Delivering Value in the Real Estate Sector: Digital Services through Data Insights
In South East Asia, large real estate companies which are involved in multiple stages of the real estate value chain (Design, Build, Sell and Operate) have the potential to create value for their stakeholders. By planning with the end goal of providing more than just a space for their final end users - the tenants, shoppers, office workers and residents – real estate companies can choose to orchestrate the incorporation of technology elements across the stakeholders from the design phase, enabling them to provide digital services that are beyond efficient facilities management.
This is a goal that Ivan Ng, Chief Technology Officer of City Development, is hoping to achieve with CityNexus. CityNexus allows the user to interface directly with the various building stakeholders: from fixing a hallway light to ordering your lunch for pick-up, office workers are able to use the CityNexus app to manage their multiple interactions with a City Development Office Building. In closing the gap between the developer and the user, the real estate developer is unlocking value on multiple fronts: increasing the convenience for its users and tenants e.g. allowing office workers to take a queue number for a restaurant through the app and alerting them when their turn is near, growing the relationship with its building stakeholders e.g. integrating smart lift services with secured automated entry, to ultimately, achieve a brand differentiator.
This ability to deliver user focused designs is further expanded through the advancement of a whole suite of technologies. In the design phase, efficiency is improved by the utilisation of Building Information Modeling (BIM) technologies and digital twins. Robotic Process Automation (RPA), Chatbots and other digital technologies are easing the administrative burden and paperwork in the selling phase. The rise of the Internet of Things (IoT), reduction in sensor costs, increasing computing power and big data is enabling the creation of Smart Buildings in both the build and operate phases. The combination of connectivity with additional computing power, sensor technology and future possibilities enabled by 5G can create large amounts of data. The key to unlocking value then, would be how to filter through troves of data to pinpoint the right services to prioritise for users.
Smarter Buildings drive Smart Services
Sustainable energy use and maximising the usage of space are becoming increasingly important tenant requirements. Data insights from the energy utilisation and consumption that is captured by Smart buildings can be used to develop advisory services on how tenants can reduce their utility bills. This can be extended to other environmental factors such as monitoring air quality, adding new facilities such as end-of-trip facilities for cyclists, or even reporting on underutilised tenant spaces. At the very minimum these deliver additional value to the users. If done well, these services can even help to improve occupancy rates and reduce tenancy volatility.
In addition to new digital services, landlords can also introduce a suite of applications for tenants to customise and control different aspects of building functionality (air-conditioning and lighting systems) or room and facility bookings. With the infrastructure in place, a new tenant comes on board, can pick and choose the type of applications and digital services that they need and be charged accordingly, or it can be bundled into an Office as a Service/ Retail as a Service with tenants paying a premium for being able to access a wide range of services that they need without having to devote CAPEX to it.
As omnichannel retailing rises to prominence, the service component in retail spaces is also increasing in importance. Traditionally, tenants simply rent a space from retail landlords and focus on selling to their customers, now landlords need to get more involved in creating a more unique experience for consumers.
Space as a Service, Mixing up uses in a development
The concept of “Space as a Service” (SPaS) has until now been popularised mainly by co-working companies, landlords are starting to see opportunities in providing more services for end-users, such as including retail space within offices. Another similar concept of SPaS would be co-living space, where the kitchen, pantry, living room, dining room and other facilities are shared boundaries and definitions of places for work, play and rest as seen by these new business models.
Developers will need to actively monitor such shifts and continuously activate spaces within buildings that would traditionally be empty or transitional in nature or are becoming empty due to changing demographics and expectations. With sensors in place, developers can take a data-driven approach to asset fracking and continue to extract value from every part of a building. For example, lobbies can be turned into spaces meant for meetings, breaks, and other specific uses beyond just waiting for appointments.
Mirvac, an Australian property and construction company spent 2019 launching several ways to better utilize its large portfolio of residential and commercial buildings. Mirvac created coworking spaces in its retail developments to help get people shopping in person instead of online. But its most interesting development was the conversion of some of its parking lots to underground urban farms. As city culture moves away from the car, parking lots are becoming redundant, so the company partnered with agritech startup Farmwall to build green spaces under its buildings, which are now providing some residents with local produce.
In 2019, Greystar Real Estate Partners, an international real estate developer and manager based in the United States, linked up 450,000 apartment units with Hello Alfred, and its “Powered By Alfred” program, a residential assistant service which allows members in buildings where it is available to outsource tasks (receiving a package, booking a dog walker) to a Hello Alfred employee—all of whom are full-time. Its expansion has been powered by deals with large real-estate companies to offer the service in their buildings: A deal with Greystar added 450,000 units in 2019.
In Thailand, Nasket Retail together with Hitachi Asia (Thailand) will be rolling out digital services to condominium residents via an in-home tablet-like device in 2020. This device will provide residents access to a customer loyalty system, where they can use the system to conveniently procure retail services while obtaining discount coupons and redeeming points for the targeted consumer retail services. Nasket and Hitachi Asia (Thailand) hopes to include services such as, remote monitoring, telemedicine and other digital services which can help improve the convenience and quality of life of the residents.
Keeping an eye on CyberSecurity & Privacy
As the number of connections in a building increases, it is also important for real estate developers to ensure that their networks are secure. Globally, cyber incidents are among the most serious business risks (Allianz Risk Barometer 2020) and according to a Marsh & McLennan report for the Asia-Pacific Risk Center, organizations in Asia are 80% more likely to suffer cyber attacks.
Targeted attacks can intercept connections and compromise data and privacy. End-to-end encryption and security patching to address vulnerabilities in real-time will safeguard connected devices and their operations.
Data privacy would be another growing concern as owners and managers will increasingly learn just how far they can go with sensors and tracking in their spaces. While many of these implementations yield direct benefits for the people using these spaces, the reality is that sooner or later an equilibrium point will be reached on the level of monitoring that tenants and end customers are willing to accept. It may differ from country to country, but this will eventually be a conversation that will happen.
City Developments and Hitachi Asia will be part of our regional discussion on “The Future of Real Estate Development: Prioritizing Value Creation with Data Insights” on 12 Oct.
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