The real estate is a booming industry that over the years has seen profound developments across different parts of the world. The real estate industry has a close relationship with economic performance and progression effects. That is, the fluctuations of the economy influences that market value of properties in the real estate industry. The paper extensively analyzes the real estate industry, whet it entails, origins, developments and transformations over the years, and revolution of real estate with technology. The technological changes relating to the real estate impact on the marketing strategies of modern operations and the development of infrastructure forming part of the real estate. Therefore, taking a marking point of view, the paper comprehensively examines the significance and importance of the real estate and its impacts on the society.
The real estate comprises of the buildings, land, and rights of ownership and control of the air and land below the land. The real estate is a property in which its ownership to an individual guarantees the right to develop the property, control natural resources such as water, minerals, crops, animals, etc. Real estate as a property is protected by law and individuals private, collective, or communally possessing the rights of ownership has the protection to improve the property. This has seen tremendous developments throughout history as real estate transform into a massive commercial entity that sells houses for different purposes. The transformations of the real estate can be analyzed as a profound entity of life as people access mortgages to acquire residential, home ownership, commercial, among other reasons for acquisition of real estate property.
The etymology of the term real estate can trace its origins from the Latin word, res which implies things. Others understanding of the term real estate trace it to the Latin word, rex which means “royal.” This was based on the King’s ownership rights of all and land that is within the jurisdictions of the kingdoms. Bloom (1971, 633) note that property ownership as early as the 17th century served as the prerequisite to vote for the Americans. The voting rights were reserved only to the owners of property indicating the long history and significance of property ownership in the society. In Britain, in the duration between 1787 to 1828 saw the use of property ownership as a core aspect to restrict the number of persons qualified to vote (Ratcliffe, 2013, 219). The right to vote was reserved only to a few individuals who owner property and had the means to pay taxes to the government.
According to Roth (2018), private land ownership is an integral part of the Americans culture and Constitution. The right to property ownership in the U.S. is protected by the Fourth Amendment which prevents government’s entrance into a privately owned property to conduct unreasonable searches and seizures (Monk, 2013). The Fifth Amendment stipulates for the protection of private property through demand of the due process of the law to deprive an individual of property by a government or corporation (Monk, 2013). Also, stipulates for the need of compensation following government’s taking of private property for the construction of public infrastructures such as roads, schools, ports, international airports, railway lines, among others (Michelman, 1981, 1097). Thus, indicate the foundation of property ownership rights in all its forms – real estate as a core component of property ownership (Pilon, 2016).
The aspect of homeownership is a primary for most Americans. As a part of the people’s culture and social phenomenon can be traced back to as early as the 1890s. Roth (2018) stipulate that “homeownership implies success, freedom, and wealth for most Americans.” It is a part of vast majority’s dream to own a home for themselves and their families. According to the U.S. Census Bureau (2011), home ownership in the United States has long been considered as a key part of the “American Dream.” Over times, homeownership has developed profoundly indicating the tremendous growth witnessed in the real estate industry. For example, in 2000, owning of homes among householders stood at 2 out of 3 possessing the capacity to own their own homes. Compared to the 1900s, less than half of the American households owned their own homes. Figure 1a and b below indicates the performance of homeownership rates in the United States since the 1900s to 2000s across different states of the United States.
Figure 1a: Homeownership Rates 1900-2000.
(Source: U.S. Census Bureau, 2011).
Figure 1b: Homeownership Rates 1900-2000 (Continuation).
(Source: U.S. Census Bureau, 2011).
