Technology once only imaginable in classic science-fiction is forming the fabric of modern life. From robots with the capacity for empathy to self-driving cars, the visions of yesterday are becoming the happenings of today. The effects of these changes will eventually be unavoidable and unmissable in our personal and professional lives. As real estate strategists, investors, and tech enthusiasts, we’re particularly enthralled by technology that—like real estate crowdfunding—disrupts the status quo with a simpler, more democratic alternative.
Two recent tech innovations embody this ideal: virtual reality and drone technology.
Virtual reality—technology that immerses a user in a virtual environment, allowing him or her to interact with it—has existed conceptually for decades, but has only in recent years emerged as a transformative, lucrative, and awe-inspiring industry. Since 2010, investors have poured nearly $4 billion into startups working on virtual reality. (Fortune) Companies such as HTC and Oculus—the latter of whom was purchased by Facebook for $2 billion in 2014—raised $408 million within the first nine months of 2015, with a total estimate of $1.5 billion raised by virtual reality companies since 2012. (Soho Loft)
Big-name investors see virtual reality as a high-potential market. But the technology is still evolving and not yet widespread (the Oculus Rift is available for pre-orders now, the HTC Vive on Feb 29, and the Microsoft Hololens will begin shipping “in the first quarter” of this year). Digital design firms charge tens of thousands of dollars to build virtual customizable spaces for wealthy buyers. (NYT) Consumers have therefore had limited exposure to the technology. Can virtual reality achieve ubiquity in the immediate future? Is the demand there, or will the technology ultimately fail to catch on?
Regardless of its fate, virtual reality carries some undeniable advantages for real estate professionals, companies, and investors.
Greater Autonomy for Buyers
A simple virtual reality headset allows a prospective buyer to take vivid 360-degree tours of multiple homes and diverse neighborhoods from anywhere in the world. This greatly simplifies a potential buyer’s access to a home—especially in cases where the buyer lives hundreds (or thousands) of miles from the property, or when the home is under construction.
Furthermore, where before an agent walked a buyer through a home, dictating the pace and access to an interior, virtual reality shifts exploratory control to the buyer. You can use a VR helmet to browse whichever rooms you wish, with the ability to loop back and forge your own path through a home. VR even allows buyers to view specific spaces over a custom length of time (imagine alternating the view of a patio between day and evening). In an era where first impressions can make all the difference, real estate sellers can benefit by giving more freedom to buyers.
First-Hand Diligence for Investors
Virtual reality gives real estate investors the valuable ability to experience a project—its floorplan, installations, and other architectural features and designs—before deciding to fund it. Moreover, a detailed projection of a property can enhance an investor’s faith in a company and project.
Cost-Efficient for Employers
While an expensive investment—with headsets alone costing upwards of $1000—virtual reality technology can reduce the amount of money and time a company spends on trips to a site, allowing employers to spend that money and time on more efficient aspects of the project.
Since Fundrise launched a drone last summer to take aerial pictures of new properties for crowd investors, real estate crowdfunding has been alight with the possibilities of drone technology. (Technical.ly) Drones are becoming more and more common for private use. Although there are strict limits on how and where they can be deployed, various firms also see commercial advantages to utilizing the technology.
Moreover, drones compliment the purpose of virtual reality. Whereas VR lets you see the interior of a home and its immediate surroundings, usually from a ground perspective, drones fill in the rest of the picture: the home’s exterior, surrounding properties, and the neighborhood beyond.
Currently, firms must apply for a Section 333 waiver to deploy drones for commercial use. The FAA released proposed rules for commercial use of drones this February and, according to FAA Deputy Administrator Michael Whitaker, is hoping to finalize rules by mid-2016. (NWI.com) When enacted, these rules could have an impact comparable to that of the JOBS Act in 2012: an event marking a new way of completing real estate projects.
While pessimists argue that virtual reality and drones are over-hyped—that their appeal is limited in scope and will pass like any other fad—the financial infrastructure and regulatory measures influencing these two innovations shows otherwise. VR and drones can accelerate real estate acquisitions, facilitate more efficient reporting for investors, and save companies cash in the long-run. These technologies are entering our lives today, with the power to transform our industry tomorrow.
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