Redfin, the US estate agency, has recently carried out a fascinating study of buyer behaviour. Looking at over 2,000 buyers, Redfin found that a surprising one in five had put down an offer on a property without seeing it. Even more startling perhaps, was that 53% of all buyers of properties over $750,000 were in this number: they were prepared to buy a property of this value without even viewing it in person.
Redfin did acknowledge that buyers knowing the vendor did make a significant impact on these figures. However, considering Redfin’s strong focus on technology for their platform, it is a reasonable assertion that technology is also impactful.
Another rather astounding statistic released this week came from a report by Goldman Sachs. The report stated that the combined market of virtual reality and augmented reality (superimposing digital images on your physical view) would be worth over £55 billion by 2020 – a similar market capitalisation to that of the desktop PC market today. They went on to say that it will be as transformative a market as mobile phones were, and stated that the real estate sector would be one of the main beneficiaries.
The Inefficiencies of Property Viewing
Estate agency and house building are two completely different markets, but there are inefficiencies in each.
It is generally accepted that people will see between 12 and 15 properties before they purchase. An estate agent may see 2 properties in an hour, including travel time, which works out at around 6 to 8 hours work to find a property for one buyer.
When it comes to the sale of new-builds, motivations and buyers can be pretty varied, and the viewing process is quite different. Firstly, buyers may be more likely to buy off a plan, and the purchase decision may be more fragmented, more distant, and more difficult.
Research conducted by Knight Frank in 2014 found that 49% off all purchasers of new-build property in London were from overseas. This begs the question: why build such elaborate and expensive show homes? Even for domestic clients, the show home as the traditional base for all sales can be a daunting prospect for potential buyers.
Nonetheless, a show home is still, currently, an essential component of new-build marketing. But could we be about to see a change? If we can help a buyer to filter their choices, and to make their own decision about coming to see you and your development, efficiency is improved for both sides.
360 Imagery and The Start of Change
Google has long wanted to map the world, first with Google Earth, and then with Google Street View. It was a clever move that began as part of Google’s Friday afternoon ‘free time’ initiative for employees to work on their own projects. It also sparked an immersive photo revolution, and has continued to grow since Google expanded their vision of mapping the world externally to mapping it internally.
Their latest project, Tango, is doing just that, and Nigel Walley, the Managing Director of Decipher, states that “it is part of a broader trend towards improving the accuracy of data in all aspects of our lives”. He goes on to say that Google “are looking at the potential for Tango to improve consumer space mapping for our homes, as part of our ‘Chimni’ project”.
‘Tango’ is about data. However, it is the consumer interest in immersive photography and video which is most interesting. At the end of 2015, we saw both YouTube and Facebook open their doors to 360 degree video. It is quite something to see entire footage where you get the whole story of what you are viewing.
360 video has already been so successful that Facebook is opening up the capability to advertisers on its platform. It’s no surprise that at the recent Consumer Electronics Show in Las Vegas, a 360 degree camera stole the show.
Giroptic, a Lille-based company, was voted the 3rd best innovation at the entire event (out of 1,200 companies), and, as such, was invited to Necker Island to pitch to Richard Branson for even more funds than it has already raised.
Richard Ollier, the founder of the company, started out looking at the innovation’s application for real estate, stating that he saw the attraction of “simple point and shoot 1-click solutions to create virtual tours”, and went on to say that the “future of real estate is a virtual tour, where you can change everything inside the property – repaint the walls, change the flooring, add your own stuff inside, and teleport yourself into your future home”.
Giroptic is a great entry-level solution, and could be seen as a cost-effective, do-it-yourself option. Virtual Walkthrough, another company in this space, has just announced another collaboration, this time with Winkworth, to add to their existing business deals with CBRE, British Land, and Hammerson. They use an HDR 4K resolution camera to capture fully navigable, true-to-life virtual tours, as well as to produce high-resolution photographs and RICS standard floor plans.
James Morris-Manuel, Virtual Walkthrough’s UK co-founder, states: “Developers and estate agents need to ensure that they are capturing the attention of their prospective customers in an ever-increasing variety of ways, and a distinctive technology platform that saves people time – particularly in terms of travel – and helps them make faster decisions, is clearly a very compelling offer”.
This is exactly what I am concerned with: the property buying cycle is currently distinctly inefficient, and not client-centric.
How It Fits Together: Virtual Reality Is Key
Currently, most of these applications are designed for the screen; for mobile and desktop. However, once you consider the large platforms, and their interest in virtual reality, it all starts to fit together.
It’s no surprise that James from Virtual Walkthrough went on to say that he thinks “that a move beyond the ‘screen’ is a certainty. The development of immersive, experiential virtual reality platforms provides a strong opportunity”.
Facebook owns Oculus Rift, a virtual reality company that it purchased for £1.5 billion in 2014. Google has Cardboard, its very cost-effective, consumer-friendly alternative, with version 2 due out this year. HTC has Vive, perhaps the most exciting of all the virtual reality headsets. Microsoft have Hololens, a virtual reality and augmented reality headset. Samsung worked with Oculus to bring out another cost-effective headset. The names keep rolling; it’s plain to see that the large brands are paying close attention.
Google went so far as to say “think immersion first” at one of their developer conferences in 2015. It’s no surprise then that both Google Street View and YouTube can now be switched to virtual reality mode. This is only the beginning.
The thing about virtual reality is that it is as much about existing structures as future ones. There is a huge surge of interest globally by developers considering the opportunity offered by the new technology to build simulated environments. US developer, Halstead, was reported in the New York Times, to be developing virtual reality solutions for some of their existing stock, as well as for their new-build stock.
The point is that virtual reality is getting all the PR at the moment, but very soon it will become part of the marketing norm. People will come to expect it. They will not want to travel to see you unless it is worth their while, unless they have bought into your vision and what you are selling. People want choice, and they want accessibility. However, they also want to be in control, and to view what they want to view, when they want to view it. It’s what some of the immersive 3D tours and 360 videos are currently doing, and it shows where virtual reality is inevitable in future.
When I am asked about the technology by house builders, I ask them to think not about how they are marketing their developments today, but how their prospective clients are viewing their marketing now, and how they are going to want to view their marketing over the next five to ten years. This is the point: we need to start planning today for this technology, which – as Goldman Sachs states – will come to be more important even than television.