The performance of the real estate in the homeownership rates has been influenced by various factors throughout history. Between 1900 to 1920, the homeownership rate declined slowly but steadily over time. The economic developments and robust growth positively impacted in the real estate homeownership in the 1920s and beyond. The Great Depression of the 1940s pushed the rates of homeownership to the lowest of the century. This is attributed to the effects of World War II which was followed by an economic boom positively impacting on the homeownership rates as high as above 60 percent in just two decades in 1960s and beyond. The Figures 1a and 1b illustrate the performance of real estate in homeownership across different states in the United States with some responding well due to the economic growth witnessed in their respective regions. Thus, the Federal Reserve Bank of St. Louis (2020) sums up that homeownership rates for the United States in the past five years from 2016 to 2020 include 2016 – an average of 63+ percent, 2017 – 63.5+ percent, 2018 – 64+ percent, 2019 – 64.5+ percent, and 2020 – 65+ percent.
There are four key types of real estate as illustrated in Figure 2 below. The types of real estate include residential, commercial, industrial, and land properties. The four types of real estate provide the basis of the categories to which the industry operates from in the acquisition of ownership rights. Thus, understanding of each category is integral to understand what the real estate entails and how it works.
Figure 2: Types of Real Estate.
(Source: Amadeo, 2020).
Residential Real Estate. This category provides homeownership rights. The residential real estate includes the existing and new construction of homes that are open for the market to sale afresh and resale the established property (Amadeo, 2020). The value of the residential real estate varies with the location of the property, size, design, and terms of services such as duration sold or leased (Schulte, 2012, 218). The residential real estate property includes single-family units, condominium, apartments, multi-family house, terraced or townhouse, et cetera. The residential real estate basic purpose is to provide families, individuals, and groups a home which culminates on homeownership.
Industrial Real Estate. The industrial real estate comprises of manufacturing buildings, processing plants and warehousing property. The industrial real estate property is considered as a commercial real estate as it is used for production, storage, research, processing, and distribution of goods. The industrial real estate runs such as factories operations, research and development facilities, mechanical production, warehousing, logistics and distribution centers, transportation and shipping, construction, among other purposes (Schulte, 2012, 218).
Commercial Real Estate. The commercial real estate consists of land and building used for business purposes such as running operations for malls, office space, individual stores, medical facilitates, hotels and restaurants, parking lots, among others. The commercial buildings comprise of property owned to provide income or run day to day business activities that generate income.
Land. The term land outlines the baseline of all real estate properties. All types of real estate as based on developed, developing, or any other form of land status. It comprises of the developed, underdeveloped, and vacant land that may be used for further developments and improvements in the future (Yang and Qian, 2014, 286). In the real estate development of residential, commercial and industrial property – developers acquire the land to put up infrastructure development ready for acquisition. Thus, land development and improvement is done to create value of the property through additional developments of the real estate.
The studies show extensive connections between tourist numbers and the real estate in different countries across the world. The increase in tourist numbers directly impacts in the increase of demand of the real estate expansion from hotels, shopping malls, road infrastructure, residential areas, among other properties integral to the industries growth. The term “tourism real estate” emerged in China in the 1990s (Tsai, Huang, and Li, 2016, 1114). It is used to refer to the rapid development of large-scale tourism resources including resorts, theme parks, residential properties, and housing projects vital to the sustainability of the profound growth in tourist numbers (Tsai et al., 2016, 1114). For example, in the “Overseas Chinese Town of Shenzhen, Ahedonic pricing model was designed and built using a 294 real estate transactions” leading to significant benefits to the tourism real estate value in the region (Tsai et al., 2016, 1114).
van Noorloos (2012, 1) note that the residential tourism investment in the developing countries has been on the rise. This is an indication if the profound positive effects of the increase in tourist numbers to the global south countries impacting in the demand for commercial and residential real estate properties to support the growth. This has seen a great number of the “relatively well-to-do citizens from Europe or Norther America move, temporarily or permanently, to tourist destinations in the South where they buy or rent property” (van Noorloos, 2012, 1). Figure 3 below outlines the key aspects impacted by the increase of tourist numbers triggering tourism real estate massive investments in the local transportation networks, medical facilities, residential and commercial houses, shopping malls, tour operations guides among other categories influenced by the industry (Zhou, 2011, 23). Thus, the increase in tourist numbers to the global south culminates in subsequent investments of the tourism real estate property critical for the sustenance of the high demand.
