December 6, 2017
Commercial property sector disconnected from game changing new tech, claims report
Executives in the commercial property sector have significant reservations about emerging disruptive technologies such as Big Data and predictive analytics, augmented and virtual reality, Blockchain and driverless vehicles, but see huge potential for process automation according to the Altus Group CRE Innovation Report (registration required). According to the report, which is based on a global survey carried out in September of 400 CRE executives at firms with assets under management of at least US $250 million representing a total of over US $2 trillion, a large majority of executives report their firms have benefited from technology investments made over the past two years. However, when presented with six rapidly emerging disruptive technologies, only a minority of respondents recognised them as having the potential for major disruptive impact.
The six technologies and the proportion of execs who think they will have a major disruptive impact are:
- Smart Building Technology – 35 percent
- Artificial or Machine Intelligence – 28 percent
- Big Data and Predictive Analytics – 24 percent
- Augmented and Virtual Reality (AR/VR) – 18 percent
- Blockchain Technology – 15 percent
- Driverless Vehicles – 9 percent
While these technologies were met with reservations from executives, over 50 percent of respondents indicated that many major CRE processes and workflows could be significantly or completely automated. This suggests a significant impact on the people associated with these processes while at the same time presents opportunity for resource reallocation to areas that will drive greater value. The results imply the industry is ready for the acceleration of automation, which will completely change the way tasks like debt underwriting, capital market brokerage and property management are undertaken today.
“CRE firms are facing the challenge of finding a balance between operational benefits delivered by existing technology and the potential disruptive impact to business models by what’s coming next,” said Robert Courteau, Chief Executive Officer, Altus Group. “Organizations that will lead the way as the next wave of technology arrives are those that seek to change the rules of the game by disrupting traditional business processes and models, adding greater value and gaining competitive advantage.”
Other findings from this year’s Altus Group CRE Innovation Report include:
- Only 14 percent of executive respondents say they compare their operational expenses against competitors, the market or industry, indicating a significant performance management shortfall, however, 69 percent believe there is significant potential to conduct better benchmarking around operational expenses. This suggests that a deeper analysis of property expenses is an overlooked area in terms of applying analytics and monitoring – and has the potential to unlock greater portfolio value.
- 58 percent say their firms are using significantly more CRE-specific applications now than they were three years ago, however 59 percent say they do not have significant integration between major management systems and applications, which can hinder their ability to make faster and more transparent decisions.
- 50 percent indicate their firms have a shortage of technology staff, suggesting that a lack of skilled IT professionals continues to be a barrier for CRE firms trying to make the most of their technology and data investments.