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Becoming data literate: the rise of 'data-geeks' in global real estate

Data geeks are increasingly present in real estate. What are those firms who don't have one doing? Do they risk falling even further behind the pace of innovation in real estate?

Becoming data literate: the rise of 'data-geeks' in global real estate

Back in the October 2012 issue of Harvard Business Review, Thomas Davenport and D.J. Patil proudly announced Data Scientist as “The Sexiest Job of the 21st Century”.

Already almost eight years ago, this statement was signaling a major shift in thinking across many industries, where two highly specialized roles, the statistician and the developer, were starting to merge.

More importantly, it changed the perception of these talents by transforming so-called “geeks” into valuable and important players in the business world, where interpersonal skills and relationships had often been seen as more valuable than technical acumen.

This rise of data-geeks spawned from many trials that successfully proved evidence-based decisions could provide tremendous business value and take the uncertainty out of some of the most difficult strategic challenges.

In fact, in many cases data analysis can go far beyond just descriptive, or historical analysis, to predictive and even prescriptive, providing forecasts for what will happen in the future and offering suggestions for the best course of action.

"Data analysis can go far beyond just descriptive, or historical analysis and even prescriptive, providing forecasts for what will happen in the future and offering suggestions for the best course of action."

Prior to the growth of data science and associated technologies, data had of course been valued, but was limited to only addressing the most pressing business needs. This was primarily due to the complexities associated with tracking, managing, extracting, cleaning and analysing data.

Fast forward to today and it is now difficult to blame slow processes for lack of business insights, as enough technological advancements have occurred that make data not only easier to extract, but more powerful once analysed.

Real estate is certainly no exception. Any asset that has ever undergone an initiative to become “smart” or any pilot program aiming to tackle digital transformation, by its nature, produces countless data points that can be tracked and leveraged for data projects.

Given the complexities of this process and the advanced skills needed to conduct advanced analysis, data experts are continuing to be highly sought after in global real estate.

The rise of all things data

Gartner’s Hype Cycle for Artificial Intelligence sees many data-driven AI tools as still being in the early stages of “inflated expectations,” where tools and technologies are only starting to have recognized value, with somewhat limited practical applications.

However, machine learning and insights engines are predicted to reach the “plateau of productivity” in less than five years time. This means that organizations need to be prepared and ready to adopt technologies and skillsets through in-house talent, third-party tools, and consultancy to avoid being left behind.

Luckily, with the rise of proptech, there are a growing number of companies taking on the data challenge by focusing their efforts completely on solving difficult problems in real estate through data-driven software that can be leveraged by data novices. In this set up, It is not necessary to have a data team in-house, as simply leveraging a software tool can provide tailored insights, custom to your business.

In fact, taking this step sooner rather than later can already provide a strategic advantage in the market, as data/AI solutions and proptech are still at the early stages of adoption (fig. 1)

"Taking this step sooner rather than later can already provide a strategic advantage in the market."

The reason why it’s crucial to start incorporating data into your business now is that tenants, employees, customers, or any of your constituents may already be fully accustomed to, and see the benefits of, data-driven technologies in other parts of their lives.

For instance, residential tenants already receive personalized recommendations and conveniences for shopping, television, and local restaurants, so it would only make sense that their home itself was smart enough to improve the quality of day-to-day life.

As with technology projects, the value always comes in identifying an area of opportunity for solving critical problems or improving the overall quality of experiences as long as the ROI can thoroughly be justified. Lately, the best tools available to tackle these challenges are appearing to be data-driven proptech solutions.

For instance, in commercial real estate (as with all sectors) there has been a drive to drastically improve sustainability. In this case, many technologies such as occupancy sensors and Co2 or temperature meters can already combine complex data points to help better predict usage needs, giving teams better insights into how to optimize space and energy.

Figure 1

Building your data strategy

There is no doubt that data should be a part of your 2020 strategy in at least some capacity. For those who are new to the exciting world of data, it is easy to get started, and starting small is the best approach. First and foremost, start by identifying the goals of your business where data and analysis may be a good approach to accelerating your efforts. Think of areas where there is a lot of uncertainty when making decisions and identify ways that data might be able to provide some additional context.  

It’s not recommended that you jump right in and hire a data scientist until you know exactly what you’d like to accomplish and have jobs ready for this talent. Instead, begin improving data fluency within your current talent pool by encouraging and challenging teams to leverage data, and giving them the tools (such as training and software) to do so.

After all, one of the most important factors in data analytics/science is domain expertise, which takes more time to learn in many cases than analytics or statistics skills. This is why we’ve seen the rise of the “data translator,” which Mckinsey identified as “The new must-have role,” thanks to the ability of this person to translate analytics into actionable recommendations that are finely tuned to the complex needs of the business.

"Instead of a “track-everything” approach, start small by tackling one specific challenge."

Once your organisation is already quite comfortable working with data and would like to start getting more advanced, it is extremely important to take a tactical and strategic approach to ensure data integrity, governance, and security.

Nowadays, there is so much data available that it’s often hard to identify where to start. In fact, the biggest challenge isn’t necessarily finding data to analyse, but being pragmatic in what data to focus on, given the infinite possibilities of cross-analysing data points.

Instead of a “track-everything” approach, start small by tackling one specific challenge and ensuring your organisation is able to gain value with the effort that is put in. Once there are manageable data structures  to work with and clear goals set, your organisation is probably ready to begin leveraging the talent of data scientists for data mining and predictive analysis.

After all, data is only valuable if it is accurate and trustworthy, so the first priority should always be to have a high quality data architecture to work with.

"Make sure you begin tackling this challenge before your organisation is unable to keep up with the speed of delivery."

There is no doubt that data-geeks will only continue to gain prominence in real estate as we continue to see successful use cases and applications taking form. For instance, predicting space utilisation of an office building can already be used to drastically cut costs associated with energy and facilities management.  

Thanks to automation, analytics engines, and other technologies that continue to enter the proptech market, it will become easier and easier to build a data-driven strategy within any real estate segment.

Make sure you begin tackling this challenge before your organisation is unable to keep up with the speed of delivery and loses its competitive edge in the market. It is safe to say that the real estate industry is only in the early stages of proptech and AI/Data adoption, so catching the wave now can offer a significant strategic advantage as the sector and talent pool continues to rise.

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