To gauge the ongoing impact of technology on Asia’s real estate sector, Mingtiandi teamed up with Yardi during July this year to conduct a survey of property professionals around the region to find out how developers, investors and other industry players are implementing new systems to run their real estate businesses.
The release of the findings from Mingtiandi-Yardi report, will lead this month’s Property Innovation Forum 2021, which invites experts to share their insights on the tech-led transformation of Asia Pacific’s real estate industry.
The study, titled Innovation in Asian Real Estate: Systems for a Disrupted Industry, will lay out in detail how property players view technology as a tool for stabilising their businesses and preparing for potential future crises.
Mingtiandi spoke with Bernie Devine, Yardi’s regional director for Asia Pacific, in the run-up to the forum to get his views on the survey findings.
How have challenges posed by the pandemic helped to spur tech adoption?
The challenge is the pandemic is entirely unexpected, no one anticipated this, and that has profound impacts on the responses people had. Secondly, I think what people have learned is that the pandemic experience is consistently inconsistent. Things can change overnight and we’re moving into a world where there is ongoing unpredictability.
One factor really early on was highlighting the issue of spreadsheets and pieces of paper still going into processes. Initially a big part of the change was around that.
Secondly was the issue of the impact — particularly on some assets such as retail, and to a limited extent to some others — of the inability of tenants to pay. And that was either the case of tenants simply just asking for cash-flow accommodation to tenants who are asking for discounts or whatever. The problem is it’s not just one tenant, but everyone. We had clients who had thousands of tenants and they really had to deal with thousands of abatement requests in the space of a six-week period. There’s a need for a different tool to address that, and I guess a different focus in some of the tools around receivables management. So being able to understand the performance of your receivables process has been a key area.
Thirdly, the other big change in terms of adoption, if I look back on 2020, if I want to have a paper duly signed, particularly in China, digital signing is not an option. Most of the rest of Asia is like that. But if you go now, even if you look into August or September, the preference has quickly moved to digital. In fact we’re seeing a very high adoption of digital signatures.
The final point is in management information. So prior to the pandemic, we saw a growing trend for people to want to bring together asset management dashboards. What the pandemic did was to accelerate that probably ten-fold in terms of the desire and the number of companies wanting to do something and the speed by which they want to do it, to be able to deliver real-time information to management has been a critical change.
We’re really seeing a very dramatic increase in the amount of tech adoption. If you talk to senior clients about what they would have done differently, pretty much all of them said they wished they had spent more on tech earlier.
69 percent of respondents say technology will play a significant or major role in reshaping their portfolios in the next three years. What types of tech solutions are real estate companies looking for? What technologies are likely to be the most attractive for real estate players?
This is one of those topics where the hype and the reality are different. If you look at the hype in the industry on blockchain and AI and big data, the reality of it is that most people are still using spreadsheets, and spreadsheets are not a process tool. In fact, spreadsheets are the antithesis of a process tool.
A lot of people are discovering that one of the things they need to do is get better data, and to get better data they need a system that replaces a spreadsheet, because when you do it with a system you’re enforcing some discipline, right? Do the same thing, get the same outcome. The problem with the spreadsheet is that it doesn’t force you to do the same thing. It might encourage you to do a similar thing, but not necessarily the same, therefore you don’t necessarily get the same outcome. Whereas with a system, if you do it this way, one, you collect data, and two, you get a consistent outcome, and that’s a really big challenge.
For many years there’s been a recognition that we have to move beyond that, but it’s only in the last 18 months that there’s been a lift in momentum. That was already accelerating over the last three years, but then COVID pushed it a lot faster. There’s a growing adoption of technology.
What are some of the common challenges that real estate companies face in adopting technology, and have you seen this changing?
The ability to pay is not the issue, and real estate companies are always in tune with return on investment. The issue is the desire to pay, so part of this is about how real estate companies can assess the benefits of new systems. When a company comes to me to buy software, all they ask you to do is keep the status quo; they are not interested in seeing how technology can improve the operations of their business. So it’s really understanding the value that change can bring, that technology can bring, and that should eventually take care of the resistance to change.
There are markets that have been faster to adopt technology and some that have not. Why aren’t we seeing these fast adopters separate from the pack?
It’s clear that some of them are gaining an edge and there’s no question that there are leaders. There are folks who are brave enough. But then you have those who don’t see the value in change. They see value in what they do, but they don’t want to change. I look at their processes and I know I can help them make a lot more money.
Have you started to see some difference in performance between the more innovative companies and the more traditional companies?
Recent events have shown that those who were able to absorb change and unpredictability thrived, and there are those who have really struggled, and part of that has been around, I think, that lack of predictability, the need to innovate and to change, accommodate different models. Part of that is about agility, flexibility, ability to do something different and accommodate that within business processes.
Those who did not adapt struggled more because you can’t just change technology, whereas those with modern technology are able to adapt. I think the classic case would be if I go back 20 years and compare leasing practices to today, the occupancy rates are much higher today, and a big part of that is the ability to accommodate more innovative leasing structures and leasing processes. A big part of that has been the fact that accommodating that complexity has been done by technology.
Business process automation (60 percent of respondents) and big data analytics (58 percent) were the two technologies chosen most often as the top priority for adoption within the next three years. What types of tech systems do you see being adopted most rapidly this year? What forces are shaping these tech choices?
Two things. One is absolutely that business automation is helping companies get out of spreadsheets and get everything online, so that everything can be done remotely and work-from-home is not a problem. That’s absolutely top of the list.
Secondly, a lot of companies realised they have a huge gap in giving real-time reporting. Data can be six weeks out of date on what’s happening. I would totally agree that process automation and the ability to analyse the data captured and deliver that real-time are absolutely the two top concerns.
I think big data comes from the fact that automating processes allows you to get more out of your business. Identifying additional data feeds that come from processes, finding ways to look at data and putting it in context. Then there’s looking into correlations between this information and other aspects of the business, then building models that deliver insights that you can’t otherwise see. But without automated processes, it’s not going to be worth it. It’s useless to keep on getting more data that you don’t understand.