Digitalization and innovation: opportunities and risks of the transformation in the real estate industry
Digitalization is fundamentally transforming the real estate industry, from project development to day-to-day operations. Those who remain on the sidelines today risk falling behind the competition in terms of ESG compliance, facing a shortage of skilled workers, and increasing cost pressures. This article explains the current state of the industry, which technologies play the biggest role, and where companies see the greatest opportunities and challenges. Where the industry discusses the latest digital solutions: EXPO REAL 2026, October 5–7 in Munich.
What does digitalization of the real estate industry mean?
In the narrower sense, digitalization simply refers to the conversion of analog data into digital format. However, when we talk about the digitalization of the real estate industry, it encompasses much more than that. It involves the digital transformation, leveraging digital possibilities, and strategically identifying and harnessing the potential that arises from digital technology. The more interconnected digital communication becomes, the more solution options arise. But these solutions also become increasingly complex, and thus, the end of this ongoing change is not foreseeable. Hence, the term “disruption” is used, as traditional products and services are being replaced and/or displaced by digital innovations.
What does digitalization mean for the real estate industry?
The digitalization of the real estate industry is leading to a fundamental change in the sector and opening up new perspectives for more efficient processes and innovative business models. It is a comprehensive change that affects all areas of the real estate industry and the entire life cycle of properties. It starts with the planning and project development phase, extends to financing, encompasses building operations including property and facility management, and has made significant advancements in rental and marketing activities. Moreover, it serves as a foundation for asset and portfolio management.
Today, no commercially used building can do without digital control of water consumption, lighting, heating, ventilation and digital access systems. The same applies to residential buildings that are becoming increasingly “smarter” with more digitally controlled processes. While office buildings are still in the planning stage, they can already be visited using a “digital twin” concept, which enables virtual tours and simulations.
In the project development and construction sector, Building Information Modeling (BIM) has become indispensable. It consolidates and streamlines the respective processes, ensuring that all necessary data is available for the operation of the property later on. Financing is now not only provided by banks but also through crowdfunding platforms on the internet. Other buzzwords in financing are blockchain and cryptocurrency. Asset and portfolio managers no longer rely solely on Excel spreadsheets. To meet the future requirements of ESG taxonomy, they will increasingly count on appropriate solutions that enable scoring by leveraging the multitude of necessary data.
Simply put, there is no area in the real estate industry where digitalization does not offer solutions for existing tasks and challenges.
What is the current state of digitalization in the real estate industry?
The industry is undergoing digital transformation, but the pace lags behind its potential. This is evident in the 2025 Digital Transformation Study by ZIA and EY Real Estate (10th edition, n=150), which highlights a familiar contradiction: awareness exists, but implementation is lagging behind.
What the numbers show:
- 90% of respondents view AI as a key technology for the next five years.
- 62% of companies invest 1–5% of their revenue in digitalization; only 9% invest more than 20%.
- 82% prefer cloud solutions, but a lack of integration between systems remains a key problem.
- A lack of human resources is the biggest challenge—it has consistently ranked first for the past ten years. Nearly 80% of respondents cite it.
- The number of companies that consider themselves to be digitally excellent has actually decreased compared to 2024.
What this means: Many companies know that AI is on the horizon, but they don’t yet have a solid digital foundation in place. Those who don’t invest in data quality and integration now will not be able to capitalize on the potential of AI.
What benefits does digital transformation bring to the real estate industry?
In general, digital transformation offers two invaluable benefits:
- For one thing, repetitive tasks can be automated. These include, for example, payment processing, controlling, document analysis, and reporting.
- On the other hand, it is the comparability and rapid availability of data that are also—and especially—important in decision-making processes.
Why should the real estate industry take the plunge into digital transformation?
There are now three additional reasons that make digitization almost inevitable:
Skills Shortage and Automation
The real estate industry is suffering from a structural skills shortage. Automation in areas such as document analysis, reporting, payment processing, and controlling can help alleviate some of this pressure without compromising quality.
ESG Requirements:
The EU Taxonomy and the reporting requirements under the CSRD necessitate seamless data management throughout the entire real estate lifecycle. Companies that do not use digital solutions risk compliance gaps and lower ratings from institutional investors.
Cost Pressure and Resource Efficiency
Rising construction costs and energy prices are intensifying the need to use resources more sparingly. Digital control of heating, lighting, and climate, combined with data-driven maintenance planning, demonstrably reduces operating costs.
What are the obstacles to digitalization in the real estate industry?
It is rarely a mental hurdle as to why the real estate industry is not exactly a pioneer of digital transformation. It is rather a healthy degree of pragmatism in deciding what can be easily implemented and promising in terms of success. The focus is on utilizing digital applications to increase productivity and reduce costs.
Where do companies see the greatest opportunities in digital transformation?
The greatest opportunities are seen in areas where digitalization has already made significant progress: invoice processing, controlling, document analysis, reporting and payment management.
There is also a high assessment of the potential in marketing, maintenance planning, property valuation and tenant communication. However, where digitalization in the real estate industry needs urgent further development is in project development and construction—both in terms of resource conservation and considering rising construction costs and property prices, the use of digital technologies would be crucial.
In what direction is digitalization heading in the real estate industry?
Five trends are emerging that will shape digitalization in the real estate industry in the coming years:
- AI is becoming standard technology: Machine learning is moving beyond the experimental stage. It is becoming the norm in valuation, portfolio management, and risk modeling—and those without a solid digital foundation will not be able to harness the potential of AI.
- The digital twin is gaining ground: More and more buildings are being managed as data-driven models. Planning, operation, and maintenance no longer run separately alongside one another but are now intertwined.
- ESG data will become mandatory: Anyone who is still fulfilling their reporting obligations manually in 2025 will face a real regulatory problem starting in 2026, because the workload will be nearly impossible to manage without an integrated database.
- The IoT connects buildings with data: Sensors monitor energy consumption, indoor climate, and occupancy in real time. This data forms the basis for automated control, predictive maintenance, and ESG-compliant reporting—not just a nice-to-have, but an operational standard.
- The PropTech market is consolidating: Fewer new startups are emerging, but products are becoming more mature and can be integrated more deeply into existing workflows.
Why is it worth visiting EXPO REAL?
EXPO REAL offers a wealth of knowledge and expertise on digitalization of the real estate industry, among many other trade fair topics. By attending, you will gain a valuable competitive edge as you will have firsthand access to the latest technological trends and innovations in the real estate sector.Trade fairs are known for creating unique synergies for both exhibitors and visitors. Therefore, be there when decision-makers and experts from the real estate and digital industries discuss new digital solutions for practical implementation.
Visiting EXPO REAL also allows you to establish valuable connections. Take advantage of networking opportunities with experienced professionals and entrepreneurs from various sectors of the real estate industry.