By: Sharon Roset-Saclolo / Philippine Daily Inquirer
Digitalization was the buzzword in the recent state of the nation address of President Bongbong Marcos, and has already started adoption in government offices to improve efficiencies. The administration regards it as a vital key to economic growth that can streamline processes and can even be used as a tool against graft and corruption.
But what is digitalization and what is its impact on the real estate sector?
Digitalization in essence is the change in business model processes through digital technology, especially online or through the internet. Cathy Reformado, Head of Consultancy at Leechiu Property Consultants said, “Digitalization is the future of real estate. Properties must meet the demands for new technology, digital infrastructure and sustainability solutions to keep up with an evolving market.” Among the visible changes in the way real estate business is done are as follows:
Property Listing Platforms
Gone are the days when buyers would go through classified ads of the newspapers. Interested buyers or tenants have been going online to look for available properties for years. Buyers and tenants can easily input their search parameters to find properties that meet specifications. Some platforms even offer virtual tours of the properties. Property search is more made easier and buyers and tenants are matched with sellers or lessors for the properties they choose.
Developer Selling Platform and Online Payment System
Real estate developers have their own online selling platforms that feature their projects and show the specifications of available units. They also offer online payment systems that streamline transactions for buyers. Beyond the sales transaction, online payments are likewise available in property management, where residents can pay for utilities and management dues.
Data Analytics
Unlike other market, the Philippine property market is still opaque. Due to privacy concerns, transactional data is not available for public consumption, unless the stakeholders intentionally disclose details themselves. Data analysts need to scour the market to find relevant and reliable data so they can formulate well-informed strategic advice. Some platforms offer a subscription service to data in select areas or for select properties. There are publicly available indices, but they provide a macro view. Location-specific or segment-specific information is limited at best. The Philippines is a little behind on this aspect. However, general market insights are available through various property advisor portals.
Smart Homes
Smart homes allow residents to remotely manage appliances and systems in their homes. They can use devices to monitor security, control lighting, control temperature, and systems can even monitor usage patterns to suggest settings to users. Users can monitor the safety of their homes and efficiently use utilities.
Retail and Office Space as Experiential Destination
Digital transformation steered retail into a more defined experience. There’s shopping to just buy essentials which can be done online, and there’s the immersive retail experience where the goal is interaction, engagement, making connections, and building relationships. Brick and mortar stores now offer options to patrons where they can shop either online or in-store.
The work-from-home trend that accelerated during the pandemic pushed office space contractions to about 1.74 sqm. Twenty percent came from IT-BPM and 39% from POGO tenants. Employees started to return to work face to face over a year ago, but many are still opting to work from home or doing a hybrid setup. There are cost considerations in bringing back workers to the office, but companies that prefer to have their employees in the office are transforming their office space. Ms. Reformado said, “There is an increasing trend in making the office a destination, where workers can collaborate with colleagues or focus on their work with ease. They do away with production-line-like offices with generic claustrophobic cubicles and opt for open, dynamic workspaces.”
Progression of Data Centers
The rise of digitalization and digital transformation is pushing up the need for data centers. The Philippines is strategically positioned as the next data center hub with support from the government, trend of tighter data security policies in Southeast Asia, and the political drive of companies to pivot from Western and China influence. The Department of Information and Communications Technology said that the country will have 300 megawatts capacity for data centers by 2025. They project at least five times increase in data capacity in the country in the next two years. Meralco mentioned that there were about 28 companies exploring putting up their data centers in the country as of the first quarter of 2023. Hyperscalers are looking into positioning themselves in the Philippines, depending on the country’s economic performance.
“Digital transformation is an ongoing process, and in real estate there are many facets that still need to upgrade and evolve,” according to Sharon Roset-Saclolo, Head of Research at Leechiu Property Consultants. “However, it is not simply about applying digital technology to the industry that is important, but the overall change in the mindset of the stakeholders that will change the way the industry works.”