Financial analysis software helps organizations boost revenues, profits, resource utilization, and customer satisfaction by properly directing their investments based on identification of key performance indicators (KPIs), financial efficiency measures, and customer and product profitability. And because Artificial Intelligence (AI) and machine learning streamline financial analysis, these will further drive the growth of this sector.
People believe something when they see it. Visualization is powerful tool and that is precisely what VR and AR deliver. Virtual Reality (VR) and Augmented Reality (AR) coupled with 360-degree cameras and mixed reality allow people to digitally feel a space in three dimensions before modifying it, something that saves time, effort, and money for all the stakeholders. For example, VR can create a simulated environment that is large enough for the user to walk through. AR takes this further by enabling users to virtually view where, for example, wardrobes will be located after renovation of the space. More than that, AR can predict problems and, thereby, facilitate, proactive preventive measures – reactive response is costly. Building owners and promoters who incorporate such digital technology in their marketing strategy will attract and retain customers more effectively. What then, is holding back the greater adoption of such incredibly useful technologies? Cost is always an issue with newer, more sophisticated technologies. Complexity isn’t far behind. Then again, these technologies have not matured completely. Top VR and AR companies include CemtrexLabs, NEXT/NOW, 4Experience, Treeview Studio, and Groove Jones.
Worldwide livestreaming market is forecasted to hit $60 billion by 2026, almost double from the $32 billion size in 2017. Humans are social animals and, come what may, will try and socialize – we can’t fight millions of years of evolution just like that. Plus, resilience is an ingrained human trait. Although cowed down under the initial onslaught of the COVID-19 pandemic, the social humans made a comeback via multiple channels.
Expected to clock an impressive $1.2 billion by 2020 and expand at a 20% CAGR between 2019 and 2022, the market for commercial use of unmanned aerial vehicles (UAVs) is getting pushed upwards by their increasing use for quicker, cheaper, and more eco-friendly delivery of goods.
Drone is the name by which we know the UAVs and everybody’s talking of them since Amazon decided to use them for parcel delivery. By no means is Amazon the only exponent. DHL, Google, Skycart, Matternet, Flirtey, and Zipline have got onboard or are in the process.
Proptech, the short form for Property Technology, received as much as $20 billion in investments in 2018 as per research firm VentureScanner, a 38% rise from the corresponding statistic in 2017. Considering that investors allotted only $20 million in 2008 and that the real estate industry is acutely conservative in adapting to innovative technologies, the $20 billion figure is enormous. Availability of lucrative assets and changing tenant expectations are coercing investors and other market players to hunt for fresh business models, alternative investment options, and methods to optimize expenses. Technologies and trends shaping this transformation include Big Data, Mobile Apps, Internet of Things (IoT) for smart property and building management, Space as a Service (SPaaS), and On-Demand Real Estate Market. GetHome, ShareSpace, Opendoor, and Flyhomes are among the proptech start-ups facilitating this metamorphosis. Unlike the last decade, however, property investment will not be a sure shot safe investment destination as local bodies and governments take to policy and tax measures to limit demand, particularly overseas demand. And then, there is the conservative outlook of the real estate sector to confront with.
At the focal point of the impact of technology on activities in the healthcare and medical estate sector are data management and communication. Unified storage of all patient data and making it accessible to the relevant medical professional quickly and easily enables better treatment. Big Data, Electronic Medical Records, and Dedicated Mobile Apps are useful here. Tele-health or Telemedicine, also called Remote Medicine, is a boon for patients living in remote or rural areas, miles away from the nearest specialist. Record keeping and data security acquire paramount importance in such a setting and this is where the significance of Blockchain Technology comes into play.
Goldman Sachs estimates the drone market to surpass the $100 billion mark by 2020. Real estate holds great potential for drone technology application – property marketing, faster and safer construction operations, home delivery services, safer infrastructure maintenance, property surveillance . . . the list goes on.
LinkedIn cut annual operational expenses by $100,000 at its headquarters using AI-powered technology by Gridium, a company that focuses on optimizing property resources and saving energy. Smart property utilization is just one application of Artificial Intelligence (AI) in the real estate sector. Data management is the primary application of AI in real estate which transforms into rapid property search, correct forecast of property value, efficient issue of mortgages, superior lead generation, and avoiding budget overruns.
“One of the rich world’s most serious and longest running economic failures,” is how a cover story in The Economist chose to describe home ownership. Why failure? Because, many cannot afford a home near large cities. Well, 3D Printing could change all that.
