Is COVID-19 bringing virtual real estate tours into the mainstream?
Virtual property tours are offering investors and occupiers a way through restrictions on site visits during the COVID-19 pandemic
Virtual tours, a nascent but growing technology pre-crisis, are rapidly gaining traction in lockdown times – and could become a mainstay of the commercial real estate transaction process.
For many real estate professionals currently working remotely, virtual tools from drone and Google Street View footage to the widely-adopted Matterport 3D tours are being used in the early stages of the buying or leasing process to help identify opportunities worth pursuing.
“Interest in virtual building tours really picked up as COVID-19 increasingly curtailed travel,” explains Edward Parry-Jones, data director in JLL’s central London office markets team. “Very early on, we could see how the lockdowns in Asia were becoming a significant catalyst here, focusing attention on virtual solutions in a short space of time.”
Life before COVID-19
Prior to the COVID-19 outbreak, virtual tours were largely the domain of the residential lettings sector, although they had limited use among commercial occupiers and investors.
“Virtual tours were starting to get traction in the commercial sector, specifically used by overseas investors or corporates seeking to shortlist space,” says Alex Edds, Director of Innovation at JLL. “However, most clients still wanted to view the property in person.”
Attitudes have changed significantly in just a few months.
“Some sellers may have erred on the side of caution, preferring to shun virtual tours in favour of human interaction, perhaps doubting a buyer’s seriousness if they were not willing to view in person,” says Parry-Jones. “That’s no longer the case as the industry adapts out of necessity.”
Taking virtual tours to the next level
Just like increasingly sophisticated video games, virtual tours, which also have their roots in the computer gaming industry, are developing at pace.
Lessons are quickly being learned from elsewhere, such as the residential sector’s broader use of 3D and VR headsets to help bring internal spaces to life and visualise the surrounding areas.
“The next step will be to see how existing tools can incorporate facts and data within the virtual walk-through,” says Edds. “New tools are emerging all the time and as technology further advances, then so should its infiltration into real estate decision timeframes. The typical three to six-month process could be sped up.”
JLL’s NXT suite, for example, uses machine learning tools, data-visualisation technology and real-life footage to enable investors and occupiers to identify and find out more about buildings that meet their specific criteria in real-time. It can make the process faster, and is also a more sustainable than site visits.
“It’s this type of innovative technology which will drive the market forward, support clients in their strategic decision-making and help to improve transparency,” says Sandrine Garofalo, NXT support partner lead at JLL in Paris.
Other tech tools are offering investors and occupiers an even closer look at buildings. The use of laser-based tools such as LIDAR, which works in a similar vein to facial recognition software, could become more common when surveying and assessing property.
A new must-have for real estate?
However, sophisticated tech equally needs solid underlying connectivity – somewhere that forthcoming 5G networks could help.
“Virtual tours are data intensive and require multiple participants; that means a higher degree of tech support, usually from a digital coach, is needed,” Garofalo says. “It’s especially true when a lot of people are online at the same time – as we’ve all experienced in recent weeks.”
While virtual tours are a necessity as long as travel remains restricted, they could have proved their worth sufficiently in just a few months to secure a longer-term place in the decision-making process.
“The outcome of the current spike in demand for virtual tours is that while viewings will always be needed for final decision, it will allow long lists to become shorter lists decisions,” Parry-Jones says, who adds that investors have not completely stopped proceedings and are quickly adapting. “The sceptics are no longer skeptical.”
Yet the need for a site visit remains. “No investor or occupier would sign a large deal without viewing the building in person,” says Edds. “But as real estate becomes more digital and people become more comfortable with new technology, they’re trusting it more.
“We’ll see a shift in the way things are traditionally done in the coming years,” he concludes.