Software has transformed the delivery of physical goods and services – think Amazon and Hotels.com – and is spawning businesses that are entirely digital and virtual. Such trends have swept across all sectors. It is now impacting real estate.
Zoopla and Rightmove, for example, have put a massive selection of property information at consumers’ fingertips, and rexchange.com is using artificial intelligence to target potential buyers through social media. New technology is streamlining administration; Dealpath.com provides a workflow management tool for real estate investment teams and appearhere.co.uk runs a marketplace for short-term retail space. Co-working space providers are showing how well online booking can work and it is only a short jump from this to leasing longer-term office space online. Here are other examples of how technology is impacting real estate:
- Providing insight: Analytical tools to help understand the strength of a tenant’s covenant; spacejamdata.com gathers consumer information allowing property owners to select and attract specific retailers to their developments.
- Arranging finance: Finance providers can use AI to satisfy themselves of valuations and automate the finance approval process.
- Reducing building operation costs: Smart building management systems and software harnessing ‘internet of things’ technology. EnModus enables the internet connectivity of any mains-powered device without the need for rewiring or use of unreliable wireless technology.
Finding the skills
These developments are creating a challenge for private real estate fund managers to identify the risks and opportunities arising from AI and other new technologies. The risks need to be mitigated and the opportunities analyzed and prioritized according to which will give the best return on investment of money and management time. And this requires staff with the right blend of technological expertise and commercial savvy to separate the substance from the hype.
The increasing importance of the technology function to the achievement of managers’ overall business goals is leading to the creation of chief information officer and/or chief technology officer posts in organizations that previously would have seen technology as a lower-level function that would report into the chief financial officer. However, IT is no longer about simple tasks like ensuring the hardware is up and running and updating everyone’s copies of Windows and Office. It is now about ensuring the organization has a technology stack that is appropriate to its business and that continually incorporates best of breed new products in a thoughtful way that keeps the organization competitive.
Below the CIO/CTO, organizations need to bring in further technology staff to the extent their size allows, to focus on specific areas such as big data analytics.
The high salaries commanded by individuals with these skill sets presents two challenges for managers: their direct impact on the P&L and how they can be accommodated in an overall pay structure where long-serving, experienced individuals in non-technology areas are paid comparatively less.
The pool of talent with technology skills is at a premium. Those who additionally have experience of the real estate sector are rarer still. For that reason, rather than further bidding up the salaries of that limited pool, real estate managers and investors may look to pull people in from other sectors (such as consumer), which are further down the technology adoption path. Companies looking to make these hires will find it easier to address these challenges if they are supported by an executive search firm with real-time knowledge of candidate pools and market rates, coupled with the capability to assess individuals for their ability to adapt to a new sector.