In May 2016, Dubai grabbed headlines by being the location for the world’s first 3D printed office building – printed in seventeen days and assembled in two. Oh, and it also cut labour and construction costs by 50% while requiring a fraction of the manpower that conventional buildings do. Early 2020 saw Dubai completing the world’s largest (by volume) 3D printed building, somewhat shorter than the world’s tallest 3D printed building that has dotted Suzhou’s (China) skyline since 2015.
But while its capacity to cut costs, safety hazards, wastes, and construction-assembly time hold groundbreaking potential, 3D printers can use only some building materials, errors in digital modelling can prove extravagant, and transport and storage of printers on site can be a significant challenge. Apis Cor (Russia), Be More 3D (Spain), WASP (Italy), and ICON (United States) are among the top global companies that 3D print houses.
Nanotechnology has empowered the creation of materials with super structural strength, anti-microbial features, higher eco-friendliness, and self cleaning capacities, something which can revamp the construction sector making buildings stronger, greener, cleaner, and more anti-microbial. It doesn’t come as a surprise that Avanzare is building a fresh 10,000 square meters Graphene production plant in Spain. Human development is inseparably linked to advances in material technology, starting from the Stone Age and moving to the Bronze Age, Iron Age, Glass Age, Steel Age, Aluminium Age, Plastic Age. There is also the Silicon Age that ushered in the Information Technology era.
Digital buildings boost employee productivity by up to 16% and operating income by 5% while cutting energy usage by a maximum 30%. The digitization of buildings comes armed with myriad challenges and opportunities for the real estate promoters and service providers. Real estate sector is miles behind cutting edge technology trends and this exposes promoters and service providers to data and technology companies entering the field. These players are, however, at the very source of data in the sector, a position that can make data-technology companies seek their partnership. Remote workers – numbering 25 million in EU28 or 10% of the EU28 workforce in January 2019 – are on the rise in Europe, meaning customers will increasingly demand commercial facilities in residential. Rich revenues from the data available from these smart systems will incentivize the digital transformation by promoters and service providers. City centres and cities with high real estate demand will first demand such tech-savvy digital buildings because this is where promoters can generate quicker ROI with better benefit-cost ratio. Municipalities and local authorities may base their permissions on related technologies such as Building Information Modelling (BIM).
Smart warehouses utilize 40% less floor space than their traditional counterparts, apart from slashing accident rates and propelling eco-friendliness and productivity to higher levels. With e-commerce pushing warehouses (logistics real estate) inside the boundaries of cities in Europe, the lower areal footprint of such warehouses becomes a huge asset. Warehouses are an inseparable part of the supply chain plus important sources of competitiveness because they exert immense influence on the accuracy and on-time delivery of goods to the end user. After all, the ultimate objective of supply chain management is the on-time delivery of the required high quality products to the end user. Connected warehouses link all stakeholders across the supply chain and bring them on the same page, something that improves transparency and allows the initiation of proactive measures. Using Internet of Things (IoT), connected warehouses lowers the bullwhip effect and thereby push the accuracy of demand forecasting to great heights. Possibly, the driver for M&As in this sector will be the compulsion on suppliers to base their inventory as close as possible to their clients in view of the disruption of supply chains unleashed by the COVID-19 pandemic. Investment in connected warehousing will generate excellent returns, but only over a prolonged investment horizon.
By giving clients a genuine feel of what their office or home looks like, and how it can be made to look, Virtual Reality (VR) and Augmented Reality (AR) navigate the real estate agent through the toughest part of the deal making process - getting a prospective buyer to sign an agreement. And, these technologies can do so without the buyer actually visiting the property. People expressed willingness to pay for the knowledge and convenience that comes when virtually visiting a property in a live poll at the Realities Centre in London that was hosting a Virtual Reality (VR) and Real Estate event, reports Ecorys in a study titled “Virtual Reality and its Potential for Europe.” Across the Atlantic, a survey by the National Association of Realtors found 77% real estate agents vouching for the utility of Virtual Staging, which, they say, assists clients better visualize their potential property. To harness the umpteen merits of VR and AR in real estate deals, realtors need to invest in technology, which can be expensive. However, advances in technology normally bring down its cost, a phenomenon that should make realtors look forward to a technically bright future.
