Does Predictive Analytics in Commercial Real Estate Influence the Development Industry?

Does Predictive Analytics in Commercial Real Estate Influence the Development Industry?

June 02, 2021

What is predictive analytics in commercial real estate based on artificial intellect, and how does it affect the development industry? In a nutshell, predictive analytics is a part of a marketing strategy that is aimed to provide potential customers with the information that best matches their needs.

Predictive Analytics in Real Estate

Predictive analytics instruments are a symbiosis of behavioral factors and customer information. Thus, a package of customer preferences, based on a personalized experience, is formed, which is the basis of establishing the purchasing algorithm.

Predictive analytics real estate is useful for both developers and potential buyers:

  • Structured user data makes life much easier for developers, homeowners, and investors alike. Predictive analytics takes into account motivation and preferences and enables an individual approach for each market user. As a result, each of them sees online real estate options that not only match their search criteria but also their individual consumer preferences.
  • Segmented data is the most reliable source of information, especially for those looking for the perfect property to invest in. A potential investor sees thorough analytics, including not just the value of the property but also the potential rental income and even the estimated occupancy rate.
  • Return on Investments in a case when a home needs renovation can be easily boosted with predictive analytics instruments. You can get information on how much local investors are willing to pay for possible upgrades.

In the recent past, marketers calculated all of the parameters listed above manually by assigning each lead the following category, and so on. Intelligent predictive analytics makes it possible to predict future real estate trends, optimize their activities, and get the resulting profits.

Future Real Estate Trends

Artificial intelligence technologies actively intrude on all business branches and consumers of goods and services. In real estate, the market was stable until 2003. But then intelligent learning technologies made a real revolution! And as predictive analytics technologies grow, the revitalization of the market can be noticed.

What are the benefits of real estate development technology?

  • A guarantee of a successful investment based on 100% consideration of the location and prospects of the area. Predictive analytics based on artificial intelligence provides the investor with a prediction of trends in the real estate market, and this is a sure way to success.
  • The ability to obtain information about the Return on Investment in case of property renovation. Predictive analytics allows the investor to analyze the potential willingness of users to pay more for a certain improvement.

Understanding and using effective predictive real estate analytics instruments gives market users a chance to change buying and selling commercial and residential real estate.

Big Data Predictive Analytics Solutions

How to avoid mistakes when choosing residential and commercial real estate? Marketing theory is good. But what is the right choice for a buyer? This means working with an unimaginably huge amount of real estate data. In this regard, not only already made decisions are worth attention, but also different startups that are developed based on artificial intelligence. The predictive analytics system provides all factors that may influence the decision making for the consideration:

  • Demographic data of the region;
  • Average cost per square meter of residential and commercial real estate;
  • Concordance of the retail space to the number of residents in the area;
  • Security level;
  • Availability of a competitive environment;
  • Availability of parking;
  • Transport infrastructure;
  • The purchasing power of the local population;
  • Profitability of retail space lease.

These circumstances significantly increase the importance of modern algorithms for determining the characteristics of real estate in each specific micro-district.

What trends have property buyers and sellers faced in 2020?

Slim pickings for home buyers

Note that during the pandemic, the number of offers in the real estate sector decreased by almost 22% compared to 2019. In such circumstances, the buyer should:

  • Give up some wishes, since an inexpensive house in a good neighborhood can eventually be put in perfect order.
  • Include multiple districts in your search.
  • Obtain mortgage approval before starting your property search.

As for the sellers, a small selection implies low competition and, therefore, a bigger selection of the best buyer.

Home prices are still rising

In order to avoid financial difficulties when buying real estate, follow these guidelines:

  • The monthly house payment must not exceed 25% of the buyer's income;
  • The initial payment must not be less than 20%. Otherwise, the buyer is at risk of facing additional commissions and fees on the mortgage loan.
  • The optimal format is a 15-year mortgage with a fixed rate. But a 30-year mortgage will be too expensive.

For real estate sellers, rising prices promise good profits. Do not rush to sell your property to the first customer. With a little patience, you will have enough money to buy a new home.

Low mortgage rates

In 2020, the rate on a 15-year mortgage reached its lowest level within the last 20 years, at just 2.1%. In 2021, the interest rate will be about 3%. This is great news for both buyers and sellers of real estate. For the buyers, this is the availability of making a purchase, but a reason to make a purchase that will be difficult to pay for. For the sellers, an affordable mortgage means a large number of motivated buyers.

Online real estate services are growing

The consequence of this is an increased activity of companies willing to buy and resell your home, freeing you from the hassle. They promise to do all the work of the experienced agent for a small payment. But be prepared that your profit will not always meet your expectations.

Another option is a hybrid service, where only a part of traditional agent services is provided. As a result, there is a reduction in commissions. But, nevertheless, caution should not be neglected, because you are selling your most expensive asset.

To simplify the documenting process of selling and purchasing, digital technologies with digital signatures, remote notarization, etc. are used more and more often.

Conclusion

Our team will help you use modern real estate technology when buying and selling residential and commercial real estate. Our highly qualified specialists deserve your trust and will ensure you achieve the best financial result.

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