Global trends impacting on SA's real estate industry

As is the case in almost every industry, the internet and technology in general have substantially changed the game for the South African residential real estate industry, with many, if not most, of the innovations seen globally in this space embraced by estate agencies locally.

Dr Golding says whether or not this particular innovation takes hold in South Africa remains to be seen, but what seems certain is that the pace of technological advances is set to accelerate exponentially in the coming years and residential real estate, being the multi-trillion dollar industry it is, is likely to benefit.

This is according to Dr Andrew Golding, chief executive of the Pam Golding Property group, who says according to the National Association of Realtors, in the United States, which has led the way technologically as far as the residential real estate industry is concerned, 90% of consumers now begin their real estate journeys on the web.

“And we are seeing similar trends here in South Africa,” says Dr Golding.

In addition, he says the California Association of Realtors reports that more than 8 out of 10 home buyers are accessing home information on their smart phones and computer tablets in a trend to mobile, which is also mirrored in South Africa, and probably set to increase even further as our access to more bandwidth improves.

“Speaking of bandwidth, according to a recent Wall Street Journal report, the availability of fast internet service is starting to become a major factor in Americans’ decision to buy a home."

A recent study released by researchers at the University of Colorado and Carnegie Mellon University found that fibre-optic connections, the fastest type of high-speed internet available, can add $5 437 to the price of a $175 000 home, about as much as a fireplace, or half the value of a bathroom.

Dr Golding says this is to some extent being mirrored here in South Africa, with the introduction of ‘fibre to home’ across entire suburbs, such as Parkhurst in Johannesburg, and in the process, undoubtedly adding value to the suburb itself and the properties within it.

Such features are also being incorporated as ‘standard’ in many new upmarket developments, such as Steyn City and Park Central in Gauteng.

He says also in line with global trends for real estate agents here in South Africa, technology and in particular mobile apps, are innovations that are becoming increasingly popular tools to increase efficiency, competitiveness and most importantly, to give an added value service to clients.

“For estate agents, the use of tablets for presentations to clients is now commonplace, giving real time listing information and enabling quick and easy storage of notes, templates and presentation discussions,” says Dr Golding.

Some companies now have proprietary software that facilitates e-mail reports to sellers and follow-ups with buyers regardless of the device they might be using.

However, he says one interesting technological innovation that has not yet reached our shores from a real estate perspective is Google Glass.

“The high-tech internet-powered computer, which is worn like a pair of eyeglasses, debuted to the general public in the US recently, at a unit cost of $1 500. But well before its full-fledged consumer launch, it had already begun trickling into the real estate industry, particularly on the residential side.”

Dr Golding says whether or not this particular innovation takes hold in South Africa remains to be seen, but what seems certain is that the pace of technological advances is set to accelerate exponentially in the coming years and residential real estate, being the multi-trillion dollar industry it is, is likely to benefit.

“The big question, of course, is whether or not these technological innovations will lead to significant changes to the role and function of the individual estate agent. As is the case with many other industries, some argue that some degree of disintermediation by technology is inevitable,” says Dr Golding.

“Another view is that, unlike the disintermediation of the travel industry, for example, where direct booking online is commonplace, the real estate industry finds itself in a world where house prices are typically three to five times the annual household income of the buyers, a home purchase is significantly more complicated and risky than booking a vacation and residential property is as distinctly individual as the people who buy and sell it.”

To date, there is no technology that can overcome this fundamental fact and mitigate the risks associated with it, says Dr Golding.