The real estate industry has dramatically changed in

the past ten years1 and the way the industry engages

with customers is constantly evolving in this highly

competitive market2. Estate agents are already

looking towards new technologies to stand out from

the crowd and there are many new tech innovations

on the scene that agents are using to market

themselves, appeal to more customers and ultimately

drive more sales.

Figure 1: The Digital House Hunt

Today’s Real Estate Market Online and mobile are hugely influential in today’s real estate market. Mobile has already taken the industry by storm with around one-fifth of real estate related searches happening on mobile devices3. According to The Guardian, consumers are continuing to rely on sites like ‘OnTheMarket’’ and ‘Rightmove’ for housing information4.

Figure 1, "The Digital House Hunt” Study - REALTOR.org." 2014. 10 Jun. 2016 1 "Mapped: 10 years of Great Britain's house price boom ... - The Telegraph." 2015. 13 Jun. 2016 2 "The rise of the customer-led economy - Economist." 2016. 13 Jun. 2016 3 "“The Digital House Hunt” Study - REALTOR.org." 2014. 10 Jun. 2016 4 "OnTheMarket is off the mark as the war of the property websites is ...- The Guardian" 2015. 12 Jun. 2016

There is also a lot of buzz around drone technology with companies like Spark Aerial5 offering drone flying lessons to real estate professionals. Although, currently, drones are predominantly used in high-end real estate to create an aerial panoramic view of a property, nearly 20% of agents who are not using drones already said they plan to use them in the future6. 3D walk-throughs are also growing in popularity as an updated version of the panoramic camera shots that were all the rage a decade ago. With no headset, users move their mouse or arrow keys from their computer keyboards to navigate through rooms and zoom in on apartment features. Halstead has 3D walk-throughs available for 30 listings and its goal is to get its entire inventory online. They quote that buyers stay on a page with a 3D walk-through 10 times longer than those without7. Estate agents could embrace many new technologies to innovate and gain a competitive advantage. Of these, Virtual Reality (VR) has a number of clear advantages.

There are already a number of headsets on the market, such as Facebook’s Oculus, the HTC Vine and Samsung Gear VR Hololens.

VR is already transforming our gaming industry and advances have been made to develop the technology further to support a wide variety of applications in immersive films, sport, arts and even medicine8. Facebook’s founder, Mark Zuckerberg, only agreed to pay $2 billion for Oculus because of its potential beyond gaming9.

5 "Spark Aerial | Creative Drone Agency." 2007. 10 Jun. 2016 6 "Realtors' Use of Drones on the Rise, new NAR Survey Finds - Dronelife." 2016. 13 Jun. 2016 7"A New Dimension in Home Buying: Virtual Reality - The New York Times." 2016. 14 Jun. 2016 8 "9 industries using virtual reality - TechRepublic." 2015. 12 Jun. 2016 9 "Oculus Connect: 5 key questions at the big virtual ... - Los Angeles Times." 2015. 8 Jun. 2016

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In this paper we will look at the strategies real estate companies should adopt to ensure they take advantage of the opportunities VR offers and embed VR into their sale strategies.

Figure 2: Selling the Future: Virtual Reality's Potential Role in Real

Estate

Stay ahead of competition CampaignTrack10 states that 3D tours of houses will be available in real estate agencies by 2020. They are wrong. If agents wait until 2020 they will have missed the opportunity and the competition will be far ahead of them. VR must be adopted now, or customers will reject traditional agents altogether and move even more strongly towards mobile agents. Virtual reality is here and should be embraced today.

Go beyond the high end Sotheby’s International Realty already use VR as a tool to sell high-end homes and new builds. Luma11 has been showing customers around using VR whilst construction is just breaking ground. These are just the starting points, however. There are many other

Figure 2. "Selling the Future: Virtual Reality's Potential Role in Real ... - Curbed." 2016. 15 Jun. 2016 10 "Real estate marketing trends you didn't see coming - Campaigntrack." 2015. 8 Jun. 2016 11 “Luma Oculus Experience -studio216” April 2016

opportunities, such as in mid-priced residential houses and commercial real estate.

Sales of mid-priced houses and flats: Firms such as Eyespy360 now sell VR tour production at £3 per property12. This makes

VR accessible to the entire market. All estate agents, both online and high street, must start making VR tours of their properties. The solutions should work with headsets such as ‘Google Cardboard Goggles’, so buyers can tour houses from the comfort of their own home. High street estate agents should take this further. Learning from travel agencies, they should entice sellers and buyers back from the online only agents by offering a premium service with comfortable VR viewing booths in their stores.

Location, location, location: Nobody buys a

house in isolation. They buy the house plus its location. New build developers understand this, and use drones to photograph views from high rise apartments13. VR can build upon this, linking with Google Street View in virtual reality mode14 for a seamless tour of the house and its environment.

12 "Eyespy360 | Virtual Tour and Virtual Reality Pricing." 2016. 8 Jun. 2016 13 "Virtual Reality and Real Estate; how a Seattle ... - James Dearsley." 2015. 8 Jun. 2016 14 "Revolutionising Virtual Reality Real Estate - Start VR." 2015. 8 Jun. 2016

Imagine living there Real estate has only tapped the surface of VR, showing virtual tours. Data gloves, wands and treadmills are yet to be explored and would allow buyers to walk around, sit down, open cupboards, “touch” objects, and really feel what the house is like. Better than a real visit, people can do this privately and without feeling embarrassed as the owner or estate agent watches.

Why view virtually when you can visit?

