The Rise of the Intelligent Real Estate Asset
Technology is changing the real estate landscape as we know it. The real estate eco-system and investment landscape involve different layers of decision-making horizons. The life-cycle rotates between the landowner, developers, designers, contractors, brokers, lenders, asset holders, asset managers, property managers, and tenants, each having their factors that impact the decision-making process. Technology is being utilized today at various levels across this ecosystem. Brokers are automating advertising, deal flows and closing. Architectural Consultant’s and contractors began using and testing with virtual reality and drones to aid in construction, with a few contractors incorporating the 3D printing. Property managers benefitting from automating back-end operations and processes; lenders benefiting from the availability of more data to assess risk. The potential is endless. As I explain more into the change that is happening around the world with PropTech, I envision that we are heading towards serious modifications to the present investment landscape and real estate eco-system.
Assets end up with an owner. More substantial assets end up with institutional investors, Family Offices and REIT’s. These large asset owners today require more sophisticated data analysis to analyze a more competitive market. In conversation with May Khizam from ‘The Grid Initiative’ as part of SmartInvest Series on a panel discussion: I explained the importance of REIT’s evolving intelligently by utilizing technology to have a competitive edge. Today, REIT’s and portfolio managers can utilize technology in site selection, tenant attraction, satisfaction, and retention, brand differentiation and brand enhancement, space design- redesign, operational efficiencies, process improvements, cost savings, impact on positive changes in rentals and occupancy rates, and positive changes to capital and net asset values.
REIT’s can utilize technology to enable them to optimize decision-making, make more informed decisions at a faster rate, utilize IoT for operational efficiencies, linking with FinTech products, and studying tenant demographics, providing tenant technology amenities to attract and retain tenants. With the availability of data, algorithms and machine learning will allow for more data-driven portfolios. REIT’s and real estate owners will be able to predict and forecast market cycles and movements, in some cases up to 5-year forecasting. Of course, as I always say, ‘machines can’t predict what humans can’t predict’. Even though machines can analyze far more extensive data than human beings and at a much faster rate. A US-based REIT was able to build a platform that allows predictive real estate market movements, and when the input data from the last two decades into the platform, it was able to predict the previous global crash. Indeed, the factors affecting real estate markets are, to a certain degree, predictable, when you have a machine that is looking at all variables and can connect the dots.
Ability to analyze data faster, and to have a fair amount of forecasted data, at the least, allows feasibility analysis to be conducted much faster than the traditional methods currently utilized, which gives leading tech-enabled REIT’s the advantage of making offers faster and analyzing more properties. In conclusion, giving them a clear position at the time of ‘purchasing.’ The same algorithms can be used to sell and hold decisions.
Smart-technology implementation will assist real-estate assets in attracting and retaining tenants. When looking at two properties, other things being equal, a tenant is more likely to choose a property that has tech amenities such as a building-wide Wi-Fi network, car-charging facility, motion sensors, air quality sensors, app-enabled temperature control, keyless entry locks, and water quality sensors. Tenants will be demanding more comfort and more of a customized experience in the near future. It is expected that by 2020, over 1.3 billion sensors in buildings will be connected. More advanced buildings and fully autonomous BMS systems will be able to gather augmented intelligence about residents’ behaviors and take actions accordingly, i.e., adjusting the temperature based on your habits, rather than your instructions.
*KAIZEN Asset Management consults the property sector on PropTech and assists in planning, developing and building tech-enabled platforms and buildings, which will assist in advancing the eco-system into the forward-thinking technological frontier*