The commercial real estate sector must be best prepared for its potential “Airbnb Tsunami”
Interview with Vincent Vallois, CEO of Online Real Assets
You mentioned in your earlier interviews that a new kind of real estate consumer, requires new ways of doing business, do you still see the need for innovation in the online real estate sector?
Absolutely. The clients today are becoming less and less predictable as they navigate a market where real estate demand is determined by increasing variables such as customer trends, market sentiments and lifestyle ideals. All of this is happening online where we must be equipped to adequately face the oncoming challenges.
Although the real estate sector is rapidly integrating and making use of new tech like virtual modelling and virtual reality, we are still facing many disruptive changes. Hyper-connectivity has uprooted many industries and it’s also fundamentally affecting real estate. Virtual-space versus office-space. Prime locations remain paramount, but in the era of unrestricted global mobility for business and consumers alike, we are beginning to blur the lines between home, travel and office spaces in completely new ways.
The workplaces of the future will become even more decentralized, unrestrictive and nimble yet very interconnected. The interchangeability and flexible nature of the virtual space has already revolutionized our relationship to the physical workspace. As technology progresses, these changes and their effects on the real estate industry will be even more pronounced.
On the one hand we have the disruption caused by digital technologies to employment and organizational structures, generating a seismic effect on the demand and allocation of future work places, in the other is the evolution of the virtual and digital platform environments themselves.
Today, the bulk of online advertising spending, which accounts for over 70 percent, is channeled mainly into Facebook and Google. However, 75 percent of Facebook users are older than 22. The post-millennials, known as Generation Z have low user interaction on Facebook and are expanding into different online channels such as Instagram or Snapchat. We must anticipate and prepare for these new online communication next trends.
So does this mean that there will be an online tech revolution for the property sector as well?
Oh yes, technology will overturn our assumptions, whether we are prepared for it or not. Look at what has happened to the taxi, hotel, bus and retail sectors. Offline businesses that were stable and prospering once now face major online competitors such as Uber, Airbnb, BlaBlaCar and Amazon, respectively. When considering the impact of these activities, other sectors need to be wary of such changes and this goes for real estate as well. Real estate agencies could be the next classical business model to come under fire, as more agile online competition introduces sweeping new changes. In the same way that travel agencies had to face the music and adapt years ago.
The United Kingdom is already bearing the winds of change for the real estate brokerage industry. Many online companies have taken root, the largest being: Purplebricks, Housell or Cliventa. Digital companies such as these, have already claimed an impressive 5 percent market share and this is expected to reach 15 percent -20 percent by the year 2020.
That’s impressive! So what are the quick wins real estate companies can have? Which Online Marketing strategy would you suggest that companies adopt for real estate in 2018?
Same as the “Location, Location, Location” rule that always worked for Real estate, I would say tomorrow will be about “Branding, Branding, Branding” for those who want to win in the digital space over time. Through all the online noise and chatter, the constant changes and dispersion- it is brand values and quality of service that will determine the winners. A well-branded product combined with a smart communications strategy will ensure the longevity and commercial success of its real estate properties. Such properties will have individualized, relevant and perfectly timed online marketing strategies at their disposal, which will captivate and engage with a very attentive and interested audience. This is a powerful tool to have.
At Online Real Assets we recommend to all our customers a mix of advertising on Facebook where target audiences are still relevant, attuned and active. Also, the price of the ads is reasonably cheap when compared to LinkedIn or Google. The best ROI is yielded by mixing a clearly defined strategy with content creation.
Next is lead generation, because no marketing investment is worth it if you don’t convert business out of it. It could be performed through traffic generation via Google with AdWords or remarketing but the most effective are the large properties search platforms such as www.officerentinfo.com or www.warehouserentinfo.com, both of which are leading in Central and Eastern Europe for online office and warehouse search, helping leasing departments and landlords connect with tenants directly.
Can’t this be simply achieved through AdWords or remarketing?
Google AdWords and remarketing fulfill 2 separate functions. One is to attract traffic on the site which could be converted only if a smart landing-page strategy is implemented or precise call for action has been set up. Remarketing, akin to content generation is more of a midterm goal to remind the potential prospects of the availability and special features of the properties.
I think that with over 2 million sqm to be delivered in the Central Eastern European real estate market in the next 18 months and a potential turn of the economic cycle by 2020; the wise landlords who properly invest in their online strategy NOW, will reap the benefits of a distinct competitive advantage in the years to come.
The content and brand recognition you create is the long-term print of your property and what it does in its environment. It should be more unique, and instead of simply saying green energy and social responsibility, it should rather emphasize unique benefits, tenant relations or even event organization. Such characteristics produce a long-lasting brand recognition.