PropTech revolution has arrived in the UAE, study finds
The global “property technology” (PropTech) revolution has arrived in the UAE, with more than two-thirds of UAE home buyers turning to technology to help gather information relevant to their purchases.
According to new research from HSBC, nearly three-quarters (72 per cent) of UAE buyers search for available properties online, 67 per cent check the value of their current home, 65 per cent look for information on taxes and regulations, 65 per cent research where to live, and 64 per cent explore prospective home prices.
In its first year, the new global research report from HSBC looks to provide insights into how people really feel and behave when buying, renting, and owning their own homes. Beyond the Bricks, The Future of Home Buying assesses the views of over 9,000 people in nine countries, including over 1,000 respondents in the UAE.
The HSBC-commissioned research quantifies how the wide-scale use of technology in the real estate purchase process is bringing the PropTech revolution to the UAE.
PropTech to disrupt real estate market
The UAE findings reinforce forecasts that in the wake of the revolutionary change that financial technology (FinTech) is having on the banking sector, PropTech will similarly disrupt the property sector. Property websites are increasingly turning to technologies such as artificial intelligence and virtual reality to transform each stage of the home buying process. They are delivering end-to-end services, including many of those traditionally offered by estate agents. The scale of this transformation globally can be seen in the funding of disruptive PropTech firms, which rose phenomenally, from $221 million in 2012 to over USD 2 billion in 2016.
According to Kunal Malani, Regional Head of Customer Value Management, Retail Banking and Wealth Management, HSBC, MENA: “The process of buying a home in the UAE will change substantially in coming years. It will be a more streamlined transaction, with buyers and sellers having greater control and relying much more on technology. These efforts are being led by UAE smart government and Smart Dubai initiatives, and forward-looking government entities and regulators such as the Dubai Land Department (DLD) and its Real Estate Regulatory Agency. By putting a growing number of databases and services online, they are demonstrating the early power of PropTech and helping to simplify the home-buying process.”
Some examples of DLD’s work in this field include the Investment Map portal that gives investors and businesses practical information on ongoing real estate investment projects; the Trust Account System app, which manages the registration of developers and their projects; and Ejari, a lease application and management app designed to provide flexibility and transparency to the process.
The UAE private sector also is helping to drive the PropTech trend, with the number of property listing websites rising sharply in recent years, followed by a growing range of mortgage comparison sites. These websites compete for users by offering a wide array of services to improve and simplify the home buying process. Technologies include live chat services, searchable databases of online brokers and agents, and cloud-based services that let website visitors save property favourites for later viewing on any device.
According to Asma Dakkak, Research Manager with JLL in Dubai: “Although the UAE is considered a relatively young country, it has been in the front lines when it comes to embracing change, with technological advancements being no exception. While many people in the UAE are already doing their property research online, physically visiting an estate agent’s office could soon become a thing of the past. Property websites are becoming considerably more sophisticated, including by partnering with real estate consultants to use big data to bring more and better properties to prospective buyers.”
These online developments show that mundane and repetitive tasks are increasingly being handled through automation, thereby making the estate agent’s role more focused on value-added consulting that helps in decision making and improves the purchaser experience.
Dakkak added: “Technology is offering a range of solutions to improve the user experience in the real estate space. Ultimately though, technology is not always enough in isolation. Leveraging best-in-class expertise, market insights and the deep experience of local experts is the most likely way that home buyers would achieve their ambitions.”
Technology’s opportunity in the UAE
The potential for PropTech to simplify and improve the home buying experience is greater in the UAE than in any of the other surveyed countries. that is true for two reasons: first, the level of PropTech use in the UAE is lower than in the other eight countries, and second, UAE respondents reported higher levels of stress during the home-buying journey than their global peers.
The opportunity for increased technology uptake can be seen in the 67 per cent share of recent UAE home buyers who say they use online channels such as websites, mobile devices, and email to research their property purchases, compared with 83 per cent among all nine countries.
In the use of online resources to research financing options, only 61 per cent of UAE survey respondents say they use online tools, compared to the nine-country average of 74 per cent. In the UAE, the same proportion (61 per cent) go online to identify what they can afford – again, lower than the 73 per cent average across all countries.
Nearly two-thirds (62 per cent) of home buyers report being stressed out dealing with people, versus 37 per cent globally. Forty-nine per cent of UAE respondents say they are stressed when negotiating prices, versus 29 per cent globally; and 40 per cent worry over fees in the UAE, compared with 28 per cent globally.
Malani added: “With more than 70 years of expertise in providing financial solutions to customers in the UAE, HSBC is a valuable advisor to UAE home buyers as they explore the opportunities available in the market. We understand where technology can facilitate the process, as well as where a skilled Relationship Manager can provide the trusted financial guidance needed for such a major commitment and milestone event as buying a home.”
Artificial intelligence, with a human touch
As people increasingly turn to technology, and as that technology becomes increasingly powerful through the aggregation of big data, predictive analytics, and artificial intelligence, virtually reality has the potential to allow home buyers to view more homes, narrow down their choice and then ‘live’ in a virtual version for several days to truly try before they buy.
Dakkak added: “While virtual reality use in this manner has yet to arrive in the UAE, it doesn’t seem farfetched that it may soon be implemented, given the pace at which the UAE adopts change.”