With its ability to understand and learn, AI is the technology of the future and not just a passing fad. And this is true not only for capital markets. Association for Financial Markets in Europe (AFME) identifies the ability of Artificial Intelligence (AI) in boosting the prowess and efficiency of multiple functions related to the capital markets viz. client communication, compliance, reporting and management of risk, and processing at the back end. An October 2019 report by Greenwich Associates found almost half of professionals in the capital market sector already using AI. Echoing AFME’s findings is a report authored by Deloitte in conjunction with the World Economic Forum which pinpoints AI’s potential to decentralize capital availability, identify hidden investment avenues, free up human resources for high value operations, better track risk exposure, and empower real time optimization of capital reserves. AFME’s report also sheds light on the possible hazards of AI in capital markets viz. unrepresentative data input, escalation of unintended negative consequences, and potential curtailment of transparency. Proper governance, operational control, education-awareness, robust data quality, and standardization can, however, address these issues, the AFME report goes on to say.
James Balda, CEO and President of Argentum, a leading senior living association, states that the elderly prefer residing in senior living and care facilities on account of the available support and socialization opportunities. People generally move into senior living and care facilities in their mid 80s. United Nations reports the global population of those aged over 80 at 143 million in 2019 with 53.9 million living in Europe and North America. With such sound fundamentals, the long term prospects for the sector are bright. On the other side of the coin are the estimated 20% rise in labour costs and 100% escalation in the cost of supplies. Since the sector cannot arrange walk thru for potential clients, occupancy rates can drop in the near future. However, the senior living and care sector is lobbying for $20 billion of the $100 billion healthcare stimulus under the CARES Act, which should offer relief.
As many as 55% of family offices had proactively modified their investment strategies in view of the imminent challenges that the COVID-19 pandemic would unleash, reveals the Global Family Office Report 2019 by Campden Wealth Research and UBS. SDS Family Office Managing Member, Peter Sasaki outlines the various actions of family offices to mitigate risks and improve returns viz. hedging against heightened volatility and expanding safe holdings such as precious metals which have placed them in a position to purchase good but depreciated assets. KPMG believes family offices will look to protect wealth instead of expanding it, an observation confirmed by 42% family offices shoring up cash reserves since 2019, before the crisis erupted. Then again, the private wealth industry has to come out of its comfort zone and utilize cutting edge technologies such as artificial intelligence (AI) while also responding to the tech savvy demands placed on them by their next generation clients and the remote working culture.
With over 400 million Small and Medium Enterprises (SMEs) across the world employing 60-70% of the global workforce, economic recovery is possible only by factoring them in. Many governments have already started acting in this direction in order to prevent fall in employment and incomes. While some of these measures focus on delivering immediate relief, others are long term in nature and direct SMEs towards better integration with the realities of a changed economic-geographical scenario. Considering that the relatively limited resources of SMEs – funds, workforce skills, technology – they are more exposed to the shocks imparted by the COVID-19 pandemic. M&A activity in the SME sector will be on hold as they find their way out of the challenging situation.
Private Equity (PE) is sitting atop $2.5 trillion dry powder in the form of uncalled capital, including $800 billion in buyouts. As valuations fall in the wake of the lockdown, General Partners (GPs) have to channelize these funds. Plus, the companies with dropped valuations have excellent fundamentals. Banks’ reluctant to lend make Private Equity a preferred investor. Legal and valuation uncertainties can slow down the forward march of the Private Equity sector as can inflation-inspired interest rate hikes, falling returns, and the reluctance of Limited Partners (LPs) to allot funds to an already expanding component of their portfolio
While the short term fallout of the COVID-19 pandemic on Student Housing and Purpose Built Student Accommodation (PBSA) is not very optimistic, strong fundamentals brighten up the long term prospects. Aurelio Di Napoli, Director of Operational Capital Markets at Savills, a property agent, believes investment activity into PBSA will gain momentum in the last two quarters of 2020. Four stakeholders in the segment are housing managers / providers, students, asset owners, and educational institutions. At present, multiple forces are creating revenue issues for universities, housing providers, and investors. But education is a largely recession-proof sector as will be amply clear in a few months from now.
CORONA-Impact: For healthcare, Remote consultation rising needs may open major facilities evolutions still to conceive
“Virus resistant,” is how Millionacres described healthcare REITs (Real Estate Investment Trusts); CNN named them “a coronavirus safe haven.” Conventionally, healthcare real estate is recession proof. For various reasons, life-sciences real estate space has emerged as a focal point in dealing with the immediate and long term fallouts of the pandemic. Five segments of the healthcare REITs are Hospital, Senior Housing, Medical Office, Skilled Nursing, and Research/Lab. No segment is a clear winner at present. Most hold good future prospects. Senior Housing is the worst hit. Neither is Skilled Nursing performing any better.
