According to Statista, by 2030, the real estate market is projected to reach $14,6 billion with an annual growth of 4,8%. Let’s figure out what factors will drive the industry’s growth!
“Across the entire lifecycle of real estate, there is a significantly higher demand for technology. And data is going to have a big role to play”, mentions Sandeep Dave, Chief Digital & Technology Officer at Global Commercial Real Estate Services.
What does it mean? Technology and data are vital in the real estate industry. Data and analytics drive the vertical’s growth by enabling the forecasting of future trends. Predictive analytics for real estate emerges as a powerful instrument for identifying potential investment opportunities and making better decisions.
But adopting predictive analytics poses a challenge for real estate companies. Some of them are unaware of how it may benefit their businesses and others are afraid of risks created by innovative solutions.
Fortunately, we’re here to answer most of your questions and dispel your doubts about the value of analytics for your real estate business. So, read this article to understand how you can grow from real estate predictive analytics and how you can integrate it with maximum results. What’s more, you can learn from the Forbytes team as we share our expertise and insights.
What Is Real Estate Predictive Analytics?
Predictive analytics is based on machine learning techniques, statistical algorithms, and data mining used to estimate future outcomes. It helps companies identify trends and patterns, analyzing historical and current data. As a result, this allows businesses to make accurate decisions about the next strategic steps.
Real estate predictive analytics assists in forecasting market conditions in the real estate industry. Plus, AI data analytics aids in identifying potential investment opportunities, making informed decisions, and assessing risks. But benefits from applying predictive analytics in the real estate industry are not limited to the mentioned above. So let’s reveal the advantages of predictive models for your business.
Benefits of Predictive Analytics for Real Estate
No doubt, predictive analytics transforms real estate, offering a comprehensive picture of market trends and property values. This technology encourages companies to shift from traditional approaches to advanced algorithms and machine learning. But what exactly are the benefits of predictive real estate analytics?
The shift in real estate decision-making
Predictive analytics can aid investors in making better decisions by providing insights for the future. As a result, they shift from intuitive decisions to data-driven and evidence-based ones. In addition, these changes lead to a better understanding of prime opportunities and more precise risk assessment.
With real estate predictive analytics, businesses can make more informed decisions backed by up-to-date and relevant data. In addition, with access to a broad scope of information, investors incorporate data-driven decisions in their strategies. As a result, they feel more confident in navigating the ever-evolving real estate market landscape.
Reduced risk and smooth operation in the market
By applying predictive analytics, real estate businesses can reduce risks by identifying potential threats and finding how to mitigate them. Plus, with data-driven insights, companies can predict market disruptions, enabling them to maximize returns and deal with fierce competition.
Armed with real estate predictive analytics, companies can ensure smoother operations and safeguard against unexpected challenges. Whether it’s tech advancements, economic issues, or shifts in consumer preferences, predictive models can detect them. Thus, adopting predictive analytics enhances decision-making, reduces risks, and guarantees long-term success.
Improved efficiency
Equipped with predictive models, investors show higher efficiency by streamlining processes and automating routine tasks. As a result, they have more time and resources for strategic operations. For example, real estate predictive analytics drives efficiency in property valuation. By using predictive models and historical data, investors can make more informed decisions about property purchases.
From property management to tenant screening, predictive analytics facilitates the work of real estate professionals. As a result, they are more productive, efficient, and better equipped to address emerging challenges.
Increased returns
By using predictive analytics in real estate, investors can increase their returns and unlock additional opportunities in the market. For example, predictive models are used to analyze market trends, economic situations, property characteristics, and location, providing real estate professionals with insights about properties that will be valuable over time. So, armed with this information, investors can understand whether there is a rationale for buying this property and how to optimize returns.
With predictive analytics, real estate businesses gain a deeper understanding of investment strategies. They use data to identify new opportunities related to tenant behavior patterns, demographics, and market dynamics. As a result, the more informed and knowledgeable investors are, the higher the chances for increasing business returns.
Common Applications of Predictive Analytics in Real Estate
In real estate, there are various ways to use predictive analytics. The scope of applications is increasing by extending business opportunities for investors. Let’s explore how predictive real estate analytics can be used.
Accurate property valuation
One of the most common applications of predictive analytics in real estate is property valuation, considering factors such as location, amenities, and market demand. In this situation, predictive analytics contributes to providing accurate information that real estate professionals can use to assess property characteristics. This empowers both buyers and sellers to negotiate fair prices and make more informed decisions about property investment.
Portfolio optimization
Predictive analytics can be used to optimize real estate portfolios and identify the best mix of properties to consider. With data-driven insights, advanced algorithms, and precision, real estate professionals can refine their portfolios. What’s more, they’ll get a forecast for various property types and locations. Predictive real estate analytics enables effective asset management and optimization of investment strategies. As a result, your portfolio will reap the benefits of growth and stability, ensuring optimal performance streamlined by real-time adjustments.
Investment insights
With real estate predictive analytics, investors can analyze historical and current trends and forecast future property values. This helps them identify attractive investment opportunities, maximize their business returns, and stay ahead of the curve. What’s more, by having a comprehensive picture of the real estate market, investors can make more informed decisions related to resource allocation, portfolio optimization, and investments.