Figure 3: Key Real Estate Properties Affected by Tourist Numbers Increase.
(Source: van Noorloos, 2012, 3).
Tsai et al., 2016, 1114 states that the increase in leisure and tourism facilities has been the key trend of the tourism real estate. The high demand triggers an increase the property value including the land property value, residential buildings, commercial, and industrial facilities. The tourism real estate directly impacts on the increase in the property value in the regions experiencing a boom in the tourist numbers (Chen, 2011, 2). This is attributed to the high demand and sustainable economic value generated by tourism. Fang, Zheng and Peng, (2009, 186) asset to attract high numbers of tourists, real estate developers commit to improving the real estate tourism industry to ensure availability of world class and international standards properties. This leads to architectural designs of unique infrastructure to drive high number of tourists visiting to experience the marvel of real estate property development and exquisite experiences (Gupta, 2015, 2). For example, the development of the Palm Island containing of massive real estate property is fundamental to the growth of tourism in the United Arab Emirates (Falade-Obalade and Dubey, 2014, 160). Thus, tourist numbers and real estate property development goes hand in hand to induce profound economic and financial growth of the investors, employees, local communities, and the government (Gupta, 2015, 2).
Olaleye and Adebara (2019, 2) note that tourism has enormous impact on the property market maturity in the real estate. In a case study of South Africa and Tanzania – some of the global south countries, Rithacher (2011, 2) states that tourism creates direct and indirect employment resulting from the revenue of quality tourists. The sectors drawing high employment rates include food and beverage, road and air transport services, accommodation, hotels and hospitality services, tourism-related retail, as well as, travel agency and tour guide services Olaleye and Adebara, 2019, 2). The availability of sufficient revenue and direct improvement of the local economy build the capacity for vast majority of locals and tourists to demand real estate properties Tsai et al., 2016, 1115). Thus, induce a positive impact on the industry.
The capacity to remain competitive, the tourism impacts the real estate in the aspect of demand and availability. To sustain demand high traction to tourists and tourism sector, the real estate development is paramount. Studies show that tourism impact on the real estate through development of infrastructure such as electricity, water resources, and the Internet (Olaleye and Adebara, 2019, 3). In turn, these resources the value of real estate property both developed and undeveloped land (Falade-Obalade and Dubey, 2014, 166). Amenities such as hotels, restaurants, shopping malls, residential property for permanent and temporary stay, resorts and leisure park, marinas, recreational and other sporting facilities impact on the need for development to expand the sector (Tsai et al., 2016, 1115). Countries attracting high number of tourists need to have vibrant tourism sector and booming real estate property development. Thus, attract diverse cultures and nationalities due the availability and accessibility of diverse tourism attraction and leisure facilities.
The growth of the tourism sector has a direct impact in the increase in the real estate property prices. This is attributed to the positive revenue generated by the sector due to increase in spending of the tourists. The tourists need for residential, temporary and permanent homes impact on the increase in the property value. This is essential for the benefit of the local communities and the government as a whole (Karoki, 2013, 2). Investors in the real estate strive to attract high numbers of tourists in the regions to create more dividends for the shareholders. The rate of return for the real estate development in tourist frequent areas attract high prices. This is fundamental to the growth of both sectors. Thus, tourism sector expansion is essential for the growth and development of the real estate and property price value.
The application of technology continues to revolutionize how different sectors operate and remain competitive. The real estate industry and market is no exception to the vast impacts of the application of technology (Maududy and Gamal, 2019, 012020). The revolution of the real estate is directly influenced by the technological advancements that contribute to making the sector’s operations smooth and efficient on a global scale (Garebaglow, 2016). The real estate technology influences customer service delivery, management of property, and the development of infrastructure using the latest technology (Warburton, 2016, 2). This presents the profound value of technological advancements causing the revolution of the sector in the 21st century.
