Real Estate Activities
The real estate sector comprises five activities: development, dealing, letting, brokerage and administration. According to the NACE Rev. 1 classification, chapter 70, real estate activities are subdivided into three categories with further subcategories:
Real estate activities belong to the service sector and are to be distinguished from construction activities. Class 70 does not include architects and construction economists, and, in particular, class 70.1 does not comprise the execution of building projects through construction units.
Basic economic data
Number of companies: In 1996, the real estate sector comprised 828.000 companies.
Market structure: The real estate sector is characterised by a high share of small companies. In 1996, 73.6 % of all companies in this sector were self-employed with no employees, compared with an average of 51.9 % in the whole of the service sector. Moreover, 98.2 % of the companies in the real estate sector had less than 10 employees.
Market activities: In most EU countries, the number of purchases on the real estate market has increased since 1993, with Germany being a remarkable exception. In the UK, almost twice as much purchases as in France or Germany were conducted.
Employment: In 1996, 1.8 million persons worked in the real estate sector. Half of them were women (data for 1998). The share of self-employed is relatively high, with an EU average of 17.5 % in 1998.
Reasons for selecting the real estate sector
The real estate sector has a fundamental significance for both businesses and private individuals. Regarding business, real estate is one of the basic preconditions for running a business at all. Regarding private tenants, this sector is important in social policy terms, because it deals with the basic need of housing. For this reason, public and semi-public suppliers play an important role in real estate. Roughly one quarter of the EU population is living in public or semi-public housing. Thus, by the nature of its supplier structure, the real estate sector allows a comparison of ICT and e-business application between public authorities and private firms.
Role of ICT and e-business
The real estate market is characterised by a particular lack of transparency. There is only little or unsystematic information about supply structures. The goods offered are largely non-standardised and have to meet individual needs and requirements. Thus, the real estate market could significantly benefit from a widespread use of ICTs, for example information offer on the internet. However, the real estate sector is not a forerunner of ICT use. A recent survey concluded that the websites of German real estate brokers are not satisfying and that those of real estate administrators are quite poor. Regarding B2B e-commerce, most real estate platforms have not yet reached profitability. The market is still in an experimental phase. One reason for the rather low level of ICT adaptation could be the market structure: Very small companies and self-employed without employees may find it difficult to spend resources on ICT and e-business.
However, there are various activities within the sector to advance the usage of ICTs and e-business, for instance for improving the service for tenants by implementing smart networks allowing communication between the tenants and the real estate organisation in charge of administrating the building. The importance of B2C e-commerce should increase for real estate agents, and particularly as the diffusion of broadband internet connectivity gains momentum (e.g. enabling potential customers a 3D virtual tour through the objects of their interest). Thus, we forecast that the real estate sector will see a sharp rise in the importance of using ICT in all segments of the value chain (from constructing buildings to selling real estate and to administrating) over the next 3-5 years.
European associations and interest groups