New business models of real estate

The real estate market is today on the threshold of a new era. If this evolution is not yet very significant in terms of market share, it is clear that the real estate sector is gradually changing fundamentally and is gradually moving towards new models. Focus on new trends that could upset the real estate market of tomorrow...

The real estate market is evolving as society transforms, as Generation Y emerges and as digitization becomes more and more present in our daily lives. While the evolution is not as striking as that seen in other sectors, it should not be neglected. The purchase of real estate remains an exceptional act and buyers are still too often in age groups that are not among those most affected by disruptions that can be seen on other markets. One thing is certain, the revolution is on the move and is on the increase in the years to come.

Towards a collaborative economy

Today, we clearly see an evolution of the rental market with the emergence of an increasingly strong trend of payment for use. In the movement of colocation and collaborative economy, it is now increasingly common for an owner to rent a room or even all of his property when the latter is absent. This tendency often results from a choice of life or financial reasons. Thus, a senior may decide to make a room available to a young person to feel less isolated or increase his resources. This new business model combines the collaborative economy, but also payment for use and performance.

A new economy that we also find more and more in short-term rentals. This market, which includes the holiday rental sector and the business travel sector, has clearly marked a break in the last 10 years. We can see today a complete changeover from a model that has been held until now either by PAP or by real estate agencies, towards a collaborative model proposing exchanges of goods like Airbnb. However, some classic players are still focusing on niche just like MGM French Properties, specializing in property for sale in the French Alps. Traditional business models are still very present and well established in the markets of prestige goods. In this case, the revenues generated by the collaborative economy are not necessarily attractive to some fortunes who prefer to have the full disposal of their real estate.

... and a pay-per-use

In the construction market, new business models have also emerged. We are thus seeing an evolution in the energy sector with a real reflection on the integration of the building in the city and its carbon footprint. New ways of building have been reinvented, linked to business models and uses offering mixed solutions (offices / housing / car parks), shared uses and energy pooling. Once again, we find here notions of payment for use or performance, particularly with the emergence of connected homes that should develop more and more in the years to come.

The secondary park is also experiencing an evolution of its business models. The secondary house is currently not very popular. With the plethora of short-term rentals and co-investment models, individuals no longer want to invest in property that will only be used for a few weeks a year. The new trend is similar to a pay-per-use.

Finally, even in the more traditional field of buying in the old, we have been seeing for some time developments in business models which, of course, still represent rather small market shares, but which are still quite notable for the real estate market. Procedures, such as crowdfunding, online auctions and lease-back, should develop more and more in the years to come.

It is therefore quite simple to imagine through these few examples the evolution of the real estate market in the coming years. Like other markets, real estate professionals must now rethink their business model in order to gradually evolve to pay-for-use or even performance.