Property rental calculation
Tenants often request a well-assessed estimate of the rentals, while investors strive to understand the profitability of their investment. Predictive analytics in real estate can cater to the needs of both sides. Predictive analysis models assist in identifying a property with the highest ROIs and finding assets that align with your financial capabilities.
Targeted marketing campaigns
Predictive analytics benefits real estate marketers, enabling them to create more targeted campaigns oriented toward specific segments of potential renters and buyers. Additionally, marketers can tailor their messages and reach their target audience more effectively by accessing data on demographics, preferences, and purchasing behaviors.
Pricing optimization
Real estate businesses use predictive analytics to transform and optimize their approaches to pricing. In this case, companies analyze historical sales data, property characteristics, and market trends to establish optimal prices that attract buyers. As a result, they’ll ensure that their property will be appropriately valued in the market.
Demand forecasting
To forecast future demand for properties, real estate investors rely on predictive analytics. Analysis and evaluation of the economic situation, infrastructure, and demographics help identify locations with increased demand. This provides companies with valuable insights for making informed decisions about further property investment.
For example, heat maps are among the products of predictive analytics in real estate. These visual representations highlight locations promising for property investments. Heat maps generated by predictive analytics display areas and neighborhoods that align with clients’ criteria.
Challenges of Using Predictive Real Estate Analytics
While predictive real estate analytics offers numerous benefits and opportunities for businesses, it also poses challenges and concerns. Let’s review these issues to understand how to address them or minimize their harmful impact.
Lack of expertise. Many real estate companies and agents lack the knowledge and skills required to adopt predictive analytics. They may be unaware of available data or limited in analytical thinking and time to generate quality insights.
Complex data models. Real estate involves large volumes of data. To generate accurate and valuable insights, it is necessary to aggregate data models and add them to predictive analytics. However, creating highly complex models can lead to challenges in monitoring and processing.
Data risks. Predictive analytics in real estate comes with risks that affect authenticity and privacy. As you need to aggregate datasets from multiple sources, there is always a threat that you may collect non-public or personal information. Another concern is related to the transparency and validity of data, particularly without a standardized procedure for data collection.
If you want to discuss these risks and learn how to prevent them, email us. We’ll help you handle them and fortify your predictive analytics strategy.
How Forbytes Uses Predictive Analytics to Assist Real Estate Businesses
At Forbytes, we specialize in developing real estate predictive analytics and AI software, and we have on-point stories to share with you. Our clients came to us with requests to build more intelligent and sophisticated solutions to automate their tasks and ensure real-time data sharing and reporting. So, let’s look at how we did it.
How we enhanced property management software for speed and advanced functionality
Our client is Guesty, an Istael-based provider of property management software for property owners, property managers, and other B2B clients. The company offers smart solutions aimed at automating workflows, reducing costs, and enabling more strategic tasks.
Initially, Guesty’s real estate solution was highly appraised by clients. But over time, our client faced technical challenges. Therefore, Guesty turned to Forbytes to keep their software up and build features to facilitate property management for both vendors and end users. So see how we approached our client’s challenges.
First, we moved Guesty’s solution from Angular to React, enhancing performance, reducing page loading, and ensuring code maintainability. Second, we seamlessly integrated the new payment service, Zoro, into the system to reduce the need for manual operations. Finally, we assisted Guesty in choosing the right log monitoring tools to visualize metrics on solution performance and gather necessary data for future enhancement.
How we built a data-driven solution for hotel management and reservation
Our client is Telic Minds, a consulting company specializing in solving business challenges and assisting others in building customer-centric strategies.
Telic Minds was looking to build an all-in-one hotel management system to present it to property owners and reach a wider audience. Unfortunately, they lacked developers with the required expertise. That’s why they found us – Forbytes had the right talent to meet our client’s demands. So, we offered to develop an advanced and intelligent real estate solution right away.
First, Forbytes built a speedy and sophisticated solution, enabling users to create and personalize bookings, customize prices and discounts, and sell extra services to hotel guests during their stay.
Second, our team integrated numerous external booking channels and social networks, such as Booking.com, Expedia, Airbnb, TripAdvisor, and Facebook, into a newly built system to help Telic Minds reach a broader audience.
Third, by integrating predictive analytics into the system, we ensured real-time data sharing. As a result, we enhanced this real estate solution with the capability to provide accurate and up-to-date data about property availability. Additionally, users could receive notifications about events, upgrades, and requests for changes related to their bookings.
Finally, we equipped our client’s system with powerful reporting tools that can be customized to meet specific business needs. These tools allowed property owners to analyze their company’s performance and gain valuable insights from their reports.
So, with predictive analytics, we built a truly advanced and intelligent real estate solution that promises better business returns and outcomes for our clients.
Final Thoughts
In a nutshell, the demand for predictive analytics in real estate will only grow. More and more investors will use it to gain a competitive edge and make more informed investment decisions.
To succeed in integrating real estate predictive analytics just follow the following tips. Use a reputable provider of predictive analytics solutions. Make sure to use only accurate, complete, and up-to-date data. Test your predictive models using backtesting. Finally, don’t expect fast results as it will take time to develop and fine-tune predictive models.
But if you want to speed up the improvement of your real estate investment performance, contact Forbytes. Get a free consultation with our team to make the first step of integrating predictive analytics into your real estate business.
