Digital real estate: going beyond mere space
Over the past few years, traditional operating models have been considerably disrupted across many sectors. However, few sectors have felt it more than commercial real estate (CRE). Though this disruption has in a large part been accelerated by Covid-19, underlying it is a fundamental shift in the changing demands in real estate consumption.
Demand in this sector is no longer about the mere access to space – it is the integration, connection, enablement, and experience of utilising that space. This shift, underscored by the global digitalisation movement, is pressuring the CRE sector to metamorphose.
In particular, harnessing big data allows for the development of the concept of digital real estate – which can form the bedrock for success in a world of disruption.
From ‘location, location, location’ to ‘location, insights, experience’
Space is being deprioritised as a commodity of value. The old model of providing mere space is being quickly superseded by models that provide access to services enabled by that space. These services should enhance users’ experience, productivity, and connectivity, resulting in better business performance.
To fully appreciate the extent of this shift, there is a need to tap big data. Before approaching data analytics, CRE businesses should understand these three interconnected layers and work their way up to the top of the pyramid.
The first layer is data collection in relation to building operation, security and accessibility at the infrastructure level, made possible only by suiting real estate assets up with the requisite smart data collection infrastructure.
Once that has reached a sufficiently mature stage, businesses should move on to the insights layer, by embarking on platform services data analysis and automating interactions with users through apps.
At the topmost layer, the organisation can achieve a high level of service integration and occupant engagement through user profiling and preference analysis, and the creation of hyper-personalised enabling environments.
To succeed, it’s important for CRE organisations – both occupiers and owners – to consider the following:
Location: While location will always remain important, it takes a back seat in the digital real estate service business model.
Insights: Utilising data to drive strategic decision-making on items such as operational costs, energy consumption, maintenance, occupancy, use trends, divestments and investments.
Experience: Applying insights to augment behaviour and improve how occupants use the space, by optimising the delivery of the spatial experience.
Adhering to these principles can help reduce operational costs in the short term, while also enhancing business agility in the long run.
Squeeze the most out of data
To build a strong foundation in digital real estate architecture, organisations need to invest in technology that can harvest real-time data on operational issues such as heating, air-conditioning, electricity, water, and parking, through integrated building management (IBM) systems. An IBM system can also create opportunities for the deployment of digital services such as booking facilities, ordering food, and reserving parking spaces through smart devices.
By using data analytics to derive insights, building owners can make smarter decisions about their building use and leverage the tangible and intangible benefits generated to charge a premium for the rental of their spaces.
Such data can also be monetised by landlords when they pass on these insights to their tenants and establish a new service line for the betterment of the tenant’s own employee or customer engagement. The growth of this symbiotic relationship enabled by the internet of things (IoT) can create endless value propositions for the CRE sector.
In Singapore, readily available facilities management software such as FacilityBot and Qornerstone enable facility managers and building owners to integrate maintenance management, IoT data, finance, invoicing and procurement, as well as visitor and facility management, thereby assisting owners and managers to better understand their building.
Optimise the CRE portfolio
By further aggregating operational information on occupancy, frequency of use, state of repair, workforce location, system and infrastructure quality for each real estate asset across a portfolio, organisations can obtain a detailed snapshot of which properties are most valuable and sustainable for the future. This allows the organisation to either replicate operational models on assets that are creating the most value, or optimise their portfolios through the strategic investment or divestment of assets.
Artificial intelligence (AI) and machine learning can help organisations identify complex patterns and opportunities in the market. Such technologies can go further to predict future scenarios and market trends for the business. Companies will thus be able to fine-tune their risk of overexposure or underexposure to various asset types and geography.
Develop with precision
In real estate development, knowing what to develop for the next hit project is a considerable challenge. In these tumultuous times, it seems practically impossible to plan for a construction project, where the incubation period can last 5 years or more.
To assist with this, building information modelling can be used to monitor changes in building designs, equipment faults, cost overruns, supply chain issues, and general real-time project management. Moreover, the use of AI could proffer potential solutions after analysing a multitude of factors and running simulations and models.
Plug and play software such as the Singapore-founded VRcollab seeks to enable better collaborations through the coordination of onsite issues via virtual and augmented reality tools. Another software developed in Singapore, Airsquire, enables construction projects to be visited as a 3D virtual site at any stage of their construction timeline so that progress can be effectively monitored.
Reimagine the user experience
Humans are both curious and social creatures, with an innate demand for interactive, social, and experiential spaces. The goal is ultimately to provide value-added services to tenants and improve overall customer service engagement in a way that speaks to this innate need.
The future of the sector is for real estate to be repackaged as the provision of an integrated experience for end-users. This could entail improving the employee experience for office properties, and the shopper experience for retail centres, through ambient intelligence. New revenue streams could be created by increasing productivity through services such as collaborative spaces for offices and shopper analytics for retail spaces, facilitating the formation of human-centric buildings.
Available support schemes
In a drive to encourage building owners and facility managers to adopt technology to transform, the Singapore government has launched various schemes to assist owners in retrofitting their buildings with newer technologies and improving their building management.
The Building Retrofit Energy Efficiency Financing Scheme finances the upfront costs of energy retrofits of existing buildings, by covering the cost of equipment, installation and professional fees.The Productivity Solutions Grant co-funds up to 70 per cent of the qualifying costs of adopting pre-approved digital solutions, and is available for small and medium enterprises that are in the construction and facilities management (FM) sub-sectors.The Green Mark Incentive Scheme for Existing Buildings 2.0 supports building owners to achieve higher building performance by lowering the upfront capital costs for energy efficiency retrofits, to improve the returns on investment.The latest Integrated FM and Aggregated FM Grant look to support projects with up to 70 per cent of the qualifying costs in the adoption of progressive facilities management procurement and strategies, processes and technologies. Applications are expected to start in the third quarter of 2022.
- The Building Retrofit Energy Efficiency Financing Scheme finances the upfront costs of energy retrofits of existing buildings, by covering the cost of equipment, installation and professional fees.
- The Productivity Solutions Grant co-funds up to 70 per cent of the qualifying costs of adopting pre-approved digital solutions, and is available for small and medium enterprises that are in the construction and facilities management (FM) sub-sectors.
- The Green Mark Incentive Scheme for Existing Buildings 2.0 supports building owners to achieve higher building performance by lowering the upfront capital costs for energy efficiency retrofits, to improve the returns on investment.
- The latest Integrated FM and Aggregated FM Grant look to support projects with up to 70 per cent of the qualifying costs in the adoption of progressive facilities management procurement and strategies, processes and technologies. Applications are expected to start in the third quarter of 2022.
Digital real estate helps both users and owners extract new and better value from their physical assets. Through digital transformation and intelligence, potential benefits arise from diversified revenue opportunities as stakeholders make the best use of their space. Those that embrace the digitalisation of real estate will be well-positioned to face the disruptions and emerge as leaders of their industry.
Get In Touch
For more information please contact Michael Velten.
michael@veltenadvisors.com
+6590687547
391B Orchard Rd, Level 22, Ngee Ann City Tower B, Singapore 238874
