As the real estate industry looks to the future, property and asset managers are digitizing every piece of data they possibly can to make smarter decisions about productivity, operational efficiency, and more. From fintech to proptech, real estate leaders are tapping data and technology to solve problems and pursue opportunities and it’s generating a daunting amount of data. And more is flowing down the pipeline.
Of course, it’s one thing to collect all the data. It’s quite another to successfully glean insights from that data that can help drive strategic decisions about the future. To leverage data and analytics to fundamentally change how the real estate industry operates, real estate leaders need to lay the foundation to turn information into insight and to be able to act on analysis. As with any other construction project, sound building principles are paramount to a stable structure.
Putting down the digital pipe necessary to make business decisions in real time based on wide-ranging data sets is grinding work. Companies have to collect, clean, integrate and analyze data drawn from disparate sources. It takes time and requires the coordination of people and data sets across regions and systems. While putting in place the appropriate data governance and technology architecture is a heavy lift, it has the ability to catapult the industry to a new level.
Crushing data crunching: from weeks to seconds
Done right, the results are impressive. For example, a multifamily real estate platform with a number of different operators increased insight into their financial operations so they can make better investment decisions about portfolio properties. With the old way of working, it took them hundreds of hours to accumulate and consolidate data from individual property managers and produce financials that consolidated portfolio information. Now, they have the capacity to crunch data in seconds rather than weeks and can drill down into granular property data, allowing them to better understand what is driving true performance at individual properties.
Companies that are proactively getting processes and systems in place now are poised for even more success once more data becomes available. And, more data for real estate companies is coming, fast.
Consider “proptech”—a sort of catchall term for how software and technology such as drones and IoT devices—is changing the industry and advancing at an accelerated pace. “According to data from CB Insights, global proptech investment is projected to reach a record U.S. $6.3 billion across 382 deals in 2019.”
Proptech will fuel a firehose of data, but like financial data, it’s often unstructured and disconnected. All that raw data will go to waste unless it’s channeled into useful insights and distributed for decision makers to see the bigger picture. Here are just a few examples of where we’ll see data coming from:
- Drones. From conducting heat analysis of roofs to assessing property damage, drones are producing streams of data. Imagine a commercial provider analyzing roof data across thousands of properties to assess how climate change is going to affect construction estimates and adjusting their building decisions accordingly to save millions in the long run.
- IoT and sensors. In addition to using AI and sensors to increase the energy efficiency of buildings, innovative real estate companies are monitoring the flow of people in commercial and retail spaces to analyze behavior patterns to improve the consumer experience.
The real estate industry is experiencing digital transformation and experimenting with emerging technologies. It’s an exciting time for the industry, but it’s also important to remember that taking advantage of data and technology demands discipline. Real estate companies need to think like construction engineers and put the necessary foundation in place if they want to be successful.
Byron Carlock is partner and real estate practice leader with PwC.