Six technologies shaking property investment to its core in 2024
Huge technology developments in 2024 are set to shake up how buyers find the types of properties that will make good investments, as well as how properties are managed and transacted.
Think you know everything there is about investing in property? Well buckle up because big changes in 2024 are set to shake up how buyers find the types of properties that will make good investments,
The revolution in data and artificial intelligence (AI) among other things are changing the face of property investing, while making transactions faster and safer.
Here’s a look at the trends:
1. Big data
It may seem counterintuitive to call big data a trend for 2024. Property has always been rich in data revolving around markets, geography and property features.
But the world’s use of data is now seriously next level and the tipping point has been breached.
The Economist famously described data as ‘the new oil’ back in 2017. Back then, the world created about 26 zettabytes of data annually. Today we create 120 zettabytes of data a year – growth of more than 460 per cent.
One zettabyte is equal to a trillion gigabytes. If you need help visualising it – a typical Netflix stream uses 24GB a day - so it’s the equivalent to 41.7 billion Netflix accounts.
Where this is going to impact how we invest in 2024 is in the overlay of personal and property data.
Instead of scrolling through reams of columns about suburbs, properties and yields in spreadsheets or across platforms to find potential matches, the data from our banking and payment histories, social media and past behaviour will identify our personal preferences, risk profiles, and serve up suitable homes for consideration that are exact matches.
The bigger the dataset, the greater the confidence the property will meet our expectations as an investment, be affordable financially, and fulfil our emotional investment needs.
Big data is also driving the transformation of industries that have been laggards at embracing digitisation, including councils and local government, construction, building, and logistics. Efficiencies in these areas will, in time, reduce the cost of new property construction and support better housing supply policies.
ChatGPT changed the world in November 2022, closing the gap between non-technical humans and machines by making natural language the way it receives instructions and provides answers, rather than lines of complicated code.
Suddenly any Tom, Dick or Carrie can ask ChatGPT to write an investment proposal, project plan for moving house or extol the virtues of property investment as a haiku.
Just don’t ask it to identify suitable investment suburbs – unless you’re absolutely confident that it’s pulling from the latest data, as ChatGPT is notorious for sounding confident while seemingly hallucinating at worst, or drawing upon dated information at best.
But while ChatGPT may be the AI poster child, it’s behind the scenes within proptechs across the country that AI is really starting to gain traction.
AI is driving even greater data acquisition, crunching the never-ending data stream that is produced as we design, build, buy, sell and live in our homes.
New AI-enabled apps understand if the built environment of any given address is fulfilling its development potential, and design alternatives that will meet council codes while also providing detailed financial modelling, including sale prices.
Automation and machine learning is being installed into property management apps that reduce the manual workload of managing properties, provide support to tenants and predict the work required in advance to maintain, improve the value of the asset and deliver more frequent and detailed reporting to investors.
We are already seeing AI apps that provide personalised advice and guidance for investors to identify properties that meet criteria and answer questions. Expect the trend to accelerate in 2024.
3. Internet of Things (IoT)
The Internet of Things – devices that are connected constantly to the internet – have been around for a while but failed to capture the imagination in Australia, where the need to monitor a doorbell, or turn the lights on before you get home has been greeted with a yawn.
Expect that to change in 2024 as IoT devices start to solve some real problems that irk homeowners and investors, such as smoke alarm testing, water and gas leak detection, and reducing the cost - and carbon impact - of heating and cooling systems through constant monitoring and temperature regulation.
This removes the time, inconvenience and cost of a tradie turning up to press a button to test a traditional device, which is the bane of renters and property managers across the country.
IoT also provides an army of mini bots that are effectively single purpose data capture devices inside properties that both significantly improve the safety of our homes and provide better insights and data to support more proactive maintenance and property management, while delivering ongoing running cost savings.
They also remove the need to phone a tradie when things go wrong, only to be told there’s no part and they’ll need to come back at some indeterminate time in the future. IoT is self-diagnosing and sends an alert to base when maintenance is required.
There is a cost to this ever-growing big data universe, the army of IoT bots and constantly self-learning AI.
Cyber security threats are real in property and will become even greater in 2024 as the high volume and high value transactions in real estate put large targets on our backs.
Cybercrime is now organised and industrialised globally, with 33 billion electronic records expected to be stolen this year, making it an increasingly costly issue for business.
Expect multi-factor authentication to become essential across every property app you use in 2024. Providers who do not deliver it will increasingly be questioned.
We can all hope that transacting via email – which makes us extremely vulnerable to scammers – becomes a thing of the past over the next 12 months.
When buying or selling a property, expect instead to be invited into a secure transaction room by your conveyancer or real estate agent where documents can be digitally signed and exchanged and payments made without the risk of the transfer of large sums being redirected to a hacker account in the Caymans or Nigeria.
While cybercrime feels terrifying, leaning into security technology is the best way to protect us all. Holding on to traditional ways of transacting through phone and email, while familiar, makes us more vulnerable than ever.
5. Environment and energy efficiency
If there is a single trend that will change how we invest in property in 2024, it is the impact of the environment and the way our homes use energy becoming one of the defining features to impact property valuations.
Australia signed global commitments to produce net zero carbon emissions by 2050. Decarbonising our residential property is key to this commitment, as 10 per cent of our current carbon emissions and 24 per cent of electricity use are created by residential property.
By 2030, the government has set goals to have 100 per cent of our homes electrified and using renewable energy.
This is quite the commitment. CSIRO assesses that 78 per cent of our existing housing stock is rated just 2 out of 7 stars – a fail in anyone’s books.
Environmental legislation also obliges big business, especially the banking and insurance industries, to report on the carbon risk sitting inside their portfolios and outline the steps they are taking to reduce it.
Enter the carrots and sticks of energy efficiency upgrades that we can expect to start seeing in 2024.
Property owners and investors will be rewarded with cheaper interest rates in the form of ‘green loans’ to upgrade property and make it more energy efficient, improve insulation and replace gas appliances with electricity sourced by renewables.
On the other side, landlords who refuse to upgrade will start to find insurance and other services more expensive, good tenants harder to come by, rents lower and interest rates higher, while the value of their properties will also be lower than their more energy efficient neighbours.
This nevertheless creates opportunity, with the new definition of ‘renovators delight’ meaning a property is ripe for energy efficiency upgrades.
6. Transparent risk
Actuaries have been calculating risk since before Dickens was a boy but to mere mortals, the algorithms have been impenetrable black boxes that decided the cost of things like insurance premiums, interest rates or even build costs and no further correspondence could be entered into.
That, however, is starting to change and 2024 is likely to be a pivotal year for the data democratisation that makes risk more transparent.
The outcomes of all of the big data and IoT around us being interpreted and better understood by AI means risk is no longer an unknown quantity that requires calculation based on assumption – usually postcodes, crime statistics and geographic location.
Instead, risk profiles are becoming something that can be identified down to personal specifics based on known data – billions of individual data points – and the more data we share, the more robust our risk analysis.
With risk known rather than guessed at, we can hope that this brings some charges and services down in price.
The way we interact with big corporates will change. Armed with personal insights about our own behaviour and where we fit on the risk scale, we’ll be able to challenge the boxes corporates put us into for convenience when calculating fees and charges and barter with our personalised data insights for better deals.