The real estate technological revolution enhances how employees operate and the efficiency of work done. For example, the advancement of telecommunication capabilities makes it possible for the real estate employees to operate remotely. This is based on the availability of real estate agents virtually that can assist clients and conduct sales of real estate property (Juan, Chen and Chi, 2018, 952). This is an individuation of the real estate market revolution that makes it possible for partnerships and affiliation of companies in the industry. For example, coordination of employees and companies in the real estate companies facilitating tourist movements from one country to another such as Airbnb provides a massive transformation of the real estate market (Ullah, Sepasgozar and Siddiqui, 2017, 22). Customer satisfaction is guarantee through close collaboration of the employees and different companies in the real estate industry through the use latest technological advancements. Thus, illustrate a proof of the revolution of the real estate industry through technological advancements.
The improvement of functionality in office space access and parking space has been profoundly expounded by the technological aspect of the real estate market. Today, high rising skyscraper commercial and residential buildings are possible through the use of the latest technology in architectural designs and the lift system. The lift systems make it possible and easier to access any office space in the building including top floor offices ranging to hundreds of feet high. The real estate combination of the parking space and use of technological is crucial for creation of convenience and extra services to the customers (Ullah, Sepasgozar and Wang, 2018, 3142). This impacts in the attractiveness of the real estate property in different cities. Thus, massive technological advancements are vital to the revolution of the real estate constructions and development of the infrastructure to suit the contemporary needs.
A combination of technology and innovativeness are key ingredients to the revolution of the real estate industry. The incorporation of technology in the real estate sector has been integral to offering vital solutions necessary to the development of the infrastructure (Garg, 2018). The real estate tech creates opportunities for massive growth and development of the property. The solution induced by real estate tech is based on the software solutions, platforms, and applications used in the sector to provide viable solutions to the needs of the industry (Paredes, 2014, 2). In turn, continues to expand the sector’s potential and impact in the society for growth and development.
The key areas and features inducing revolution of the real estate sector with technology revolve on the big data, the Internet of Things, Artificial Intelligence, building technology, real estate operations automation, augmented and virtual reality, and expansion of the real estate on demand technology.
Big Data. The use of big data in the real estate has been applied in making business decisions and enhancing consumer experience through better approaches to service delivery and efficiency. The use of big data technology and analytics has revolutionized how the industry examines consumer behavior, assess trends, and determine future predictions of the market performance (Mashayekhi, 2019). The big data technology is applied in determining the right consumer and target market in the society. The technology is integral in the revolution of how the real estate companies identify the right buyers and the core components and elements determining the progress of the real estate industry.
The Internet of Things (IoT). The application of the IoT has been utilized in the revolution of real estate properties creation of smart homes and home automation. The smart homes enable the residents of a facility to be able to control items in the house such as curtains, electronic devices, gas usage, electricity, among other devices. This is made possible through hand-held devices such as remote controls and the use of voice command devices (Juan et al., 2018, 952). The smart home technology is critical in changing the view and perception of a property in the real estate market. The smart homes in the real estate market are bound to attract more clients and attain high price. Thus, the value of the house is enhanced creating more benefits in the industry.
Artificial Intelligence (AI). The use of the AI technology in the real estate is utilized by investors in the sectors to manage risks, control expenses, and generate higher returns for the sector. The real estate tech utilizing AI employs algorithms designed to predict the factor of the respective investor concerns and market trends (Mashayekhi, 2019). The AI technology is essential to analyze the client needs and desires and align them with the suitable properties. The AI intensifies the level of efficiency in clients acquiring desirable properties that need their expectation and needs. Thus, create value for the real estate from traditional use of brokers who may inconvenience the client. The real estate sector use of AI tools includes the chatbots that automatically generate answers to frequently asked questions to suit client and investor concerns.
