In our latest blog, we covered insights from ReCoTech Finland’s virtual discussions around the topics of sustainability and built environment. In Part 2, we dive into the topics of tenant behaviour, data, API, and ecosystems.
1. Tenant behaviour and how the industry must adapt
Even if being digital doesn’t come naturally for many of us, addressing multiple needs from tenants’ side is something which has changed over the last years. By now, we want an easy way to communicate with our neighbours, report issues related to my apartment or to simply do payments with one click. Demand is driven by tenants and large corporations.
The industry has changed as well as the behaviour towards tenants
We see how consumer trends and changes in consumer behaviour are starting to really accelerate the development of new types of services and products within the real estate sector. That affects our private lives but nevertheless the way we work as well. There have been a lot of discussions about how the future office will look. At ReCotech, we saw some real-life examples.
Now we have the data. Machine learning and data allow computers to do better analyses of the markets and individual properties than humans.
Caro Lundin was talking about how the ARC Club harnessed Nordic values to match the decline of shared spaces in Britain by creating a new kind of remote-working, high street hub. “We realized the trend of people afraid of being isolated at home and search for other Co-working / Office sharing possibilities. There is a need to socialize, but also just to work among other people who are most likely not your co-workers” states Lundin.
Tenant behaviour will more be about flexible working. We will see more companies buying coworking memberships for their staff. Especially in bigger cities where commuting takes a significant part of your working day. That makes local coworking very important. And at the same time, we are able to focus on sustainability (Climate risk = Investment risk).
Additionally, we learned from Gavin J. Gallagher that the market does forget – once things start to recover, it will also bring opportunities for Collaboration & Community, moving to Agile workspace (68% of CEO’s planning to reduce office footprint), putting a greater emphasis on social and implementing tech solutions.
What does the future tenant experience look like?
It comes with a great service experience. Times have changed and we can see the new generation expecting a lot more of their service experience. This is because tenants are becoming more like customers; customers which are tech savvy and who travel a lot. So-called Millennials live differently, they require convenience and, statistically, they are sending more inquiries than the traditional renter.
The use of sensors will become most crucial: the business sector has much more pronounced r aspects than we can see on the residential site. But money will be invested in residential in the future as well.
We will also see a strong customer focus on the office site. Today, many real estate owners are no longer just focusing on renting out spaces over a period of time. Nowadays, it is more about providing productivity, help, safety, and services. We need to offer additional value and you need to address those very quickly. The way to do so, is by adding sensors and more intelligence to the buildings.
2. Data as the key to Real Estate decision making
Technology can easily solve data quality and management challenges. But it is important to first define what data should be extracted and collated to be meaningful to the decision-makers. The demand for more accurate forecasts and predictions of future performance has increased. This last year has shown us that relying on a so-called “good performance so far,” is not enough to forecast how the journey continues.
A deeper understanding of underlying data correlation is required to build up multiple scenarios. As global markets can change rapidly and the winner is, as always, the one who spots new trends first.
Providing a good Data Strategy
Sarah Sipilä, from KPMG Finland, defined the status of data strategy in real estate.
Key findings as the following:
- 57% do have a data strategy
- 28% have a data scientist
- 30% are outsourcing Data management from their own organisations
- 45% have an ERP system
- 39% have a data lake
- 76% are using excel
The survey also showed that 69 % of the people interviewed are too reliant on Excel, using it for Management information, aggregating data, decision making, and advanced data analysis. In addition, the most common tools after excel are Power BI, Tableau, and QlikView.
We use those tools for aggregating data, advanced data analysis, information management, supported decision making, visualising the data, and getting detailed insights. Consolidating, standardising, and harmonising data from multiple external and internal sources is seen as the main challenge when capturing data. Integrations between different systems also seem equally challenging.
Data is typically only used to drive decision making and reporting; just 28% of respondents are using data to improve tenant experience. Most respondents find using data analysis and visualisation difficult for tasks related to property management and customer relationship management.
Real estate is not known as an industry which readily embraces change. However, the majority of PropTech activity is creating building blocks towards a more efficient property market, and the amount invested means that FinTech and PropTech is here for the long term.
Is PropTech turning the real estate into a data-driven market?
Andrew Baum was one of the speakers at ReCoTech answering this specific question
“Not yet. Real Estate is a pretty slow-moving and conservative industry. A lot of people invest in real estate because they want to preserve or conserve wealth. And that means that is not an innovative, highly fast-moving industry. But there is plenty of evidence from other industries that the more data we collect, the bigger and powerful we become as an organisation.
I can see, property-owning organisations becoming more and more dominant through the collection of data. And at that point, you can start to say that it would become a data driven industry.
The fact is that private market data is still regarded as private valuable. But we see more and more public data sets being made available. We are on track towards that digital future, but we are not there yet.”
3. The value API and Ecosystems can bring to CRE
When a single organisation unlocks proprietary systems, processes, and data by publishing an API, it increases the value and, potentially, the revenue stream for both itself and business partners. Multiply this through many organisations and it creates an ecosystem known as an API economy. The value is created from the APIs that, not only operate independently, but also enable new and unique applications to create from a mash-up of several APIs.
To make this possible within real estate, we need to start talking the same language. We need to harmonize the data, to some degree. By now, manual processes are not just time-consuming, they also lead to a delay of information.
The biggest challenge remains
Setting COVID aside, the topics of API and ecosystems were part of many real estate technology related discussions in 2020. As more players are entering the market, the biggest challenge remains: data in its various forms.
The industry has taken baby steps – everyone acknowledged the issue, but there is still so much what needs to be done. This affects everything, from IoT to investment management, and all the layers in between.
No one has cracked the complete data puzzle so far. How will you deliver data to the processes and what effect it will have on your business? There is an illusion that there is one solution which covers everything, which also is easy to use and not too cost intense.
API to solve the data puzzle
To crack the puzzle you must define the ownership of data and create some regulations around it. If we look at what happened with the banks, we might understand better.
Banks were storehouses which moved from paper to electronic, eventually installing IT-systems. At that moment, they understood that they owned large amounts of legacy data (customer data, basic transactions, payments) they realized they could build a whole ray of services around that legacy data. You can easily name 10 to 15 business ideas which can be created as a service for that data.
Banks were able to build their services as App 1, App 2, or an “all inclusive” app. Or they opened up their data through an API so others could build their services around it. And this same mindset could also apply to the real estate industry.
We have seen practical examples already, where companies are working with an open API to create an ecosystem. Our partner Visma Tampuuri shared their knowledge on how to build a successful ecosystem within Property Business and Management at this year’s ReCoTech.
“We see the ecosystem as a group of services or products to create one collaborative network. That will create a win-win situation for all involved. As a market leader, we are enabling technology, APIs and Data from a large customer base. We are able to build a good business ecosystem and create value for our customers and partners.” states Juha Raitanen, CEO at Visma Tampuuri.