1. Ever watchful investors
They expect information on pretty much every aspect of the investment management business – front, middle and back office. Managers’ processes, systems and data management strategies are under the microscope more than ever. Yes, investors still want to know how managers are going to make good on their return expectations, but they also have an eye on operational efficiency, costs and even the skills and background of employees.
2. Regulation merry-go-round
Regulatory and rule changes globally continue to keep compliance and risk teams on their toes. And it is not just financial regulation. As one Europe-based CFO notes, it is also regulation in a plethora of other areas like data protection – the EU’s General Data Protection Regulation is the most noteworthy of 2018 – and the environment. Managers cannot take their foot off this particular accelerator.
3. Keeping up with tech and data
There is a consensus that real estate is playing catch up in utilizing technology and data. That mindset is changing as firms start to see its potential in delivering a competitive edge. But there is a downside. Fraud and phishing scams are a big concern. It is essential that managers prepare themselves and take steps to protect their data. Failure to do so could be disastrous to business reputation.
4. Outsourcing gains traction
A growing number of managers are recognizing they cannot do everything in-house. Outsourcing is already popular in Europe, and there are signs of an uptick in the US and Asia. The quality and expertise of service providers is higher than ever, meaning managers have greater confidence outsourcing key tasks, allowing them to focus on what they do best: raising funds, picking assets and getting deals done.
5. The X factor
Sourcing talent is no longer just about finding the best dealmakers and skillful negotiators. Increasingly, it is about finding good operators and risk compliance experts. And, of course, tech and data gurus; some firms have taken the leap and hired these skills in-house. We are seeing the rise of chief technology and even chief data officers, but competition is high for the best tech talent, and convincing that talent to work in private real estate is a challenge.
6. Proptech investing
A new breed of investing, providing the capital to startups to develop innovative new technology specifically for use in the built environment: for example, to track consumer behavior patterns and help maximize investments in the retail space. It is on the rise as some savvy investors foresee the fusion of technology and real estate.