Quiet data revolution in real estate
18 May 2016
I saw a recent newspaper headline which read “Will mobile health apps make GPs redundant?” A quick straw poll of my family (all doctors) revealed that they thought this notion was absurd. It struck me how people tend to take a very binary view of these types issues depending on their experience - whether it’s a doctor or an accountant insisting he/she will never be able to be replaced by a computer or some futurist insisting that we are all going to be replaced by robots. In my view there will always be a need for a highly trained, empathetic medical professionals to manage a patient’s well-being. But it is also my view that there are almost limitless ways in which data and technology can be used to improve our health service. So the reality I’m sure will be that many aspects of a GPs work will be transformed by the use of data and technology. Indeed, this will be an absolutely critical way of dealing with the growing pressures on the NHS to address lifestyle illnesses like diabetes, obesity and the needs of a growing elderly population - where timely, low-level interventions, coupled with effective monitoring and use of technology, will be most effective.
This is a subject for another blog, but it did get me thinking about what the equivalent is for property. At the same time that people are being seen as repositories of data, so too are the buildings in which those people live, work, play, sleep, study and shop.
What is your light socket saying?
Soon our light sockets will not only hold light bulbs but will help monitor our health, check for intruders and control the heating in our homes. Tenants are beginning to expect this hyper-connected and ultra-sensitive Internet of Things technology to manage their working environment. Equally savvy occupiers are using new sensors, booking in systems and other finely-tuned measurement techniques to make effective use of their space. The potential for real estate is limitless if the industry can get to grips with its data.
Our recent Global Emerging Trends in Real Estate found an industry that has historically under invested in IT. Taking relative size into account, global corporate real estate IT spend is half of financial services and the public sector, including health care. Data is largely managed in silos and a third of the global real estate industry is still using spreadsheets as the primary tool for portfolio management. As one respondent commented ‘data is changing the world fast and real estate is just getting its head around it’.
Whilst the industry may still be getting to grips with its data, there are plenty of examples of start-ups (Proptechs) who are harnessing the power of data in real estate. Deal-X recently launched in Europe, and combines crowdsourced data on commercial property leasing transactions, public data sets and big data analytics to provide data footprints for individual property assets. Another example is Geophy, a Dutch-based company which uses algorithms to value property even if it has never been on the market. Used by some of Europe’s biggest investors, Geophy has developed a ‘quality score’ which enables investors to make better data-driven decisions. Not only are Deal-X and Geophy increasing transparency across commercial real estate they are also disrupting traditional business models.
From data on an individual occupying space in a building, collected via a wearable device, to the increasingly connected components of a building itself via the Internet of Things, the built environment offers an overwhelming amount of data. Data that needs to be understood and protected. Organisations that are able to analyse the links between productivity, the user experience of their building and compare it in real time with all aspects of a building operations must be at an advantage. And as we have seen in other sectors, businesses that are slow to embrace the potential of data are dangerously susceptible to disruption.
Perhaps there is a parallel after all between the property valuers and the GP? A property surveyor analyses a range of quantifiable data and market factors and then applies his/her insight and judgment to value property. I’m sure there will always be some need for a human being to apply insight to determine property values, but I’m also sure we will see the world of real estate valuation undergo substantial change in the coming years as more data becomes available and its uses more sophisticated.
If you would like to discuss these issues, or the impact of emerging technology or data and analytics on your industry, then contact our Data & Analytics team.