One of the big trends in human development is the digitization of our physical world. It’s happening all around us.
We are digitizing social interaction. Whatsapp, Facebook, WeChat, Instagram, Snapchat, YouTube, and Twitter are just a few of the many mainstream apps we now use to communicate with each other. Digitization is so pervasive that it’s now common to search for one’s soulmate on an Internet dating site.
On the retail front, we still buy physical goods but only after reviewing their digital versions on Qoo10, Redmart, Carousell, Lazada, and traditional global sites like Amazon and eBay.
The digitization of the financial world is moving at light speed. Traditional stock exchanges adopted electronic trading a long time ago. However, they are under pressure from alternative ways of trading including ECNs (electronic communication networks), crossing networks and dark pools.
Meanwhile, Bitcoin is challenging our fundamental understanding of money. This and other competitive pressures are forcing traditional financial institutions to experiment with digital wallets, mobile banking, Artificial Intelligence (AI), and so much more.
The property market, particularly in Singapore, has been a laggard in digitizing itself. But this is changing. It should be able to catch up and even surpass other markets.
The starting point for digitizing property has been the opening up of Big Data by Government and private sources for the benefit of all market participants, including consumers, real estate professionals, and Government policy-makers and urban planners. Now it’s possible to represent the physical home in digital-land with digitized photographs, floorplans, specifications (i.e., plot ratio, land area, floor area, etc.), 360 videos, and drone overheads.
This digitation of the physical space improves the ability of urban planners to develop residential and commercial neighborhoods in Singapore.
More importantly, digitization makes the transaction of real estate more efficient.
A digital representation provides truth-in-advertising in which buyers, valuers, mortgage underwriters, insurance underwriters, and interior designers can assess the property and make well-informed buying and financing decisions.
Another big development in property is computer pricing and automated valuations. The property market has lagged retail and financial markets in transparent pricing. As a result, a few well-connected insiders, such as valuers, financiers, brokers, and developers, controlled property pricing.
Not anymore. Buyers, sellers, and their agents and advisors are now in control. By using neutral and objective computer values, like X-Value, these market participants justify and document deviation from the computer value to agree on the right price.
This type of transparent pricing has many positive benefits for the real estate market.
For example, it reduces days-on-the-market (DOM). A quality property listing in Singapore, which contains a computer-backed, full valuation as well as a digital representation of the home, reduces the average market DOM by at least half. This simple act of digitizing a property clearly makes a huge difference in creating a more efficient and productive market.
Digitizing price also reduces risk. Transparent, digital pricing helps mortgage and insurance professionals better assess the market value of a property and, therefore, better underwrite the underlying mortgage and insurance for that property. This, in turn, reduces the risk of housing bubbles, defaults, and fraud. This, in turn, strengthens the stability of Singapore’s entire financial system.
As we look to the future of digital real estate, there are several Smart Nation initiatives that will digitize the paperwork involved in property transactions. This will make financing and conveyancing a more efficient and pleasant experience for consumers and employees of financial institutions.
Wow! Whoever thought that “efficient” and “pleasant” would be associated with the mortgage banking and legal systems? It’s not a reality yet, but it will be as the Singapore real estate market digitizes itself and catches up with the rest of the world.
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Published on TODAY news