, work as additions that are charged for additionally. Therefore, the internal variables of the property alongside the hyperlocal variables work to formulate the property price indices and help real estate agents to cater better to the needs of the clients.
3. Understanding Investment Performance
In the field of real estate, no two properties can ever be identical. Variables differ even with properties in the same building, not to mention the changing value of properties with time. Understanding individual sub-market performance is therefore a difficult problem to deal with. As a solution to this issue, the changing price of an asset (with respect to the lifecycle, existing and upcoming infrastructure) can be tracked over time by using data science in real estate.
4. Estimating Profitability of Investment and Construction
Whether one invests in a commercial real estate space or a residential one, location intelligence acts as a very important aspect to gauge whether the investment would be able to yield the expected profits in the future. With the proper information about the geography of a particular property, accessibility of services around it, land ownership, zoning, regional laws, etc, an investor or a real estate consultant can make a more informed decision by visualizing and analyzing prospects.
Not limited to the aforementioned point, data science in real estate can also turn helpful in evaluating environmental conditions in order to finalise an appropriate time for beginning the construction activities.
5. Managing Finances of Properties
Let’s assume that you manage a diverse pool of properties across various localities in Mumbai. All through the work is the same, you need to evaluate the reasons why one property is draining more resources in comparison to another. This could be in terms of losses incurred due to higher vacancy rates or systems malfunctions. Fortunately, data science in real estate management helps you in identifying the root cause.
This is done by gathering data such as, receivables and budget, profitability and cost analysis, planning for tenant build outs from different properties. The data can then be evaluated based on various metrics, you can zone down to the bottom of the problem, and formulate solutions for the same.
6. Trimming Down Energy Consumption
With the incorporation of data science in real estate, identifying the root cause of energy wastage has now become possible. Nowadays, there are a plethora of apps and software available that gather and assess energy data from smart meters and sensors, and can also detect faults in the heating, ventilation, and air conditioning (HVAC) systems. Based on the weather changes and the usage pattern, these apps offer a holistic understanding of energy spendings. This can help property managers, homeowners, and tenants to alter their lifestyles and change energy consumption patterns.
7. Simplifying Home Searching or Buying Process
Incorporating data science in real estate not only benefits the investor and broker class, but it also streamlines the home searching, buying and renting process.
- It is very much possible that real estate property prices vary drastically across different cities. This can be attributed to factors that range from how well it is connected to the areas around, the commercial centres present in the area, and the modes of transportation and commutation. When these are effectively analysed through data science, it helps buyers decide upon a living location or understand the expenses involved if they have made up their mind to shift to another city.
- By examining user behaviour, their lifestyle preference, budget range, amenities preference and other such factors, you can offer property suggestions that match the requirements of the users. This will therefore save customers’ time in scooping through multiple property listings.
8. Revamping the Marketing Strategy
Data science in real estate aids in collecting and examining information through multiple sources. This can help agencies in understanding the behavior and preferences of the consumers, assessing the competition, and marketing their services in a more creative way. Once user preference is understood, virtual staging, 3D rendering and visualization, Google or Facebook ads, and listings can be optimized in order to attract the target audience.
Also, considering that an increasing number of people now prefer to look for property listings online, it is really important to pay attention to the real estate posts for social media marketing alongside maintaining the basic aesthetics of the content that is posted. This allows buyers to streamline their property research and boil down on only a few options that they are genuinely interested in.
It is also a common misconception that data analytics and AI nullifies the role of real estate agents or acts as a replacement for them. What is important to note here, is the fact that data science in real estate is simply helping in streamlining, organising and tailoring it as per the client demands and ensures satisfaction.
9. Identifying and Segregating Leads
A very interesting way to harness the power of data science in real estate is in the field of lead nurturing and segregation. Quite often, it becomes difficult for a real estate agent to follow up on every one of the hundreds or thousands of leads that they generate from multiple online and offline campaigns. However, with data science-backed applications and softwares, giving a “seller or buyer score” to leads which are most likely to sell/buy properties has now become possible. This assesment is made by evaluating factors like demographics, income changes and purchasing behavior.
Prospects for Growth
Modern technologies have revolutionised the real estate market. Many companies have already shifted to big data-machine learning powered software for analysing data, calculating the profitability of an apartment purchase, portfolio management, and estimating property rentals. This leads us to the idea that the prospects in the field of data science for real estate are, by no means, limited.
The study of how customers, groups, or organizations select, buy, use, and dispose of ideas, goods, and services can impact, inform and govern the decision-making process of the producing firms and organizations to a large extent. And data science plays an important role in understanding consumer behavior, thereby providing services that can be tailored as per the demand.
However, it must also be mentioned that data science is a relatively new domain of exploration in the industry. This is why there still remains a lot that needs to be unearthed as far as the potential of this science is concerned. But one thing that remains sure is that artificial intelligence, predictive, and data science, collectively, are expected to take the industry by storm!