Hospitals are walking a tightrope with escalating expenses eating up expanded revenues. Medical Offices look good for the future with hospitals seeking to outsource routine consultations. Greater research requirements will propel the demand for the Research Labs subsector. CFRA Research Analyst Kenneth Leon recommends Healthcare Trust of America, Alexandria Realty, and Medical Properties Trust as fine investment destinations for they offer a 2.7% to 5% dividend. These are respectively into the Medical Office, Research Lab, and Skilled Nursing segments. Stocks of Welltower INC, a senior housing REIT, slumped in February 2020 from around $90 and are hovering around $50 at present. M&A activity in healthcare real estate will be temporarily suspended.
CORONA Impact: E-grocers & Dataservices reach new heights but labor shortage and social distancing already cost productivity
ReportLinker lowered by 10-15% the estimated market size of the global logistics and transport industry for 2021 after considering the impact of the COVID-19 pandemic, namely the scarcity of labour and coronavirus testing kits. Unlike the 2008 global economic crisis which lowered demand, the COVID-19 pandemic has dealt a supply shock to international markets. Asia Pacific will command the largest chunk of the market. FMCG will be the most transported commodity.
Transport in general and last mile logistics in particular face workforce shortage, while capacity issues plague the global air cargo and maritime transport segments. More globalized than before, manufacturing is unable to source raw materials and dispatch finished goods. E-grocers and online retailers have witnessed an order surge while those transporting non-essentials are losing out. Walmart stock prices show an upward trend since March 2020. DHL stock tanked from January before picking up slightly since March 2020. Geographical proximity to end user and shortening of supply chains can influence decisions related to real estate and M&As.
The current coronavirus outbreak has put the global economy under a lockdown reviving the memories of past major crisis such as the last Brexit and the severe worldwide economic crisis of 2007–08. Large economic uncertainties arose and directly affected the Real Estate industry; giving rise to small gains, continued profit decline, lowest acquisition values, etc. The same uncertainties sprang up amid the COVID-19 pandemic, since it has been going worldwide and with its consequences also remaining the same. Some lines of real estate business are more impacted than others, notably the hotel sector where the outbreak's “effects are potentially heavier”. Although it first appears to be a mere public health crisis, most of the measures implemented by governments worldwide began to create a significant gap in the financial sector. Obviously, the global Real Estate business also has a matter for concern and the question is, what are the Real Estate implications?
While some professionals in the gig economy are reaping windfalls amidst the COVID-19 pandemic, others are at its receiving end. Freelancers, remote workers, and personnel on contract comprise the gig economy. People working for food, groceries, and medicines delivery companies and those who can work from home have largely benefited. Uber and Lyft drivers, wedding service freelancers, dog walkers, and caregivers are losing out. Employers will continue to have more freelancers in their team even after the stay at home mandates expire because of the flexibility and cost benefit they offer, according to Marlon Litz-Rosenzweig, CEO and co-founder of WorkGenius, an internet-based freelance recruitment platform. This may be why Mastercard and Kaiser Associates expect the gig economy to expand to $455 billion by 2023 from $204 billion in 2018. AskWonder estimates the total addressable market of the gig economy at $1.5 trillion. Ride sharing companies, Uber and Lyft are losing stock value while food delivery gig company Grubhub has witnessed stock value appreciation.
On March 17th, around 10% of Parisians fled the French capital city to spend the lockdown period elsewhere in France. Online shopping, remote work and less crowded areas seem to win consumers favor in times of sanitary crisis. Have they passed the point of no return ?
With the residential sector and home-working model benefitting from the global pandemic, development projects are increasingly emerging as a credible investment opportunity. In fact, some segments within the real estate space may come out of this pandemic stronger and bolder.
Ever since the notorious Corona virus has started to impact our lives, home owners have moved to ask for mortgage relief. This has led to property owners in the UK, Italy, Spain and the Nordic region being granted so-called mortgage holidays, ranging from between three to 18 months of suspended payments. Meanwhile, tenants and retailers are also demanding rent suspensions. There is no doubt COVID-19 is severely disrupting the property market, with established revenue streams coming to an abrupt halt.
There is currently more than $2 trillion in dry powder available on the global property market, paired with a strong and timely stimulus on the economy from a range of government and a global pre-crisis economic situation that was stronger than the one that set the context of the 2008 Global Financial crisis. The severity of Corona and its impact on the Real Estate world differs widely per asset class, according to major actors of the sector, according to Nora Creedon from Goldman Sachs.