Kira VygrivachReal Estate Digitalisation - cost too high or added-value?
Influential investors, developers & lenders in French real estate gathered to discuss the rising impact of digitalisation.
December 4, 2019Real Estate
Last week in Paris, some of the most influential investors, developers, property owners and bankers in French real estate gathered to discuss the future of the sector and the rising impact of digitalisation.
Quickly, they became interested in the potential usability and application of the real estate data ecosystem.
The main challenges identified on this subject; its reliability and accessibility. For some of the speakers present, the additional expected cost and time by setting up and managing the platforms, training staff and hiring new talent would be a short term obstacle. However, on a long term basis, a single and complete database and access to digital tools would allow a reduction in a transactions’ duration and in terms of risk for example due to estimation errors.
In this regard, participants debated the possibility of sharing data among market players. For some participants, creating digital portfolios that would be accessible to every actor in the sector could ensure the reliability of the different information. However, others were more skeptical, questioning the real interest of a more transparent market for a broker for instance. The possibility of preserving the anonymity of the data was suggested as a solution to please everyone but again, the feasibility of such a project met some doubts knowing how easy it could be to recognise some assets.
One member noted that real estate would be one of the few industries where the customer is not 'king'.
For a long time, he explained, the opinion of the end user didn’t really matter. However, this trend is being challenged today, as customer needs and well-being are becoming much more important in the value of the asset as they are customised to suit the particular demographic. The digitalisation of buildings would thus accentuate this trend, giving users more visibility on what they buy/rent and simplifying exchanges with owners.
It was then asked whether this involved additional costs, and whether or not these digital elements were actually worth it for building owners? One of the specialists present suggested that the use of technologies involves more costs but it is a bet on the future - a way to adapt to the changing users’ needs and therefore, to maintain attractiveness. On this subject, one of the participants added that it is not money down the drain, but “it is an investment covered by its future added value".
"Can we improve its management costs through this type of tool?" asked one of the members. For one of the investors present, who is currently working with this type of solution, there is still little evidence on their added value in the long term. But it seems that already, the use of BIM can allow an optimisation of the costs. When an incident such as a leak appears in a building, the model makes it possible to quickly detect its exact source and so, limit the costs and duration of repairs.
In the end, this meeting answered many questions but the future of the sector was still very much undecided. One member concluded by saying "beyond a digital revolution, it is a human revolution that the real estate sector seems to face".
More information and upcoming debates during the France GRI 2020, April 22nd and 23rd in Paris.
How does digitalisation affect the real estate industry?
Does using digital solutions save time and money? The question raised from participants from the very beginning of the discussion.Quickly, they became interested in the potential usability and application of the real estate data ecosystem.
The main challenges identified on this subject; its reliability and accessibility. For some of the speakers present, the additional expected cost and time by setting up and managing the platforms, training staff and hiring new talent would be a short term obstacle. However, on a long term basis, a single and complete database and access to digital tools would allow a reduction in a transactions’ duration and in terms of risk for example due to estimation errors.In this regard, participants debated the possibility of sharing data among market players. For some participants, creating digital portfolios that would be accessible to every actor in the sector could ensure the reliability of the different information. However, others were more skeptical, questioning the real interest of a more transparent market for a broker for instance. The possibility of preserving the anonymity of the data was suggested as a solution to please everyone but again, the feasibility of such a project met some doubts knowing how easy it could be to recognise some assets.
What are the benefits of new technology for users?
Some of the participants were in agreement that, the winners of the digital shift in the sector would be the users. The main advantage would be an improvement of the customer relationship and especially the relationship between end users, tenants and owners.One member noted that real estate would be one of the few industries where the customer is not 'king'.
For a long time, he explained, the opinion of the end user didn’t really matter. However, this trend is being challenged today, as customer needs and well-being are becoming much more important in the value of the asset as they are customised to suit the particular demographic. The digitalisation of buildings would thus accentuate this trend, giving users more visibility on what they buy/rent and simplifying exchanges with owners.It was then asked whether this involved additional costs, and whether or not these digital elements were actually worth it for building owners? One of the specialists present suggested that the use of technologies involves more costs but it is a bet on the future - a way to adapt to the changing users’ needs and therefore, to maintain attractiveness. On this subject, one of the participants added that it is not money down the drain, but “it is an investment covered by its future added value".
Impact on assets and their life cycle - which costs can be reduced?
Thus, the impact of digitalisation on users seems quite interdependent of the potential impact of technologies on the assets themselves. In this regard, the participants were particularly interested in the case of BIM, tools for modeling buildings and their uses and finally, a true centralised database of these assets."Can we improve its management costs through this type of tool?" asked one of the members. For one of the investors present, who is currently working with this type of solution, there is still little evidence on their added value in the long term. But it seems that already, the use of BIM can allow an optimisation of the costs. When an incident such as a leak appears in a building, the model makes it possible to quickly detect its exact source and so, limit the costs and duration of repairs.
In the end, this meeting answered many questions but the future of the sector was still very much undecided. One member concluded by saying "beyond a digital revolution, it is a human revolution that the real estate sector seems to face".
More information and upcoming debates during the France GRI 2020, April 22nd and 23rd in Paris.
