The use of data analytics is transforming not only asset management, but investment as well. “The big data opportunity is immense in terms of access to real-time information and the use of that information to drive decision-making,” says Chuck Leitner, chief executive officer of CBRE Investment Management. “From carbon emissions to behavioral patterns, we are committed to capturing that data and turning it into the insights we need to drive performance.”
According to Stéphanie Bensimon, head of Ardian Real Estate, the property investment business of the Paris-based private equity firm, the real assets investment industry has been notoriously resistant to technological change. “But the shock of covid has accelerated the digital transformation,” Bensimon says. “Investment managers are increasingly embracing technologies at every step of their investment management process.”
Property management is likely to experience significant change due to the rise of platforms streamlining tenants’ demands and financial reporting. Asset managers will increasingly move away from disparate spreadsheets towards digital software that gives access to real-time data on investment performance, research, analytics and advice.
Data is also critical to new investment. CBRE IM’s chief economist and head of insights and intelligence Sabina Reeves cites the example of the firm’s real-time data on office performance during the pandemic, which bucked market expectations: “CBRE has ramped up investment in tech infrastructure with a view to ensuring that every decision maker has the relevant information at their fingertips.”
Meanwhile, appraisal is poised for reinvention as managers increasingly access non-conventional data sets. “For instance, two buildings that are seemingly identical when evaluated by traditional metrics can experience very different growth trajectories when non-traditional data is analyzed,” Bensimon says.
Escalating demand for data is playing a critical role in infrastructure too, opening up new realms of investment with data centers, fiber networks and mobile towers, as well as the opportunity to add value to legacy assets and streamline asset management.
“The volume and quality of data available to us today is vastly superior to what it was 10 or even five years ago”
NYU’s Stern School of Business
“We have historically relied on the collective experience of management and the board when it comes to asset management decisions. But because there is such a wealth of data available today, those decisions can be supplemented with the aggregate experience of hundreds if not thousands of projects,” says Esther Peiner, co-head of private infrastructure, Europe, at manager Partners Group.
Partners Group, for example, uses AI-supported programs to test the critical path of a project schedule and give probability-weighted predictions of different outcomes. “This allows us to be more efficient as we build and have costs and, importantly, timelines better controlled.”
Across both real estate and infrastructure, meanwhile, data gathering is imperative to the world’s sustainability efforts. “We have developed methodologies to determine carbon impact, taxonomy alignment and other analyses based on the data available,” says Kit Hamilton, co-head of Macquarie Asset Management’s private credit team.
There is no doubt, then, that an organization’s ability to leverage data analytics will prove a vital competitive edge going forward. But we are still at the beginning of this journey.
“The volume and quality of data available to us today is vastly superior to what it was 10 or even five years ago,” says Sam Chandan, head of the real estate center at NYU’s Stern School of Business and a professor of finance. “While we find ourselves with access to a richer pool of data, the industry is still developing the tools and analytical capabilities required to leverage that data in support of decision-making. The first generation of tools is relatively unsophisticated, but we will see the emergence of more AI- and machine-learning-driven applications in the years ahead. That will prove transformative for real assets.”