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Can Real Estate Firms Keep up with an Accelerating Disruption Curve In 2018?
According to Deloitte’s 2018 Real Estate & Construction Outlook, here’s what real estate companies need to pay attention to in the year ahead in order to continue creating value:
Embrace the growth of RE fintech: Even though RE fintechs comprise just 3.2 percent of investments within the global RE tech startup space, having raised $1.1 billion so far, they are nonetheless disrupting traditional business models – but rather than view them as budding threats, traditional RE firms need to learn how to partner with them. RE fintech startups can help traditional players expand and diversify their lender base, streamline underwriting, and enable more individuals and institutions to get exposure to real estate. A key challenge, though, will lay in reconciling the significantly different operational styles between startups and older industry stalwarts. More specific research on this topic will also be included in a detailed report from Deloitte coming in November.
Don’t be afraid to adopt robotic and cognitive automation tech: Many RE companies have been slow to adopt technology effectively, and we see this in the many operational inefficiencies that plague the industry today. Robotic and cognitive automation technologies can help RE companies reduce errors and increase operational efficiency by replicating human actions and judgment at tremendous speed, scale and quality – all at a relatively low cost. It will be important, however, for RE companies to also consider the impact these technologies will have on talent needs and job functions as they bring them into their businesses.
Fight for REIT value: Traditional REITs are trading well below their net asset values due to a one-two-punch of negative market trends and the rise of investor activism in the industry. Reinstating shareholder confidence in 2018 could be critical in helping to reverse this trend. To do this, RE companies will need to strengthen investor communications and re-evaluate M&A/exit strategies, public vs. non-listed status, and portfolio optimization.
Get serious about the looming talent crisis: The RE industry’s talent dilemma is no secret, however the proliferation of disruptive technologies in the sector – especially in the past year alone – is giving new urgency to the issue. 77 percent of RE professionals agree or strongly agree that their jobs will change considerably over the next 3-5 years as a result of digital business trends – yet only 30 percent think that their organization provides employees with adequate resources to develop skills to thrive in a digital business environment. Closing the learning gap will be critical to enabling the next generation of digital RE leadership.