Big Data analysis is helping businesses optimize their resource management, boost operational efficiencies, unlock growth prospects, make informed decisions more quickly, and streamline product development, among other benefits.
The real estate industry is no exception to this trend!
Companies, investors, sellers, and buyers harness its power to build predictive models and algorithmic analyses that remove the guesswork. With big data, businesses can generate more accurate forecasts. These analyses deliver a range of benefits for all parties involved.
Do you find the impact of data mining services on real estate hard to believe?
Consider this instance:
“According to a Zillow report from February 2015, the price of homes situated within a quarter-mile of a Starbucks in Boston rose by 171% between 1997 and 2014, which was 45 percentage points higher than all other homes in the city.”
Alongside traditional data sources, emerging and non-traditional sources are gaining significance in identifying “hyperlocal” trends – detailed patterns specific to a small geographical area. These sources include surveys of residents, mobile phone signal patterns, and Yelp reviews of nearby restaurants.
3 huge ways that big data is transforming the real estate industry:
1. Valuation of Real Estate
The pricing of a real estate property directly impacts its market success. To determine the appropriate price and appeal to potential buyers, the owner, which may include the developer or landlord, typically performs a comparative analysis that considers various factors like transportation, infrastructure, and proximity to metro stations. However, this analysis alone may not be sufficient to establish an optimal price and attract the desired buyer interest.
Knowing the target audience’s acceptable price range is crucial for success in real estate.
Big data plays a significant role in providing access to updated information regarding factors like population (employment and demographic changes), demand and supply dynamics, and sales trends in specific segments. This information enables the prediction of consumer behavior and the identification of the optimal price range for the target audience.
Furthermore, big data allows for analyzing average market indicators for any segment or region worldwide, drawing from numerous sources to provide a comprehensive market picture.
Consequently, appraisers can forecast long-term price trends per square meter with an impressive 90% accuracy rate, according to McKinsey.
2. Forecasting ROI
Accurate market indicators are beneficial for both property owners and potential buyers. Investors can obtain comprehensive information about a property by utilizing extensive databases, which gather data from public sources, clients, and aggregators.
To make informed investment decisions, investors must comprehensively understand a property’s key characteristics and related factors, including its technical condition, maintenance costs, and operational risks.
Additionally, the area’s features, such as transportation options, crime rates, proximity to the city center, and average income levels of the population, are important factors to consider.
By analyzing these factors, investors can identify potential financial risks and determine the property’s short- and long-term profitability. Profitable real estate investments yield returns of 6-12% per year, based on the property’s details and location.
3. Construction Modeling
The application of data mining services in the real estate industry has made it possible to plan and model constructions accurately. By utilizing key data about the property and its location, 3D models can be created to visualize the building’s appearance and integration into the surrounding infrastructure.
These big data models offer a valuable source of information for planning commercial spaces, including communication systems and efficient use of space. This allows developers to predict project timelines and budgets accordingly and accurately.
Furthermore, big data models provide investors with insight into the ongoing maintenance costs of a facility, including electricity and water consumption. By comparing these costs with potential income from renting out the property, investors can make informed decisions about the profitability of a construction project.
Before the widespread availability of big data, real estate investors and developers relied solely on their knowledge and experience. Today, they can access comprehensive and up-to-date information to inform all aspects of real estate transactions, from buying and selling to renting and construction.
This blog is aimed at helping you discover the vast importance of big data within the Real Estate industry and how Utilizing Big Data analytics in the real estate industry provides stakeholders access to a vast array of information from various sources. This enables a more comprehensive analysis of data and more precise insights into properties and land, empowering real estate business owners to make informed decisions and improve their development strategies.
Outsource data mining services for real estate today & find your sales & profits margins grow higher!