Automation expected by over 50% of real estate executives

Altus Group released the latest annual Altus Group CRE Innovation Report revealing that CRE industry leaders are divided about the potential of new technologies to drive industry-wide change.

A large majority of executives report their firms have benefitted from technology investments made over the past two years. However, when presented with six rapidly emerging disruptive technologies, only a minority of respondents recognized them as having the potential for major disruptive impact:

• 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, more than 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, CEO, 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.
• Approximately 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.
• And   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.

The 2017 Altus Group CRE Innovation Report is based on a global quantitative survey of 400 CRE C-level and senior executives in both front and back office positions at owner-operator and owner-investor firms in North America, Europe, Asia-Pacific and Latin America. All firms represented in the survey had assets under management of at least $250 million at the time of being surveyed, representing an approximate total AUM of more than $2 trillion. The survey research, which was used to help form the basis of the report, was conducted by leading international research firm IDC in September 2017.

A copy of the full report can be downloaded at www.altusgroup.com/news_insights/cre-innovation-report.