[COLUMN] New technology changes real estate market

Lim Chang-won Reporter Posted : 2018-03-19 09:18 Updated : 2018-03-19 09:37
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[Photo by Namkung Jinwoong = timeid@ajunews.com]

SEOUL -- ULI, a global city real estate research group, emphasizes sharing economy, coworking, digital communication, and remote working as the subjects that have been doing creative destruction for the past five years in the field of real estate. Their influences appear to be pushing back industrial capitalism which sets up a barrier to entry and extracts value from its own resources. The shared economy places emphasis on collaborative economy.

The winner of a shared economy is home and car. The most expensive property many people have is houses and cars that can be shared if necessary. The shared economy is likely to continue to evolve with other types of assets that people have in common in the years to come. Despite the shared economy, the commercial real estate industry continues to consolidate its position.

The next target of the shared economy is likely to be a logistics facility. Logistics is mainly owned by small companies and individuals, and is expected to lead the shared market. There is an increasing number of resilient space layouts used by tenants to control their own use area. But the law has yet to follow a cooperative economy.

3-D printing is in some commercialization stages in architecture. In the future, 3-D printing will be extended to individuals. It can be used without any burden on the construction of private homes or warehouses. If you want to get the building you need through 3-D printing on the demand side rather than transporting semi-finished building materials in the import and export market, it can be good news for cost and environment.

When the use of 3-D printing reaches its peak, global trade can be reduced to one-third of the current level. If a digital specification is sent to a local printer that requires a product and the product can be printed as it is, the need for international trade is reduced accordingly.

Artificial Intelligence and Big Data are expected to be the creative destructive actors in the real estate sector for the next five years. Armed with enormous amounts of data, software improves efficiency and profitability by working better than people. In the end, it also changes in relation to the way people work.

Algorithmic pricing based on Big Data will become more important over the next decade. Amazon is already using this method. If all the commodity prices are determined in this way, companies will be able to predict the correct profit, and macroeconomic inflation will no longer get much attention.

Populism may expand further as unemployment increases due to new technology. Countries such as Sweden are carrying out futuristic welfare experiments, an inclusive system that guarantees the basic income in preparation for the reduction of people's economic participation due to technological development. Our real estate development needs to reflect the social inclusion of people who are not alienated by new technologies.

Crowdfunding is mentioned a lot but it is not leading to a large investment yet. Cryptocurrencies are mentioned, but there is no way yet to accurately apply distributed ledger technology to real estate. The future is not known for sure, but urban real estate continues to change due to new technology.

(This article was contributed by Choi Min-sung, CEO of the Delco Realty Group.)