Digitization in Real Estate

I started my property career back in 1998 as a part time property investor, and by 2012 had accumulated a property portfolio sufficient to enable me to, exit corporate South Africa, and purchase a property management company and begin practicing in Real Estate on a full basis.

I started my property career back in 1998 as a part time property investor, and by 2012 had accumulated a property portfolio sufficient to enable me to, exit corporate South Africa, and purchase a property management company and begin practicing in Real Estate on a full basis.

In 2014 I was fortunate enough to meet a master property developer, whom I partnered with and so began my journey in Real Estate Development. Our focus is on student accommodation, and over an almost 10 year period we evolved a sustainable, student village model, housing over 18 000 students. After 400 investment pitches, we eventually obtained funding from a green technology hedge fund.

The period of 7 seven years, over which the seeking of funding took place… opened my eyes and my heart to the notions of socio-economic empowerment, servant leadership, sustainable development, technology accelerators, re-imaging a better future and the art of living in the NOW.

The overarching hypotheses encompassing the following discussion is:

• We already know the answers to all the questions we ask

• What is mother earth telling us right now, and how are we as conscious influencer’s listening to her.

The last two years have been a tumultuous period full of seismic shifts. 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.

The COVID-19 crisis has shed light on another well-known crisis that has the potential of exponentially harming humanity to a point of no return – global warming. If we want to avoid the many consequences of global warming, we should accelerate our efforts, starting now. How can digitalization and innovation enable the industry to prepare?

“ESG”, the generally used acronym for “Environmental, Social and Governance”, has become an important business consideration all around the world. For instance, real estate investors have an increasing focus on sustainability. However, ESG in real estate can be so much more impactful. How can it become an important value driver?

COVID-19 has disrupted human connections, which are at the heart of the commercial real estate (CRE) business. Last year, leaders in all industries were challenged to digitalize many aspects of work while shifting and engaging employees in a virtualized environment. Looking ahead, what does this tell us about the future of work in real estate?

Real estate is undergoing a fundamental business model redesign enabled by digitalization and a growing market of smart buildings. What business model will be successful in the future? What can the real estate industry learn from tech? What is Real Estate-as-a-Service? And what is the impact on strategy and organizational performance?

The first 5G networks were launched in 2019 and were largely deployed from existing 4G base stations. Since then, various major network organizations have also launched 5G mobile network capability in a limited number of cities and towns. There is much more to come – 5G could solidify the business case for transformational technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), Augmented & Virtual Reality (AR & VR) and Digital Twins all of which could have a significant impact in digitalizing various sectors – the sky is ”virtually” the limit.

The availability and interpretation of the right information is crucial in any sector, including real estate. After all, data analysis can significantly improve decision-making, from valuation, sale/purchase of properties and contracting to negotiations, risk analysis and planning. Obviously, there is an abundance of data about the world’s biggest cities. This makes macro-analysis for these places straightforward and relatively easy for skilled data scientists.

However, the smaller the place, the harder it gets to create a good understanding of locations – even on the aggregated view provided by zip code areas. For single addresses (micro level) this is even more difficult. The same is true for data-rich hotspots, if the required skills are lacking.

For instance, the rental value of two properties that are only a couple of meters apart, can already differ significantly due to the presence of e.g. railway lines, noisy streets or polluted waters.

However, when it comes to data management in the real estate sector, there are still a number of major challenges.

Often the required data are simply not available, not granular enough, or outdated. If they are available, they might not yet be harmonized across geographic areas. So even before the start of a simple analysis, a lot of effort is required. This also pertains to other manual data corrections, such as missing values or incorrect master data. While for master data the case is clear-cut (a value is either correct or not), other data issues might require expert judgement. In other words, there is a risk of ending up with expensive but worthless or even misleading analysis results, due to, for instance, personal bias by the expert “correcting” the data issues. The alternative is buying data on social demographics, rents, purchase prices and geographic points-of-interest (POIs), but good data always comes at a (potentially steep) price.

Real estate companies that are able to gain a lead in mastering their own and acquired data by means of advanced data analytics, will reap the greatest benefits. Enhancing your own datasets with additional geographic features will justify the application of powerful analytics techniques such as deep learning. This in turn will lead to much better insights into previously not well-understood market developments, sub-markets, locations and interdependencies.

The year 2022 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 construction industry is one of the biggest contributors to global warming. It is responsible for 40% of all global carbon emissions. With a percentage that high (compared to other industries), the Paris Agreement’s push to limit total emissions to 1.5 °C / 34.7 °F is particularly essential for this sector. Also, according to a report from Transparency Market Research, the volume of worldwide construction waste is predicted to double to 2.2B tons by 2025.

Real estate is undergoing a fundamental business model redesign enabled by digitalization and a growing market of smart buildings. A redesign that is important in a (post) pandemic era when so many businesses are evaluating what their property brings to the company by providing on-demand, customizable and scalable access to space, amenities and services. What business model will be successful in the future?

What can the real estate industry learn from tech? What is Real Estate-as-a-Service?

And what is the impact on strategy and organizational performance?

What I have discussed today is merely the tip of the iceberg in terms of the role of technology within the Real Estate Sector. Technology in real estate extends, also, in to the realms of bio-digestors, waste management, healthy food options, event hosting, psychology, nursing, learning and the list goes on. You are welcome to make contact with me on the Rich Woman Society Platform to discuss, write and talk about how we go forward, digitally, within the realms of Real Estate.

In this modern-era a Game Changer possesses the following qualities:

• An internal locus of control

• Can visualize patterns into the future

• Understand their purpose in life and see the genius in all people

• Become Master’s in their trade

References: Deloitte: Real Estate Predictions 2021 | Executive Summary

Recommend0 recommendationsPublished in Real Estate, Property Investing

Related Articles

Responses