Data uncovered: step change needed in real estate sector

The real estate sector needs a step change to make the most of the opportunities advanced data analytics can offer, experts agreed at Real Asset Media’s ‘Data Uncovered: Meeting the Future Challenges of Data’ roundtable, which took place yesterday at CBRE Investment Management’s offices in London.

“The real estate community has yet to understand what data really means and the quality of the data needed,” said Martin Betts, vice president, commercial real estate for EMEA, NTrust. “It’s a process that doesn’t just help the investors but benefits everyone each step of the way.”

Senior management teams are not required to become technology experts. They can focus on running their property portfolio, but they must understand the need to gather, evaluate and validate big data, calling the experts in when needed.

“The real estate sector needs to step up, as the hedge fund industry went through this process ten years ago,” said Ainun Ayub, global product head for real assets, Citco. “We’re on the cusp of a big change because everyone, from fund managers to real asset managers, is pushing in the same direction now, looking at the whole system holistically.”

What is needed then is a framework and some rules of the road that can be agreed upon.

“We’re being asked to collect, normalise and validate increasing volumes of data, but clients get data from multiple sources and that creates challenges,” said Betts. “Due diligence is crucial, as there can be no quick fix or magic wand. It is a slow and meticulous process which gets progressively easier, and the cost/benefit analysis is clear.”

There is often a need to join the dots between formats and systems that don’t talk to each other.

“There are different systems and providers and you need to knit all these types of data together,” said Jonathan Avery, head of rechnology and data – real assets, Legal & General Investment Management.

A relentless focus on the provenance and quality of data will pay off, because if you start with incorrect data the mistakes will be perpetuated along the chain.

“Data will become ever more relevant, so it is clear that we need good data,” said Miguel Angel Bermudez, director – global analytics, CBRE IM. “Data quality is crucial because using the wrong data is so damaging to the whole process.”

A good set of data is the starting point, because there is nothing that machine learning or artificial intelligence, powerful as they are, can do if the relevant data are missing, incomplete or defective.

“The quality of data is a real issue,” said Dean Tower, director, GP Fund Solutions. “We’ve found it’s difficult to establish what is a true source. AI is very powerful, but you still need to validate the data being used.”

Once the optimal data have been collected and validated, predictive analytics is the next step. “It’s a quick and easy process to use the information and the data you have and apply this to investment opportunities,” said Betts.

The real estate sector may have been slow off the mark, but change is happening fast now and the direction of travel is clear.

“We expect a massive ramp-up in capabilities in the next few years,” said Andrew McLennan, MD and global head of technology, product and proptech for private assets, Nuveen. “The chief technology officer will end up having the same clout as the chief financial officer.”