BOTH the commercial and industrial property segments of the real estate market have managed to escape the tides and tsunamis of technological disruption and innovation. The industry – globally and in South Africa - has been in a pretty safe, comfortable and convenient space. Not a lot has changed despite the infinite opportunities afforded to us by information communication technologies.
The ability to generate, process and efficiently apply knowledge-based information is a key feature critical to the digital economy. It is also a networked economy, which offers many ways in which collaboration can be pursued. Sadly, the commercial real estate and industrial property markets lag behind in innovation and are slow to adopt new technological innovations in relation to the residential real estate market and other industry sectors.
Digital disruption is change as a result of the influence of digital technology. It has an effect on how we do business, engage and interact, and think. This quick-fire quacking process, which often seems extremely uncomfortable at first, is necessary to maintain the rhythm of profitability and wealth creation, to increase productivity levels and ensure that a climate exists for competition and innovation to drive market leadership.
Disruption shatters business models and then reconstitutes them entirely. It threatens existing business models, and may render them obsolete. But, most importantly, it introduces innovation into the mix and offers alternatives to the status quo. It is therefore both a threat and an opportunity.
We can look forward to three disruptions in commercial real estate and industrial property segments over the next few months.
Opening up new investment opportunities through crowdfunding
Real estate crowdfunding websites are springing up everywhere, including South Africa. These sites offer small investors the opportunity to pool their money to buy investment properties, or invest in new commercial and industry property developments.
Despite being one of the most profitable investment opportunities in the market, commercial real estate was traditionally only available to the wealthy elite. Through crowdfunding platforms, smaller investors are now able to participate in property investments.
Of course, South Africa already has a burgeoning stokvel culture. Combined with technology, it really offers an exciting new way for real estate to open up wealth creation opportunities. Interestingly, in the US real estate crowdfunding is the fastest growing segment within the crowdfunding industry, according to the San Diego-based DiversityFund.
End of the commercial property agent model?