Global real estate investor PGIM Real Estate is planning to launch a proptech incubator “in the next couple of months”.
Speaking at CREtech London, Naqash Tahir, PGIM’s head of systems in Europe, said: “At PGIM [Real Estate] we are making very strategic investments, and we are creating our own lab.”
The “lab” will sit within PGIM Real Estate but will run independently, exploring “innovative solutions and commercialising [them]”.
Tahir added: “We’re going to be doing incubations. We’re also going to be doing a lot of investments, co-investments, JVs, working with our peers.”
With 32 offices around the world, PGIM Real Estate – formerly Prudential Investment Management – has $195.4bn of assets under management, about two-thirds of which are in the US. About half (46%) of its assets are in the multi-family residential sector, with offices and industrial (17% each) making up another third.
During the panel, Tahir invited companies in the ESG, AI and machine learning sectors to “reach out”, adding that the lab will hopefully launch in the coming months.
Why start an incubator as an asset manager?
Tahir’s announcement came during a panel discussion in response to a question about overcoming hurdles in data and proptech investment.
He said that, as a highly regulated investor, PGIM Real Estate is risk averse, which means any potential investment is scrutinised and questioned – especially if it’s an investment in something none of his peers are doing.
Creating an incubator that is autonomous will allow the company to work closely with startups without the same “hurdles and all the red tape”, Tahir said.
Data is gold
The panel – which also included CBRE’s digital lead Harri John, Cherre’s CEO L.D. Salmanson and Grigor Hadjiev, head of product and development at Allianz – spoke at length about how “data is gold” but real estate has not yet made the most of its potential.
John brought up the problem of standardisation, where different types of data sit in different formats that lack interoperability.
She said: “My stakeholders, a lot of senior clients, want that magic button, they want everything to be working tomorrow – and we still have a long, long way to go in this industry to bring all of this together.”
Salmanson added that real estate is still grappling with answering “very simple questions” with data: what assets do I own? How do they perform compared to the competition? Where does the portfolio underperform or overperform?
Though simple, these questions can have a significant impact on performance and profits, Salmanson said. For example, better portfolio data allows an investor to pinpoint types of assets that it has historically improved and added value to – creating future opportunities it might otherwise miss.
Co-operation in real estate
Tahir highlighted several ways that startups have been able to use and monetise data, including the reduction of operations costs in a building and better capital allocation thanks to algorithms that help identify potential investments.
He added that there is opportunity for real estate to work together to share insights to make buildings more efficient and sustainable.
He suggested that a consortium of three or four different companies could come together to explore ESG data in order to make buildings more eco-friendly and to calculate the impact of carbon emissions on valuations, potentially creating a carbon index that the industry could sell.
Echoing John’s point, however, he said the industry has a lot more work to do around data.