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Data – The Main Currency of Real Estate?
CRE, Data, Innovation

Data – The Main Currency of Real Estate?

With a value of over $228 Trillion, real estate is one of the most important asset class globally. It is therefore no surprise that record numbers of tech companies and products have established and $14Bn+ was invested in them in H1 2019. 

Real estate is currently in a period of digital adoption, which is driving lightening-speed change and challenging existing methods and legacy solutions. These technologies, and the resulting data, enable property professionals to, improve efficiencies in tasks and reporting; enable automation of processes; make faster and more accurate decisions; and, provide better and more sustainable buildings. Ultimately, this is not only making our buildings and cities better places to work and live, but also improving bottom line. 

In line with the above, computer and data scientists are now in strong demand in the real estate sector. However, it’s not the raw data that creates value, but the ability to extract trends and derive actionable conclusions. By facilitating data to be processed to create information, analysed to produce knowledge and understood to enable strategic decision making, this is changing the way that the market is investing, operating and managing assets. 

The subject of data and real estate is not new, however, there are a number of factors which have increased its popularity and stage presence. One of these is rapidly falling computation costs. According to John McCallum, a computer scientist, a megabyte of data storage in 1956 would have cost around $9,200 ($85,000 in today’s prices) – it now costs $0.00002. I went to an event a couple of months ago where the CEO of Frontier Network said that they have installed a chip in one of their employees’ hands. At this stage, it is more of a talking point and only shows the person’s LinkedIn profile, however, it illustrates that people value advances in technology and associated data outcomes / knowledge, more than the potential downsides.

Another reason is the sheer scale of public adoption of technology. At the end of 2018, around 50% of the world’s population was online and over 54% live in cities. In response to growing urban populations, companies such as Citymapper were born. District hosted its quarterly Dinner last week – the theme – data. Joined by Laura Lewis from Citymapper, she provided her insights on how data is used, stored and analysed by the tech firm, whose mission is to simplify public transportation for commuters. One of my key takeaways was the importance of a truly open API approach, to enable other developers or transport agencies to contribute to Citymapper’s open-data projects and fill missing data gaps or discrepancies. 

It is clear that the best tech companies will be interconnected via true API ecosystems, in order to combine digital services, to ultimately offer the best client experiences. Companies, such as District Technologies, are doing just this and also capturing data points to help landlords and occupiers understand how their buildings are functioning and being used. 

While discussing the benefits of data, it is also important to consider associated risks. As the number of users and data sources multiply, so does data privacy and security scandals. The importance here lies in providing absolute transparency on how and why data is being used. At this stage, there is a clear indication that the measurable benefits provided by data knowledge, such as improved building user or client experiences; more accurate decision making; or, designing better buildings, outweigh the potential negatives.

The real estate industry is only at the beginning of this journey…