Real Estate Industries Case Study

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A STUDY ON THE IMPACT OF DIGITAL DISRUPTIONS IN REAL ESTATE INDUSTRY
Introduction
Digital innovations have caused major disruptions in many sectors in the global economy. The impact will be highly felt as most of Sri Lankan businesses are not ready including Real Estate.
Digital disruptions caused by digital innovation is all about pervasive as technology associate in to our everyday life. As a result, economies are changing and markets are revolutionizing the way business is done in all industries across the globe where Real Estate industry is no exception. The level of advancement of technology faced by organizations at present is very much similar to the Industrial Revolution of the early 1900’s. Most industries have been impacted immediately
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Most of the time, the disruptive product appeals to the low end of the market or creates a completely new market. This market, initially is limited in size and profit margins are not attractive to leading companies which focus on their more profitable markets and continue to improve their existing products marginally. Over time, the disruptive product improves and attracts customers of the main stream market. This shift may attract attention from the leading companies but by then the disruptive product may be much ahead that the previously leading companies struggle to compete.
Airbnb is considered as a disruptive innovation or a digital disruption occurred in Real Estate industry due to the company’s innovative internet based business model and its unique appeal to tourists. Now Airbnb is a part of growing movement most popularly known as “Sharing”, “Networked”, “Peer- Peer” or “Digital”
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On Real Estate point of view due to attractive income flow, permanent long term rentals are being converted to short term tourist accommodations resulting housing affordability pressures in major cities. This has raised important questions for urban policy makers and planners about how effective existing zoning and planning regulations and controls on tourist and residential accommodations are and the extent to which increasing tourism demand puts pressure on the local housing market. Also, Airbnb has penetrated residential neighborhoods which creates conflicts between residents and visitors generating negative neighborhood impact. The traditional tourism accommodation market involves tourists booking rooms from formal businesses such as Hotels. Airbnb has challenged this model by facilitating online market place that allows the large-scale rental of spaces from one ordinary person to another. This has enabled ordinary people to compete with hotel operators without major overhead or investment which threatens traditional hospitality sector. Ultimately the rise of these informal accommodations has led to serious economic, social and legal

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