Welcome back to A European PropTech View, by Dilan Omari-Clark. Our weekly Q&A focused on European PropTech's.
Our Q&A series is an opportunity for our European team, headed up by Dilan Omari-Clark to discuss all things PropTech, Start-ups, and Career with different founders and industry leaders from across the continent. Each week we ask our guests a number of provoking questions and quiz them about their product, company and career. We hope you find it insightful and enjoy getting to know the founders as much as we have.
Deloitte Real Estate advises almost all organizations at home and abroad on real estate, infrastructure and spatial issues. The team has a leading position when it comes to blockchain technology in real estate and is also very active with real estate data, real estate analytics and smart mobility.
I have seen a lot of changes in the past years like buildings becoming smarter. But in my opinion three major changes have had a huge impact: 1) the availability of real estate data, 2) the increase in computer power so that data can be enriched, combined and analysed, and 3) the data visualisation software.
I see already the impact of this, for example: data analysis can significantly improve decision-making in real estate. From valuation, sale/purchase of properties and contracting to negotiations, risk analysis and planning.
The availability of robust real estate market data varies across geographies. Incorporating disparate datasets into a forecasting algorithm, in a structured and standardised manner, enables the user to visualise how the different data layers interact in, for instance, complex environments such as an asset register for large real estate portfolios. The overarching purpose of enriching the data layer with as much internal, external and macro-economic data as possible, is to help understand the impact of future trends by feeding the forecasting process with more information. Ultimately this can arm decision-makers with customised, interactive analytics, made available in easily digested mobile formats, where needed.
As a machine-learning based tool customised for the real estate sector, the entire system will get smarter and improve over time. In this way, it is able to link socioeconomic factors such as the number of jobs by key economic sectors, with the real estate asset demand over time, to assess how this might impact future performance including price. The tool can also provide absorption forecasts for planned assets and help define the appropriate phasing strategy for each. Finally, the forecasting tool can be further integrated within business planning and financial feasibility models to drive a market-based response to real estate development. This will support future decision-making even more.
The year 2021 will initiate an era in which enhanced AI-driven location analytics for real estate will reach maturity and become suitable for the masses. It will become mature enough to be adopted by enough users in order to make a real impact in the market. This will unleash its full potential for the first time. For those who have invested early, time and cost-intensive data gathering and cleansing efforts will eventually become a thing of the past.
The real estate industry is currently adapting to the evolving market conditions, a changing regulatory environment, and a fast-growing technological landscape. This is described in detail in Deloitte’s 2019 European Operations and Technology Survey for Real Estate Investment Managers. A survey that was completed by a range of European real estate investment and asset managers. What can we learn from their replies? How to achieve an effective digital transformation in our industry?
Digitalisation is here to stay, and real estate investment, fund-, asset- and property managers can either embrace it or risk becoming marginalised within the market. It is a complex topic, but it largely relies on the willingness and ability of people to change rather than pure technology. Organisations that are willing to experiment and be prepared to try, test and fail – and then try something slightly different again - are far more likely to take advantage of the new offerings than those who are cautious, risk averse and traditional in their outlook. The opportunity offered by digital solutions has the scope to radically change the way real estate professionals work. Therefore, we are entering one of the most exciting times in our industry.
From my point of view I see three big things:
We are without a doubt standing on the brink of a completely different way of personal data sharing, driven by inefficiencies and privacy compliance risks in today’s processes. In fact, major steps were taken in the development of self-sovereign identity solutions in 2020. An interesting example of its current application is the sharing of proof of a negative COVID-19 test or vaccination that Deloitte and others are working on. Experiments and pilots with self-sovereign identity solutions in real estate in 2020 for example in rental and sale processes have shown to be very promising. I therefore expect that self-sovereign identity solutions will be dominant in real estate transactions within two to three years.
2020 has been a tumultuous year full of seismic shifts in everyday norms. In a year marked with greater public scrutiny of embedded social structures and behaviors, it is easy to forget that another impactful infrastructure change is quietly taking place. The next wave of digital disruption is on course and 5G will be the "glue" that will tie all of our devices, buildings, and cities together, enabling new and smarter ways of working. 2020 may have slowed down the 5G technology revolution, but it has also further highlighted the need for improved connectivity, greater network speeds, reduced latency and wider bandwidth capacity to support digital transformation. Although there are challenges in implementing 5G and no doubt greater speeds will soon exceed it, the economic and social benefits will outweigh the costs. The real estate sector has the ”bandwidth” to reap some of the greatest benefits from its implementation.
Industries like retail, travel and hospitality, and the financial services industries have long been dealing with cyberattacks, and have not only matured their response capability but also positioned cybersecurity as a core element of their businesses. In contrast, the commercial real estate (CRE) sector considers itself to be relatively less at risk from a potential cyberattack. This is because CRE firms typically maintain relatively less consumer personally identifiable information (PII) and valuable intellectual property (IP) directly on their own technology systems. However, due to the rise of smart buildings where tenants have building management systems on their smart phones, new opportunities for cyberattacks will emerge within the sector. The interconnectedness of real estate owners’ systems and tenant IT systems form a potential cyber risk for both parties. As a consequence to this heightened risk I predict IT and CRE will become more intertwined during the coming year to face these new cyber threats.
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