Real estate SMEs must seek inspiration across international borders
7 min read
13 December 2018
The UK is recognised world-wide. But international counterparts provide essential lessons.
In the property sphere, Purplebricks is a good example of a company which has taken its UK business global.
The business model of online agencies like Purplebricks can certainly offer lessons for real estate SMEs with global aspirations. However, we believe people can benefit not only from studying how like-minded businesses in their own nations do business, but also by expanding their frame of reference globally.
Whilst the examples below are targeted towards SMEs operating in the real estate sector, the overarching messages of looking beyond one’s own borders for inspiration is universal.
As an initial example, we feel Dubai is currently a leader in the field in terms of the ‘future’ of estate agency and can provide excellent lessons to UK real estate SMEs.
Evolving from desert to global investment centre in just a matter of decades, the UAE, and in particular, Dubai, has undergone an accelerated growth unique to that affecting any other market in the world.
With real estate in Dubai proving popular to both investors and those wishing to live the Dubai dream, the property market in the emirates has undergone rapid growth, unregulated until 2007 when the RERA (Real Estate Regulatory Authority) was established and global standards for estate agencies were established.
With transactions focused almost entirely on new developments, both off-plan and re-sales, agents are constantly competing for the favour of developers. In this highly competitive and relatively young market, companies cannot fall back on having a well-established heritage brand, but instead must concentrate on constantly improving their offering and reiterating the value they can offer to clients.
As agents seek to raise their services above and beyond what others are offering, PropTech has flourished. Virtual tours and augmented reality are increasingly becoming incorporated within agency websites, with bespoke apps being designed to better showcase developments to overseas investors.
Many agencies are also using Artificial Intelligence and chatbots to better “converse” with visitors to their websites and social media pages. This is integral for a global market, where the client base never sleeps.
Perhaps most significantly in terms of PropTech, The Dubai Land Department – the emirate’s property legislator – has unveiled plans for REST, or Real Estate Self Transaction, a digitalised platform based on Blockchain ledger technology.
The system will enable a complete digitalisation of real estate transactions by 2020, eliminating paper documents and reducing brokerage procedures. This falls within the government’s Dubai 10X plans, which aim to place Dubai 10 years ahead of the rest of the world in all sectors, including real estate.
Whilst Blockchain technology is not unique to Dubai, the promotion of a Blockchain initiative by a governmental organisation rather than a business within the private sector is an innovative step.
The methods being employed by Dubai agents are, of course, tailored to the unique and highly specialised nature of the real estate market there. I am not suggesting that a broad-brush approach should be employed, in which tools such as advanced augmented reality are taken up by all agents, regardless of their market.
The most fundamental lesson to be learnt from Dubai is the agents’ willingness to adopt new trends and technology at an early stage, to ensure they continually stay ahead of their competitors.
With the REST initiative now being rolled out, agents in Dubai will be under more pressure to prove their value and ensure what they offer does not become obsolete. The better agents, who can adjust to the new market conditions and offer clients intelligent and well-informed advice, will survive. Those who fail to do so may not.
Although this specific initiative is unique to Dubai, the digitalisation of real estate transactions and the resulting reduction in demand for ‘pure agency services’ will trickle down to other global markets. UK SMEs must keep a close eye on how Dubai businesses are adapting their services and take note.
Secondly, a lesson that I have learnt as a European bringing a US business model over the Atlantic is that in the UK, and indeed wider Europe, real estate SMEs have a very different stance on making referrals to business contacts operating outside of their own ‘patch’.
In the US and Canada, the MLS (Multiple Listing Service) means that the price at which properties were previously listed and how long they have been on the market are publicly available. Additionally, many US agents work as freelancers and so are, in effect, independent contractors tied to a brand, a status it is very difficult to possess in the UK.
The resulting combination of the wealth of information available and the spirit of entrepreneurship necessary to succeed as a freelancer means that US agents tend to be very open to giving referrals when working with people who have property needs outside of their market.
In the UK, and across Europe, property professionals tend to be much more protective of their clients and their listings, which fosters a competitive market. By embracing collegiality over competition, property SMEs can successfully expand their business network and, ultimately, their profits.
A change in a culturally ingrained mindset is required here and is something that, as a global network, we are very much encouraging.
These are just two examples of how UK businesses can learn from like-minded businesses internationally, but the conclusion is the same. SMEs looking to grow must constantly push themselves out of their comfort zone to ensure they are up to date with the latest innovation, trends and structures.
International business can also learn from the UK; the process is certainly reciprocal.
Chris Dietz is executive vice president of global operations for Leading Real Estate Companies of the World.