Altus Group Report 2020 Cover

Online markets are biggest disruptor in property, Altus survey finds

Six out of 10 senior executives in the world’s biggest real estate firms believes the rise of platforms that cut out agents and other intermediaries will cause major disruption in the years ahead.

Software giant Altus Group surveyed 400 senior executives at some of the world’s largest real estate firms, each with at least $250m assets under management and representing a total AUM of more than $2tn.

The findings reveal the expectations of the industry’s leaders on the impact of disruptive technology in real estate:

  • The potential of 5G: the top three technologies to benefit are expected to be: smart city development (81%); automated supply chain and procurement (78%); and automated inventory replenishment (77%). 5G is also likely to enable remote workforces and cashier-less retail (64%).
  • 5G was seen as most disruptive in the real estate industry in the UK, with 64% of UK respondents highlighting 5G as likely to cause major disruptive impact, more than any other country surveyed.
  • Adoption of automated valuation models in commercial real estate are still thought to be over three years away (78%)
  • Adoption of global data standards: 87% think the commercial real estate industry will adopt them; the reports ranks the main obstacles
  • Significant consolidation of proptech: consolidation is expected to begin within 12 months (43%) or within 2 years (81%); property and tenant management firms are most ripe for consolidation
  • Increasing use of online marketplaces: survey records a massive 43% growth in use of online property exchanges in just one year; substantial growth is expected in online lending marketplaces.
  • Altus is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry.

Its annual ‘Altus Group CRE Innovation Report’ provides an outlook on technology trends and highlights the current digital transformation impacting the global CRE industry.

Altus Group Report 2020

According to the report, the industry has reached a tipping point as technology adoption hits a critical mass threshold. For the first time in five years since Altus Group began conducting this annual research, a majority of CRE leaders now fully recognise the disruptive impact of tech, illustrating the shift to an acknowledgement that many advanced technologies can potentially solve their current challenges.

“CRE continues to rapidly accelerate its digital transformation and despite the growing complexity stemming from the proliferation of data, the industry is clearly shifting from a stage of ‘trial and testing’ to one of practical innovation to solve their current challenges today,” said Bob Courteau, chief executive officer, Altus Group. “At the same time, continued automation and significant proptech consolidation will both have a major impact and deliver considerable opportunities for the industry.”

Transformational platforms

The report finds that online marketplace platforms are gaining significant traction with 61% of CRE leaders saying they will have a major disruptive impact on the industry. Recent years have seen new platform-based marketplaces connecting a broad network of market participants such as buyers and sellers, tenants and landlords, lenders and borrowers, and investors and fund managers, and delivering transactional efficiencies as well as the collection and aggregation of data for the benefit of users. Lending platforms have experienced the largest level of adoption to date with 63% of CRE firms having used an online lending marketplace for a recent transaction and 79% planning to increase use in the future.

Data complexity growing

Data usability challenges continue to intensify as a result of fragmented data sources, data duplication and heightened complexity of overall data management. CRE executives report increased challenges in a majority of key areas related to data management when compared to five years ago.

The industry is heavily relying on data to drive decision making but is hindered by disparate data requiring greater amounts of time to manage. Conversely, there exists a growing prioritisation by CRE firms to address these challenges through dedicated executive ownership and governance related to overall data strategy. Almost half (45%) of CRE teams are spending at least 15% to over 25% of their time managing and organising data (equivalent to two to three months of the year). Eight out of 10 CRE firms now have a chief data officer or equivalent senior executive who oversees their organisation’s data strategy and data governance. This compares to Altus Group’s 2016 research where 44% of firms surveyed indicated a lack of executive sponsorship.

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