Demand for data insights and analytics in Asian real estate markets is expected to surge over the coming years and Realinflo’s Gary Walter MRICS recently sat down with Anthony Wong of PropTech Institute and Cushman & Wakefield to discuss the “unsexy” but nonetheless essential (and as we believe, fun to solve!) problem that Realinflo is addressing around data.
Despite the 5th wave of the pandemic in Hong Kong, access to real estate proprietary data has been easier than ever before. How we perceive, value and transact real estate has the potential to change rapidly with the help of technology and big data analytics. There is an increasing demand for real estate data services to empower stakeholders’ decision-making from real estate brokerage to asset management, which is reflected through some major headline acquisitions. For instance, most recently, MSCI purchased RCA, a real estate data research firm for US$950 mn in 2021, while Moody’s bought REIS in a cash deal valued at US$278 mn*. Other companies are also on the rise, VTS (real estate CRM software provider) had raised US$338 mn thus far and the list goes on**. While all these headlines seem attractive initially, one must wonder what is fueling this massive demand and how Hong Kong can ride on this global growth? PropTech Institute (PTI) set down with Hong Kong-based real estate data startup founder – Gary Walter MRICS from Realinflo to discuss the 5Ws on the current real estate data landscape in Hong Kong.
Who are the typical users of real estate big data in Hong Kong?
From a building and transaction point of view, landlords or developers would use real estate data for acquisition and asset management purposes to conduct due diligence and research works. For instance, data analytics can help optimize investor returns through efficient portfolio management. Other users are banks who use big data to increase their operational efficiencies including mortgages, loans, corporate lending and valuation. From an occupier point of view, lease portfolio management can be used to analyse surrounding benchmarks such as rental and vacancy rates as a way to gauge market sentiment, while agents and valuers use big data for comparable evidence and research. Therefore, the users are quite wide-ranging in that stance.
What are the corporate view of real estate data and PropTech companies here?
Corporates are currently holding a considerable amount of under-utilized data, which is mainly due to two predominant obstacles. First, the current workflow is heavily manual reliant and executed inefficiently, while some data collection processes are executed in the same way as it was decades ago. In response, asset managers can use big data to leverage their insights, optimize their portfolio management and save time and labour costs. Secondly, when property developers look to acquire a building and gather market intelligence, many companies have difficulties leveraging their in-house data. On the ground, emails or paper files are still used to upkeep their database and therefore it is very difficult to manipulate or extract data for analytics. There are currently massive data silos present that require data cleaning and management as a way to be constructive and potentially for monetization in the future.
When do you expect the real estate data demand to peak here in Hong Kong?
Today, companies have an increasing need for data to execute their decision making. Being able to incorporate big data into your workflow is essential for day-to-day operations. Currently, data distribution toolsets such as automation and the adoption of software systems allow data capture to be leveraged both internally and externally. This trend will start to accelerate in the next few years. As real estate companies become more efficient and require real-time data, we expect big data demand to likely peak in the next 3-5 years in Hong Kong.
Where else would you look to expand real estate data services beyond Hong Kong?
I think there will likely be more demand from Asian markets, particularly South East Asia, with more developed markets like Japan and Korea spearheading the market. On the other hand, a lot of the emerging markets currently don’t have the foundation of good quality public database provided by their government, but things are starting to change as real estate markets mature in those cities. Cities with more data available on the ground level and greater transparency would be the core drivers of demand for real estate data.
Why are there so few real estate data start-ups in Asia?
First of all, it is not a “sexy” problem to solve, and often a longer horizon is needed to develop a well-versed database. For a data company, we are not only building a platform but also building a marketplace with a critical mass of diversified information. In Asia specifically, the second problem is scale and market size in real estate. Each market has its practices and its ways to execute data provisions. For instance, Japan has different real estate practices than Hong Kong, whereas in the US and the Americas, the sizeable home market is generally consistent, and one can use a single platform to provide data services. While in Asia, the market is more fragmented, and it may be cumbersome to scale across the different markets. On a positive note, more private and public organizations are increasingly adopting data analytics to help drive real estate investment volumes.
*Source from MSCI & Moody’s website **Source from Crunchbase