Real estate managers are in the early stages of using data collected at their properties — gleaned from such diverse sources as facial recognition software to social media programs — to gain insights into their investments.
Most managers say efforts to develop big data to build and maintain portfolios is only just beginning, with some bringing in data analytics and information technology experts to help understand how that competitive intelligence can give them an edge on investments.
The efforts mark a sea change in focus for real estate managers, which traditionally have used data as part of their due diligence for investment decisions already made. Now, they are turning to big data to identify trends, determine what properties to buy and how they can squeeze additional returns from properties already owned.
Global real estate technology spending is projected to reach nearly $3 billion in 2017, up from $2.7 billion in 2016 and $2 billion in 2015, according to the 39th Emerging Trends in Real Estate report released in October by the Urban Land Institute and PricewaterhouseCoopers.
Blackstone Group LP, for example, recently set up a committee made up of real estate investment executives, operations executives and information technology professionals to study how technology will affect the firm's $111.3 billion real estate business, said Hamilton E. "Tony" James, Blackstone president and chief operating officer.
Everything is questioned, from whether an investment strategy can be developed at the intersection of technology and real estate to how technology can help portfolio companies perform better, he said.
At Goldman Sachs Asset Management Private Real Estate, executives are "very focused on it," said Joe Gorin, New York-based managing director and co-head. "We have access to a lot of big data at Goldman Sachs."
For example, GSAM's real estate investment professionals anticipate that as millennials get older and have children, they will move out of urban centers. GSAM real estate executives are analyzing public school systems, filtering school performance reports to target areas in which to invest, Mr. Gorin said.