One of the most important contributors to the economic growth and development in India, the real estate sector has come a long way in the last decade. According to a 2021 report, the sector is expected to reach a market size of $1 trillion by 2030 and contribute 13 per cent to the country’s GDP by 2025. Better manage security standards and their operating costs.
In view of the global challenges, there has been a sudden increase in the input cost. According to CREDAI NCR, input costs have increased by 30-40 per cent in recent times, with prices of some raw materials almost doubling in the last two years. In addition, rising crude oil prices, supply chain disruption and skyrocketing prices of construction materials have contributed to the cost escalation of most projects.
Often, construction projects run late, exceed budget and experience delays due to unprocessed tasks and imbalanced supplies of men and materials. Factors such as the slowdown in leasing due to the pandemic, severely impact the cost drivers of hybrid working models in the form of finance cost, employee cost, construction cost, operation cost, etc., resulting in additional costs and costly consequences. There is a project.
Digital Transformation Toolkit for Cost Optimization
Post COVID-19, digital transformation has become the way we operate, consume, understand and deliver. Global proptech investment sees highest growth of $9.5 billion in 2021 during Covid. This was further enhanced by the effective roll out of 4G networks, increase in internet user base and advanced technological interventions like Artificial Intelligence (AI), Internet of Things (IoT). , Big Data, Drones, Virtual Reality (VR) and Augmented Reality (AR) as well as the introduction of the Real Estate Regulatory Authority (RERA), and the Goods and Services Tax (GST).
Currently, disruptive technologies are widespread in the real estate sector, with developers embracing the use of some of these tools to better address construction tasks, improve efficiency, reduce costs and eliminate errors. Cost management is all about planning and managing the budget. It helps project managers estimate project costs and control budgets by installing the right processes and software.
Digital twin in construction through modeling of building information and cost savings, smart facility management for predictive and prescriptive repair and maintenance, process automation tools to reduce employee cost on transaction based activities, etc. have brought overall customer benefits in the realty sector. Enhanced experience. Various real estate service portals use big data analytics and real time data to analyze needs and target customers, create customer profiles and reach out to them to meet their needs. A range of technologies such as BIM, ERP, Virtual Reality and IoT have brought efficiency and accuracy to the construction sector.
While Building Information Modeling (BIM) is being widely used to create digital representations of buildings and improve construction efficiency by reducing wastage by 5 per cent on construction sites. On the other hand, ERP provides real-time data that helps in smooth running of business activities.
While cloud computing and the digital twin can answer customer questions and negate errors through simulation and predictive modeling regarding pre-construction risk analysis; Process efficiency can be brought about by the use of technologies like benchmarking, asset analysis etc., RPA and Python based automation tools and workflow automation.
AR/VR building modeling improves the buyer’s experience of the space and can design the space according to the customer’s requirements. Internet of Things (IoT) helps in real-time monitoring of HVAC components – Heating, Ventilation, Cooling (HVAC) thus providing uninterrupted services to the occupants.
Automation with Artificial Intelligence (AI) helps builders maintain ESG requirements, asset management and other reporting obligations. Machine learning based recommender engines understand customer requirement and can provide relevant recommendations, thus reducing brokers intervention and brokerage and leading to better duration of online searches or better deals offline.
Nearly 90 per cent of buyers are using AI and machine learning to conduct site visits, personalise, design their homes and offices, and experience the location through 3-D models. Not just customers, AI is helping real estate developers by providing accurate virtual property valuations, mortgage and lending facilities as well as supporting lead generation. This digital transformation and increased customer expectations have driven the requirements for equipment that can enable and enhance efficiency as well as operational parameters to meet consumer demands.
Blockchain based solutions are redefining the way bookkeeping, asset document management is currently done thereby reducing fraud across the industry. An asset can be tokenized and traded online. Not only does blockchain reduce or eliminate the role of middlemen, it also automates the entire process through secure transactions. Along with blockchain, smart financing, smart loans and on-time project delivery through blockchain are becoming the trend.
Digital procurement platforms with smart sourcing have improved building materials as suppliers also produce sustainable building materials such as smart concrete, memory steel, nano materials, self-healing concrete, concrete canvas, electrochromic materials, etc. Coping with any natural climate change makes it controllable and predictable. The use of smart materials also supports ESG standards and helps developers achieve them easily. The use of such material may not be economical as far as project cost is concerned, but in the long run, it is an efficient and operationally sustainable deal for money by future global standards.
If you are in the real estate business, you should think about where you stand as a company in leveraging these technologies to drive up the value chain with quality products for residential or commercial buyers. Digital is no longer an aspiration but a norm. Reports show that by using digital cost management tools, not only are cost savings increased by 12-20 percent, buyers and sellers save on time, resulting in a quicker process to reach their end of the deal. Quick contextual search.
In the future, we anticipate that Indian real estate customers will be completely technologically inclined and with a hybrid working pattern, the demand for sustainable buildings will increase through seamless transactions between the buyer and the developer. As one of the main drivers of the Indian economy, Indian real estate players must invest, learn and implement advanced and automated technologies in the supply chain. Cost management is not just about reducing costs. It’s about achieving high return on investment, complete optimization and ensuring the business stays relevant.
(The author is Grant Thornton, India Management Consultant and Partner – Digital Strategy & Transformation)
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