One of the most common pain points in the property buying process is the amount of time spent on house viewings. The process suggests that an estate agent may see two properties in an hour, including travel time, which works out at around 68 hours’ work to find a property for just one buyer15. VR offers real estate agents great time savings, and the opportunity to wrap up deals more quickly. This has huge advantages for agents, as one in five buyers are willing to put in an offer without viewing the property16. This not only benefits agents. Buyers can now view with no travel time, particularly advantageous if they are buying in an area far from where they live. This is a big market. In London at least, 69% of buyers of new build properties in 2013 were from overseas17. New builds have a particular advantage. With VR, buyers can view properties which have not yet been built, allowing them to purchase earlier. Buying off plan no longer requires looking at a plan and simply imagining. It could also eventually eliminate the need for the open house or show home altogether, saving $50K-$300K per development18.

A side benefit of VR could also be an increase in trust. No longer will buyers feel they have wasted time traveling to see a property that they know within seconds they will not buy. They will only visit properties they, themselves, have chosen to visit, rather than relying on the estate agent’s recommendation.

15 "Virtual Reality & The Future of Real Estate Tech | James Dearsley ..." 2016. 9 Jun.

2016 16 "Survey: 1 in 5 homebuyers make offer sight unseen - HousingWire." 2015. 13 Jun. 2016 17 "Foreign buyers dominate London's luxury housing market - BBC News." 2014. 13 Jun. 2016 18 "How Virtual Reality Can Impact Key Players in Architecture, Real ... - INGStudios"

2015. 13 Jun. 2016

Design first Moving beyond sale and purchase of houses, VR can also assist at the design stage. This could help with A/B testing of new build designs, getting feedback from potential buyers on the floorplan and interior design. This could be taken further in the commercial market for specialist constructions such as hospitals, where clinical staff could be involved in the design to ensure it meets their needs.

Trends in office design are constantly evolving as preferences for open plan and more private space change19. VR could assist the office redesign market, allowing teams to see how a layout would work rather than simply look at a plan or trust the estates team.

Just another 3D television fad? Even though forecasts for the VR market look set for high growth, with revenues for virtual reality products projected to increase from $90 million in 2014 to $5.2 billion in 201820, its future is not yet guaranteed.

Figure 3: Virtual reality revenue forecast worldwide 2014-2018

Figure 3. "Virtual reality revenue forecast worldwide 2014-2018 | Statistic." 2015. 15 Jun. 2016 19 "The Evolution of Office Design | Morgan Lovell." 2015. 11 Jun. 2016 20 "Virtual reality revenue forecast worldwide 2014-2018 | Statistic." 2015. 15 Jun. 2

There is always the risk we will see a repetition of the 3D television fad21. Unless a guaranteed return on investment develops with a significant upsurge in users, major software developers may stay away.

Health risks Concerns about health are growing in prominence, with CNBC referencing the “troubling lack of focus going into health...risks”22. The list of potential side effects is long, with 16 health instructions associated with the Samsung Gear VR23. In tests, the UCLA Keck Center for Neurophysics found “cybersickness”, abnormal brain activity in rats and even neurons shutting down24. This has the potential to completely block the success of VR and requires further work so that all potential users trust VR.

What are the legal implications? As VR is still in its infancy25 and a variety of VR products are still in development, the industry needs to anticipate present and future legal issues based on the current land laws and legal frameworks. The UK real estate market is regulated according to Scottish and English land law26, which estate agencies will already be compliant with, when selling any property in these regions. Looking at the VR products readily available on the market, it shows that the main legal implication is intellectual property rights, including trademark, copyright and right of publicity27. These legal issues

21 "Remember 3D TV? Why 2016 Will Not Be The Year of Virtual Reality ..." 9 Jun. 22 "Virtual reality: Are health risks being ignored?—commentary -CNBC." 2016. 9

Jun. 2016 23 "VM Disclaimer - Best Buy." 2015. 13 Jun. 2016 24 "Virtual reality: Are health risks being ignored?-—commentary." 2016. 9 Jun. 2016 25 "Some Of The Most Interesting VR Technology May Have Not Even .. - Forbes." 12

Jun. 2016 26 "England and Wales - European University Institute." 12 Jun. 2016 27 "Virtual Reality Creates Potentially Real Legal Issues - Mondaq." 2015. 12 Jun.

2016

apply across the virtual and the real world. For example, if branded products or logos are used in the ‘virtual world’, the traditional laws of trademark, copyright and use of publicity that are used in the ‘real world’ apply28. If other people or people’s properties are captured in the virtual world, then property rights and use of publicity will also need to be considered. This can apply, for example, if you are showing other properties or schools in the local area through VR. Real estate agencies may also require ‘terms of service’, as this can control the interactions between users, creators and companies with VR equipment29.

Summary To conclude, there is a clear gap in the real estate market to target VR towards the various business models of the commercial and residential ‘middle-market’. It would be aimed at customers visiting traditional and online estate agencies. The key recommendation for this market is to use VR to complement traditional sales methods, customer service and online tools, as most people will always want to view a house. However, VR will improve the customer experience at an earlier stage along with offering a competitive advantage for the agent. High-street estate agents should offer a differentiated service by installing in-store VR booths, which could then lead to extensions such as gloves and treadmills to improve the experience. Online agencies should invest in low cost VR headsets to be used in conjunction with their apps. The main considerations that both types of agencies, traditional and online, need to consider with VR are property rights and use of publicity for this specific trend.

28 "Legal Issues in Virtual Reality - Revision Legal." 2016. 12 Jun. 2016 29 "Virtual Reality May Create Novel IP Issues In The Real World - Law360." 2016. 12

Jun. 2016