| Digitisation is progressing at different rates among institutional real estate investors in Europe, with the sector
currently divided into two camps. The
larger group, comprising 63 per cent of companies, have already made
significant advances in this area, while players in the smaller
group (36 per cent) are still working on initial concepts or have not
even begun to incorporate digitisation into their business strategies.
Those are the findings of a survey of 150 property investors in Germany,
France and the UK by Union Investment.
The digital elite is small
As
the survey shows, the group of innovation leaders in the real estate
sector is comparatively small. Only around a fifth of companies
have implemented a substantial part of their digitisation strategy.
Most of the respondents (41 per cent) see themselves at an intermediate
stage – initial concepts and prototypes have been implemented, but there
is still a long way to go to meet all the requirements
of their wider strategy. Another fifth of companies have not yet
started to digitise their business processes, but have begun planning
work on initial concepts and prototypes. For 16 per cent of respondents,
digitisation doesn’t count as a strategic issue.
Four action areas dominate the ranking
Optimisation
of standard processes and interfaces tops the list of priorities in the
digital strategies of European real estate investors.
Some 84 per cent rank this aspect as very important. Improving IT
security and data protection is regarded as similarly important by 82
per cent. In third place comes enhancing customer communications, i.e.
an aspect that is strongly geared towards sales.
The cultural change process sparked by digitisation is likewise far
from complete in most companies. Around 80 per cent of respondents say
that further progress needs to be made on driving digital transformation
in the minds of their employees. These four
action areas represent the main concerns, followed by harmonisation of
data, which 74 per cent of companies regard as a priority within their
strategy.
“The
fact that optimisation of standard processes is the number one
requirement for real estate companies should encourage proptechs
to develop customised, easily scalable solutions in this area. Focusing
on standard processes and seeking to develop innovative new solutions
are not mutually exclusive. In fact, they are both likely to indicate a
clear practical focus,” says Thomas Müller,
head of Digital Transformation at Union Investment Real Estate GmbH.
It is also interesting to note that in the context of digitisation, tapping into new areas of business is a low priority for the
real estate companies surveyed. Only 31 per cent of respondents cited this as an important action area.
Most companies expect quick success
Two
thirds of the real estate companies surveyed expect the investments
they are making in digitising their business to pay off after
three years at the latest. Around a fifth expect a return on investment
within a year. Only a minority of companies (34 per cent) have a longer
investment horizon of five years or more for developing digital
projects. The expectation of a quick return on investment
is also a reflection of the four main action areas identified in the
survey, which are all relatively responsive to management control.
About the survey
On
behalf of Union Investment the market research company Ipsos conducted
interviews between May and July 2019 with 150 property companies and
institutional real estate
investors in Germany (n=60), France (n=55) and the UK (n=35).
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