Real estate business people have always exploited the lack of transparent information in the property markets. Superior knowledge is a key advantage for successful business in the real estate industry. Whereas markets for securities provide a high degree of available data about the prices of the goods traded on the exchanges, the real estate sector at the same time lacks thorough availability of data about transactions and prices.
It is not surprising that information technology is considered a powerful tool that that will help to improve the transparency of real estate markets. The real estate industry is on the verge of new trends and developments in the 21st century, and e-commerce is one of the major forces that will shape the new framework for the real estate industry.
What are the implications for the management of commercial property? Most obviously, information technology is capable of handling enormous amounts of data. And the internet adds an important factor: availability of software services worldwide by a simple login on a PC with an internet browser.
This translates into new ways of accessing, screening and monitoring the performance of properties in regard to asset management. For instance, it is easy to access the data of a single building or of an entire portfolio via the internet and have a computational software that features cost, risk, or similar analysis of the portfolio. Facility management is another area where the internet has its place. It is possible to have the properties’ technical facilities (heating, lights, alarm systems, etc) monitored 24 hours a day. Remote access supported by internet tools to control systems implemented in buildings will help to realise the vision of the ‘intelligent’ building in the long run. Virtual supplier-linked loan brokerage for real estate finance is already available today for the private customer. However, in commercial property finance, the credit application process is much more complex and less standardised than for private building finance. Therefore it is unlikely that the financing process will be handled completely on the internet.
The role of real estate brokers is set to change: web applications enhance the ways of promoting properties. The internet has already become a powerful marketing tool. Pictures and even virtual three-dimensional views of the property on offer are possible and systems are also able to give a virtual tour showing the inside as well as the surroundings of a building. The customised software for 3D-visualisation is still expensive. For larger developments and for standardised buildings (for instance large volume terrace houses) this is already an option from a cost-benefit perspective, because the visualisation supports sales activities even if the property is still in the planning stage.
Organising the purchasing process for properties within the company by internet may help to automate and streamline the administrative tasks. The relevant data forms of a property for sale can be standardised and then fed into a data entry tool. In the long run, real estate brokers may be directly interlinked with IT systems of their prospective customers.
Internet portals are already well known for displaying property for the private customer. But will the market for commercial property move to the web too? It should be taken into consideration that the decision-making process for commercial property is more complex and involves due diligence and similar analysis.
Virtual means of communications will most probably not entirely substitute personal communications between seller and buyer. But the administrative processes alongside a property transaction can be supported by e-business tools. The range of conceivable support tools is manifold: financing, performance analysis, cost controlling, etc.
It is most likely that probably property exchanges – platforms and portals for commercial property on the internet will function primarily as pre-screening devices. Customers can scrutiny the properties on offer by ‘virtual means’ and subsequently have visits to properties that are particularly interesting. E-commerce also becomes more important in construction and project management. But as of today many system interruptions in workflows between internet front-end and back office hinder the development of systems with real straight-through processing of data.
E-commerce will definitely change the real estate industry. However, personal consultancy will remain important.