|Time Stamp||Topic Reference|
|0:22||CREtech London 2021 Summary|
|2:18||Democratisation and Tokenisation|
|4:35||Sustainability and Climate Investing|
|6:17||The Increasing Importance of Data in Real Estate|
|8:11||Singapore FinTech Festival 2021|
You’re listening to the RealVantage podcast. The show that provides investors a better viewpoint into the real estate market with your host, Victoria Au.
So, last week, I attended CREtech London 2021, which is the biggest PropTech conference in Europe. Across the two days, there was 1000+ attendees, consisting of global innovators from leading startups, investors, real estate owners, operators, brokers and developers.
Besides how surreal it felt to actually be attending a conference in-person, I was really blown away from the sheer energy of the keenest minds in Proptech. Here was a group of people, many whom have flown in specifically for this conference, bounded by their vision in shaking up the old world of real estate, and abuzz with passion, excitement and possibility. It felt like I was part of a niche fringe small community of people, on the cusp of a revolution. I saw demos, new launches and heard from keynote presentations across important topics revolving around data analytics, smart building solutions, the increasing focus on real estate innovation in corporate giants such as JLL/PGIM/Savills, and the consolidation of the market with mergers and acquisitions. I spent hours in conversation with top leaders in their respective fields: VCs, Asset Managers, Founders. On emerging trends and the newest technologies, it's feasibility and where we think the future of real estate is headed towards. I even gained a mentor!
Even though it's been over a week since CREtech London, I don't think I've fully digested all the new ideas, and it might take me quite a while longer to allow the thoughts to percolate, but I'd still like to try my best to pick three top trends.. well, things of note I took away from those two amazing days to share with our RealVantage listeners.
1. Democratisation and Tokenisation
So, when it comes to real estate, especially large-scale projects such as office towers, apartment blocks, shopping malls or factories, it's always been controlled by a limited group of wealthy elites. Why? Because it's just so capital intensive... by that I mean, you need anything upwards from millions of dollars to participate in this asset class. However with the introduction of crowdfunding and co-investing platforms, investors can now pool their money together in order to gain access to these private off-market deals- and so they can start with tens of thousands vs millions that was needed before.
So, a lower entry price, gaining expert guidance on which deals are suitable and being able to simply login online means that more investors are able to invest in real estate easily. Real estate developers also benefit from the increased flexibility and access to an otherwise inaccessible source of funding. I love being part of a movement that is working to increase financial inclusivity. It's really something that is close to my heart and being able to include investors with limited resources to this resilient asset class that provides great portfolio diversification and good yields is helping make the world a more equitable place.
Democratisation will continue and it's a sentiment echoed by one of the key-note speakers at CREtech London, M7 Real Estate- a €4.1billion leading specialist in pan-European real estate whom RealVantage has worked together with. Tokenisation is the natural next step- being able to fractionalise the real estate into even smaller sizes and allow even more investors to participate in the $280 trillion global property market while allowing for new and cheaper pools of capital for property developers. The jury is still out on if the power of tokenisation lies in the back office in terms of administration or as an enabler of a secondary market to allow trading akin to the stock market- I think the next year or two will be immensely exciting for the asset management industry, and my observation is that Australia, the US and UK are further ahead and more robustly developed in this arena as compared to what we are seeing in South East Asia.
2. Sustainability and Climate Investing
The real estate industry contributes to 30-40% of all greenhouse gas emissions, and the general consensus is that the regulations we have seen and are seeing are only the beginning. Ignoring the environmental effects of building or operating a building is simply no longer financially prudent - with COP26 underway, we expect to see harsh penalities for properties that do not meet criterias such as energy efficiency standards. What this means is that, not having a climate-friendly solution incorporated in any investment moving forward would be a short sighted one- as there will be future additional costs where one could expect onerous taxes or having to reterofit to comply with new regulations, or even have assets be put into disuse.
One of the projects we ran on RealVantage was the development of a sustainability-focused townhouse and apartment complex developement in Leeds, UK. It had no fossil fuels on site, 100% electrical vehicle charging coverage when regulations only require 10%, air source heat pumps to drive down energy bills and lots of green space to create modern, highly energy efficient and low carbon homes. Even if it may seem expensive to be build sustainable real estate on the outset, it will ensure that what you invest in survives the incoming wave of environmental controls. I also noted that VCs such as Proptech1Ventures and 2150 emphasise funding startups in sustainable tech, focusing heavily on materials, infrastructure, and supply chain. It's clear that this problem is important enough for all of us to have a serious think about - both on a personal and corporate level, and it will take multiple stakeholders implementing various policies and technologies to move the world towards net zero carbon.
3. The Increasing Importance of Data in Real Estate
Commercial real estate is an industry that is still late to embracing the data revolution. Traditionally, property data providers had to spend copious amounts of time looking through poorly kept records and phoning up brokers for verbal ballpark figures. Considering every decision is hopefully an informed one, rather than just a pure gut-feel, that would require some sort of data to justify a particular course of action. In other words, it's critical that the data decision-makers are relying on has to be accurate, reliable and accessible.
I heard from startups such as Cherre that look to make data consistent with a "single source of truth" for better market intelligence. So, it's not so much as replacing real estate professionals as it is about facilitating their ability to prospect for deals, validate and acquire the right property.
Artificial Intelligence with a problem-solving approach meant to approximate human intellect and Machine Learning with algorithms that acquire knowledge by detecting complex patterns in large data sets could unveil unexpected and useful insights- for example, prediction of property market value, deal sourcing according to the asset manager's risk/sector appetite, or even predicting and tracking the most common maintenance issue for property management.
We look at the biggest names such as Compass, Zillow - with "Zestimate".. Millions of data points are scrutinised and all that complexity of having to crunch the numbers prior to guessing a property's price is outsourced to a computer, allowing for upfront direct cash-offers, which is pretty incredible! It's clear that the ability to collect, analyse and learn from data is going to impact real estate in a big way- and large corporates are starting to embrace this fundamental shift in their operations, especially in light of the pandemic with a higher need for accurate and just-in-time data for greater transparency.
This rounds up the three trends that struck me during the CREtech London Conference. RealVantage has also been attending the Singapore FinTech Festival 2021 this week. Unfortunately, it's all online this year but it's been quite eye-opening learning more about Web 3.0 and the movement towards data being able to be interconnected in a decentralised way. Till next time, it's Victoria, signing off!
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Disclaimer: The information and/or documents contained in this article does not constitute financial advice and is meant for educational purposes. Please consult your financial advisor, accountant, and/or attorney before proceeding with any financial/real estate investments.