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Real-time data demand being driven by Covid-19 pandemic

by • September 19, 2020 • Data Center, PropTechComments (0)173

The pandemic is pushing the real estate industry to gather and measure real-time data as landlords, investors and governments look for tangible ways to track market performance.

real-time data

Image credit: JLL

The amount of data available to property professionals has risen steadily in recent years amid an increased adoption of technology, known in the industry as proptech. But despite the hype around the transformative potential of big data, widespread use of the insights has remained a work in progress.

Now the pandemic has renewed the focus on technology and real-time data. From analyzing rent-collection rates, to monitoring crowds in malls and understanding space utilisation in offices, the pandemic has prompted more property industry players to use proptech to deliver real-time data outputs.

“What we’ve seen around COVID-19 is more adoption on the hardware side where landlords have had to quickly re-specify buildings,” says Matthew McAuley, director in global research at JLL.

High-frequency data in particular is in demand to help make decisions – especially relating to health, mobility and space usage.

In offices, data has helped companies to enable contactless movement, track who’s there at any time, and monitor cleaning frequency. The benefit of such insights in a time of crisis is wide-reaching.

“For landlords, data helps them see how they sit among their peers,” McAuley says. “For governments, it’s about seeing where the distress is, and for investors it’s about pricing and strategic implications.”

Real-time data in demand

In the U.S., the National Multifamily Housing Council (NMHC) and the National Association of Real Estate Investment Trusts (NAREIT) pooled data on rent payment rates from property owners within a few weeks of the public health crisis escalating.

This provided visibility into a previously opaque indicator of a residential asset’s financial health and has informed both policymakers and businesses through the pandemic.

“They are pooling data rapidly and continually to have information sources on something that, in the past, has been anecdotal and sporadic,” McAuley says.

Elsewhere, in the interest of public health, Placer.ai – a retail analytics platform that uses machine learning – has made its footfall data available to show year-on-year traffic fluctuations to major brands.

“Governments are interested to see which sectors are hardest hit by COVID-19,” McAuley says. “They want to see who is paying rent and who is struggling, to manage and mitigate the impact.”

Collecting and disseminating nearly real-time data contributes to greater real estate transparency.

JLL’s Global Real Estate Transparency Index 2020 shows that technology adoption has helped many real estate markets boost their position in the ranking – but the majority have had trouble implementing new technology fast enough.

“Advanced data collection techniques have only shown a meaningful and measureable impact on transparency across the last two to three studies,” says McAuley.

Opportunities post-pandemic

The combination of new hardware and analytical expertise puts the industry at an inflection point where real and rapid gains from data usage are possible and the pandemic is prompting a meaningful shift in how data is used.

“High-quality information that reflects fast-changing market conditions is invaluable during periods of market turmoil and many data providers covering niche property types have illuminated otherwise opaque market metrics,” says Jeremy Kelly, lead director, global research, JLL.

“These innovative efforts, organized in reaction to the market disruption resulting from COVID-19 highlight how transparency progress is possible when it is made a priority,” he says.

The hope is that today’s advances could help to fast-track digitization across the industry beyond the specific data points from managing the Covid-19 crisis.

“Looking ahead to our next transparency index in 2022, niche property-type data is likely to be a primary driver of future transparency advances,” Kelly says.

Alternative real estate sectors, like self-storage and data centers, over the last decade moved onto the radars of major real estate investors hunting for returns in a booming market.

One major hurdle they found when looking into these relatively niche sectors: a lack of reliable data.

But a subsequent push for better transparency is transforming these sectors. A dozen countries globally currently have significant levels of institutional investment, with real estate investment trusts often leading the way, according to a recent biannual transparency study by JLL and LaSalle . Another 54 countries reported at least some institutional investment in niche property types.

There is a strong correlation between the increased investment and increased transparency, says Matthew McAuley, Director, Global Research at JLL.

“Investor activity in these niche sectors and improved transparency tend to be self-reinforcing,” he says. “Investor interest drives a greater need for market information, while enhanced transparency allows investors to understand and thus allocate capital to these property types.”

Among the 12 niche sectors included in The Global Real Estate Transparency Index 2020 report, cold storage, self-storage, life sciences, medical office, and data centres have seen the most growth in interest. Cold storage in the Asia-Pacific region is growing especially fast, while global investment in self-storage rose to US$6.4 billion in 2019, from less than US$500 million a decade earlier.

The report shows that many of the improvements have been in the already “Highly Transparent” countries, which tend to have higher institutional and public-market ownership of these property types.

The world’s most transparent markets of the U.K. and U.S. have shown most activity in these sectors, where data providers have also been active. Investment research giant MSCI has started incorporating medical offices in its quarterly index reporting. The National Association of Real Estate Investment Trusts is now publishing rent collection rates for U.S. healthcare properties.

While some sectors have taken a hit from COVID-19, experts expect interest to continue, bolstered by global megatrends like housing affordability, ageing populations and increasing reliance on technology.

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