The industry has a false sense of security around compliance – and most companies lack the data expertise they need, a report from law firm Osborne Clarke has suggested.
Describing a “relative lack of concern”, the report showed that more than a fifth (21.1%) of real estate and infrastructure company lawyers consider the European legal and regulatory framework around data to be “well-structured”.
This compares to just 11.1% of respondents across all industries.
Arguing that legal teams could help drive innovation within their business, the Data driven business model report from Osborne Clarke and the European Company Lawyers Association based its findings on a survey of 419 companies in eight industries across Europe.
The report warned that the built environment could be downplaying the challenges involved with operating data-driven businesses.
Some 29.4% of the sector believed that data regulations are stable – more than any other sector besides life sciences and transport.
“Caution is wise given the change that is coming to the regulation of data-driven business models,” the report said, pointing to the recently proposed EU Data Act.
The proposed regulation would require businesses that use IoT system to give access to the data they collect to the users who generated the data.
Lack of experience
Real estate’s relative confidence comes despite low positive responses in other areas:
- Just 11.1% said their legal team has implemented the company’s data strategy (if one exists)
- One-third use contract templates with provisions dealing with data (compared to 40.2% among all respondents)
- About a fifth (22.2%) have board-level expertise around data-centric business models
- The same percentage think about the ethical and reputational side of data use
- No respondents believed their business is well prepared for the challenges of a data-driven business
This lack of legal and management experience around data is significant given that the majority of respondents (70.4%) in the sector already offer data-driven products and services.
Technology, media and communications was the only sector with a higher proportion (87%).
Part of the reason could be because the survey got fewer responses from real estate and infrastructure than from other industries, potentially skewing the response.
However, the numbers also point to the wide range of ways that the industry is adopting tech, from digital twins to smart HVAC systems.
Using data is an integral part of real estate. More than four-fifths (82.4%) use customer-provided datasets while nearly half (47.1%) acquire or purchase databases.
An unregulated industry
Given the industry’s digitalisation, why was real estate less concerned by data challenges than other industries?
The report said: “The reduced focus on legal and regulatory obstacles for REI respondents may reflect the fact that this is not a regulated sector into itself…”
By contrast, heavily regulated sectors like finance overwhelmingly identified legal obstacles to implementing their business model. Meanwhile, just 3.5% considered the European regulatory framework to be well structured.
In real estate, much of the collected data will not be personal data and, therefore, not subject to privacy regulation, the report said.
But that does not mean the industry can afford to ignore evolving data regulations.
Concluding its section on real estate, the report said: “Given the disruption that is likely to come to this sector… a more strategic approach to the use of data may be needed, with stronger top-down governance and monitoring of how regulation will impact on their current understanding of the value of data and how to protect it.”