Building Technology. The revolution of the real estate is attributed to the market factors such as the demand for low-cost housing units and environmental sustainability. The building technology in the contemporary world has revolutionized the innovativeness of the real estate sector to build capacity to construct houses that meet the consumer needs, specifications and capacity (Maududy and Gamal, 2019, 012020). The building technology transforming the real estate sector focus on use of prefab building materials and construction approaches to maintain the market attributes and demands. For instance, in 2014 Winsun Company based in China initiated the construction of a 3D printed house (Garg, 2018). The revolution is bound to save the construction costs accumulating up to 80 percent and labor costs accruing to 60 percent. Thus, provide effective and efficient technological innovations vital to provide the necessary technology in the real estate sector.
Real Estate Operations Automation. The capacity to automate customer relationship management, facilities management, and portfolio management is integral to technological revolutionizing of the real estate sector. The approach creates a platform in which companies in the real estate sector can address key challenges affecting the trends and market performance (Warburton, 2016, 4). This culminates in communication efficiency between the clients and the companies, and among stakeholders. Also, it is critical to induce cost efficiency through coordination and collaboration of operations for the companies operating in the real estate industry. The real estate operations automation has the potential to enhance the customer life-cycle and customer local due to service efficiency and provision of viable and timely services.
Augmented and Virtual Reality (VR). The establishment of VR platforms provide the potential customers with an opportunity to tour developed (ready) and predevelopment house units from remote locations. That is, from anywhere in the world – a client can visit, view, and experience the uniqueness of the products offered by a company (Morris, 2015). VR utilize real-time technology that give customers a unique experience in the exhibition of completed house units and progress of the underdeveloped units. Such technology include Samsung Gear VR headset enable prospective customers to experience the houses from the start of the construction through to completion and subsequent occupancy.
Real Estate on Demand. The approach creates the capacity to connect potential buyers with real estate agents ready to take a new lead and provide the services required by the clients instantly. The technology emulates Google and Amazon’s quick delivery systems designed to take the shortest time possible. The revolution in the real-estate industry, placing demand on subsequent solution is critical for the performance of the industry (Ullah et al., 2018, 3142). Thus, impact on competitiveness and high performance. Therefore, indicate the revolution of the real estate as a result of technological advancements in various forms utilized to benefit the industry.
The strategic marketing of the real estate influenced and determined by four key factors. These include property attractiveness, location, profitability and productivity. The functionality of the strategic marketing factors influences each other (Gracatt, 2018, 2). Thus, determine the value of the real estate property based on the suitability of the factors as described below.
Property Attractiveness. This is determined by the architectural design, interior décor, location of the property and the materials used in the construction and filling the building. The demand and competitiveness of the property based on its location influences the value of the property. Therefore, property attractiveness determines the value of the property.
Location. The location of the real estate property profoundly influences the value and pricing attached to the property. Location entails the most crucial factor of the real estate marketing feature. The popularity of the area, commercial entities, and surrounding determine the value of the property (Dumpe, 2015, 130). For example, real estate property based in urban centers where they are commercial business and activities is bound to be more expensive than the rural real estate property.
Profitability. Profitability relies on the productivity of the property. The higher the productivity capacity, the higher the gains attracted by the property in pricing, purchase, or leasing.
Productivity. The productivity of the real estate property depends in the future prospects which relies on the entrepreneurial net product potential.
The capacity to effectively utilize the real estate market requires the identification of the target market =. The middle class provides a potent market for real estate property. The development of real estate property should be informed by the capacity of the target market to afford the units produced. This is critical to ascertain the investors sufficient dividends and benefits from the sale of the properties (Kendall, 2014, 3). In the real estate – housing units’ developments for home and residential purposes both permanent and temporary is the most lucrative. Thus, considering the strategic marketing factors determining the pricing of the real estate property to attract the intended target market.
