Asia Pacific REITs

Data’s Evolving Role In Real Estate Investing (Magazine)

A significant difference between this downturn and the GFC is the availability of capital to be invested, with most groups in a strong financial position.”

By David Green Morgan, Managing Director, Real Capital Analytics

David Green Morgan, Managing Director, Real Capital Analytics

November 2, 2020- This Covid-19 period will live long in the memory, with many of us having set individual records for not leaving the house. But as the daily uncertainty extends into weeks and months and possibly even years, the need to get on and grow the business becomes ever more important. This is as true for Real Capital Analytics (RCA) as it is for any other company within the real estate industry and being a data provider who needs to provide a 24/7 service the challenges of home working has been significant. While the first few weeks were difficult, everyone has now settled into their ways of operating and continuing to provide our clients with the information and service they expect and require.

More Capital Than During GFC

Many comparisons have already been made with the Global Financial Crisis (GFC) from just 10 years ago, and the potential impact on commercial real estate values and transactional activity. A significant difference between this downturn and the GFC is the availability of capital to be invested, with most groups in a strong financial position. Financing providers and banks are in relatively good health as well as many other participants across the real estate investment market. With the previous downturn still relatively fresh in people’s memories, many groups are trying to position themselves to take full advantage of the recovery, which we all know will come even though the timescale is uncertain and will be uneven in each country.

As such, what investors are needing is not really capital. We have found that what they are increasingly needing is timely and reliable data sources to track what is going on in the market and to make sure they are aware of where opportunities may be emerging and who in their peer group is active around the world.

Also, over the last cycle the real estate investment market has become truly global, with investors just as likely to do a deal on the other side of the world as in their own country. This has made access to global information from a single platform especially important, as investors may need to move with even greater speed to secure the best opportunities in the current environment.

Real-Time Versus Predictive Analytics

While the number of transactions has dropped considerably globally and across Asia Pacific during the pandemic, the desire for information and analysis has increased dramatically. The lack of travel opportunities puts an even greater emphasis on the need for good quality information.

Each transaction has taken on an added level of importance as buyers and sellers look to determine when is the right time to re-enter the market. After the temporary pullback in the demand for real estate data in April to May this year, we are seeing a resurgence back to pre-Covid levels in terms of requests for information.

In recent years, using big data to provide predictive analytics has seen rising prominence. At RCA, our focus is on delivering reliable, accurate and timely data to our clients.

The number of assumptions needed to provide forecasts is constantly increasing and changing and thus we have decided not to move down that path at this time.

Each client has a unique requirement and trying to find solutions for them in the current environment is where our focus remains.

We have invested heavily in our analytical capabilities but focusing on the most timely and accurate data. In this environment each transaction is important so investors can see where pricing is and how that might change their strategies.

Much has been made of the progress towards tokenization and the use of online transactional platforms in recent years. After much progress in the early days the momentum seems to have been lost in the last 12-18 months. Adoption by the major players is always key to any new technology and that is what is missing in the current environment. There is also the regulatory and compliance element to transacting real estate which differs from country to country. I believe at some stage the impetus will return and downturns do sometimes trigger a shift, but I suspect it will be the market recovery that encourages buyers and sellers to take on this level of innovation.

About the author:

David Green Morgan manages Real Capital Analytics’ business in Asia Pacific, looking at real estate markets from India to New Zealand. He has over 20 years of experience in the real estate sector. Prior to Real Capital Analytics, David was at JLL and Cushman & Wakefield in Singapore and Sydney where he covered global capital markets research. He started his career in the UK with Investment Property Databank (IPD), where he analysed the real estate portfolios of some of the UK’s largest private sector pension funds, using data and analytics to improve performance.