The COVID-19 pandemic accelerated a process that had been occurring in recent years across Latin America: the digitization of the real estate market. In the face of social distancing, the search for real estate on virtual platforms grew, confirming the bet of startups and companies that acted strongly on the internet and, at the same time, pressured developers and real estate companies to quickly invest in technology to follow this transition from the physical to the digital world.
This shift is not limited to ads on websites and apps, which are increasingly detailed and with interactive tools, such as photos, videos, virtual tours and 3D mockups. The whole process has been impacted. Meetings are no longer in person and even the signing of contracts and financing are now digitally celebrated. If not the entire journey, much of it nowadays requires only a computer or a smartphone.
“With people being forced to move less, some of the barriers that prevented more people from using digital tools have fallen to seek a new home or place a property to rent or sell. It is a process with no return”, analyzes QuintoAndar’s head of communication, José Sérgio Osse.
QuintoAndar was born in the digital world. In the beginning, it aimed the rental market, but since the beginning of 2020, it has also turned to sales, first in São Paulo and more recently in Rio de Janeiro. The app shortens the process, replacing bureaucracies that needed to be solved personally by technology. According to Osse, this also applies to more trivial situations, which were important in times of restricted traffic, such as scheduling visits, negotiating, and video tours. Everything was done online.
These small details are the ones that make the difference for those looking for a property. The virtual tour, a kind of Google Street View of houses and apartments, has become an important tool. According to The Influence of the Coronavirus in the Real Estate Market, a study carried out by the ZAP Group, there was a 158% increase in searches for properties with virtual tours on the ZAP and Viva Real websites — both belong to the group. As a consequence, the number of advertisements with virtual tours on these platforms has also grown: 51% from May to July.
“Undoubtedly, the pandemic accelerated the process of digitizing the real estate market by ten years, and it was an absurd acceleration. These were important steps to reduce the bureaucracy in the market, from the searching process to the signing of contracts. All stages gained a lot of speed. On the consumer side, websites and apps started to filter more properties for the face-to-face visits. It is not necessarily technology, but mindset, with good quality photos and virtual tours. It is a more immersive experience”, comments ZAP Group economist, Deborah Seabra.
Technology and trust
The pandemic boosted the La Haus virtual real estate business in Colombia and Mexico. The startup, born in 2017 and which recently received a $10 million contribution from Kaszek Ventures, increased the market share in Bogotá and Medellín from 4% to 30% in the segment in which it operates. And in Mexico City, where it started operations in April 2019, the pandemic has accelerated growth so much that business in the country already represents 25% the company’s total.
According to the president of La Haus, Rodrigo Sanchez-Rios, technology’s main contribution in this sector is the transparency and trust it brings to the consumer, with ads that correspond to the reality of the properties, which are in fact available and which are sold at a real market price. For him, technology is responsible for equalizing “the access conditions to information on investment and financing opportunities, which previously was restricted to a privileged few”.
“Technology and data are responsible for ensuring that buyers make this decision sufficiently informed and with the possibility to compare options, so that, in this way, they genuinely feel that this process was rationally the best they have achieved”, says Sanchez-Rios.
The massive use of technology in this sector also reflects on people’s quality of life, especially those interested in real estate. The more information available, the better the filter for face-to-face visits. By selecting fewer properties, but with a greater possibility of closing deals, the consumer saves time and avoids, for example, the need for useless trips in large cities.
“During the pandemic, one of the most traditional industries was renewed thanks to technology because of the changes that happened in the way we buy and sell houses. In the ‘new normal’, the facilities that were offered to users during the pandemic will be part of the offer of real estate platforms”, adds Sanchez-Rios.
Despite all the ease and confidence that the digital world provides, it is very difficult for the entire process of buying and selling real estate to be carried out without any physical contact. At least not yet, especially in the used car market. “This is a trend, to be sure, although it is premature to say that people will no longer want to visit in person the properties where they will live. Our role is to have and develop the best tools to serve customers regardless of the way they prefer to visit their new home, either digitally or in person”, says Osse, from QuintoAndar.
One aspect that can change this logic is the consumer profile. Whoever goes to the real estate market today has followed the advancement of technology, but does not deposit everything in it. Unlike Generation Z, inserted since birth in the digital world. “It is a generational issue. Generation Y is now in the real estate market and in a few years it will be Generation Z, which was born on the internet. And this generation will not buy offline and that is why the real estate market needs to keep up with the changes”, warns Seabra, from ZAP Group.
New market reaction
The acceleration of digitization in the housing market during the COVID-19 pandemic was even more intense in the launch market. The impossibility of face-to-face visits during periods of greatest traffic restriction required developers to invest in technology. But not all companies had the same speed or resource capacity to respond to the demand that was coming in the digital world.
According to a study by Brain Inteligência Estratégica, the bigger the company, the less it felt a drop in the search for real estate online during the pandemic. “It is the result of the way in which large companies managed to structure themselves to understand the consumer. The ad is not enough, the entire process is important. Whoever had an innovative structure in the online world, came out ahead, in general, the big ones. This is the most important finding”, explains Fábio Tadeu Araújo, manager at Brain, Fábio Tadeu Araújo, responsible for several of the studies of the Brazilian Chamber of the Construction Industry (CBIC) in the country.
The pandemic also helped to show that investments in technology, especially in the advertisement of real estate, can mean a reduction in costs, for example, with decorated apartments. By providing tools already popularized by startups in the real estate market, such as virtual tours and 3D models, the developers give the client more subsidies to close the deal. “There is a myth that the consumer does not buy property without seeing it. In the launch market, the consumer buys an abstraction, based on a plant on the wall. This does not depend on value or pattern. This was a gain in perception that the developers had”, completes Araújo.
Translated by Jennifer Koppe