The consideration of market budget and expenses is vital to ascertain the high value creation. The capacity to minimize the operations costs of the marketing of real estate property impacts in cost efficiency. The savings are vital to ascertain high performance of the industry and financial income for investors. The market budget and expenses can be mitigated through the use of technology. This comprises of social media platforms to link the potential clients to the real estate companies ((Bellman, 2018, 139). Also, the platforms provide sufficient information that is integral to inform client choices. Thus, aligning of the client needs and expectations to the suitable property based in real estate information available on the sites.
The marketing of the real estate property should maintain high level of transparency and integrity to develop brand awareness. The use of technology provides a core component to maintain the integrity of the operators in the sector. The transparency and integrity of the sector impacts on building confidence on potential customers (Dorwart, 2016, 4). The reputation of the companies operating in the industry is essential for the long-term benefits and growth of the sector. This places a profound need for the companies operating in the sector to be focused on delivering the required services efficiently and on high standards. The performance of the sector revolves on the reputation of the operators (Bellman, 2018, 139). Thus, install confidence on the clients and players impacting on quality relationship.
The real estate sector plays an integral role in the economy of a country. The importance of the real estate is embedded in the fact that in itself it an economic enabler. That is, the provision of commercial facilities offering space for businesses to operate, the real estate provides the necessary infrastructure necessary for economic activities (Rogers and Koh, 2017, 2). This impacts in the attractiveness of different locations making them centers for international trade, transport hub, financial and commercial activities, among others. Thus, impact in the attraction of investors, skilled labor, and flow of capital to sustain various economic activities and capitalize on the existing opportunity.
The real estate provides numerous employment opportunities for thousands of people globally. This provides an opportunity for revenue generation and source of income for thousands of households. The employment opportunities allow many people to acquire revenue that can be transformed in investment capital (Kauškale and Geipele, 2016, 6). In turn, set a precedent of self-sustenance and economic growth cycle. The employment opportunities comprise of financial advisors, facilities managers, real estate agents, engineers, builders and constructors, architects, among others. Hence, employment opportunities are a fundamental benefit of the real estate sector to the society.
Also, the real estate sector impacts in the development of infrastructure. To attract high number of potential clients and to sustain demand, construction of new infrastructure is an integral part of the real estate industry. The development of infrastructure such as hotels, marinas, creational facilities, malls, road networks, among other infrastructure is key to growth (Appiah, 2007, 2). This impacts in the growth and development of the country. Urban centers have highly developed infrastructure to the expansion of the real estate sector leading to economic growth. Thus, competitiveness of the cities is sustained through real estate growth and expansion.
As well, the real estate presents an opportunity for investment and massive capital commitments. This creates an opportunity to attract foreign direct investment which is integral for economic benefits of a country. The investment opportunities are based on the potential growth, benefits and dividends provided by the sector (Rao and Ge, 2015, 3). This is critical for long-term economic growth and developments essential for a country’s development. The transformation of the real estate provides the necessary infrastructure to attract international conferences and trade fairs. For example, housing of international organization and conduct of international forums are key for foreign exchange gains. Thus, benefit a country profoundly in the long-term.
Moreover, technological developments and infrastructure investments in the real estate is vital to the tourism attractiveness of a county. The economic growth from the tourism industry impacts on the growth of the country. The increase in the number of tourists is directly influenced by the availability of sufficient real estate property to host them (Worzala and Tu, 2010, 21). This includes availability of residential areas and opportunities for investments creating extensive benefits to the society. The high demand placed by increased tourist numbers culminate in the growth of the sector. Subsequently, overall growth and development of the sector must go hand in hand with the developments in place. Hence, set course for future developments and competitiveness.
Furthermore, the real estate sector provides homes for millions of people around the world. The capacity to own a home is essential to access permanent settlement and growth of the self and family. The availability of affordable real estate property is critical for the access and acquisition of housing units to solve the housing problem (Waller and Jubran, 2012, 67). Governments around the world ought to formulate clear policies that support the investments in the real estate to provide millions of citizens in the respective countries with quality homes. This is a vital economic growth opportunity which impacts on the stability of the people. The capacity to own a permanent home is key for the overall life satisfaction.