Data may be the new oil, but is tracking the new fracking?
The real estate industry has proved to be a willing consumer of data. The industry, famed for its historic focus on relationships, heuristics and closely guarded internal data sources, has been embracing increasingly complex and hard-to-get external sources to help gain an edge in increasingly competitive, and rapidly changing, markets.
To see where this may progress in the future, it is interesting to look at other industries that are further along the adoption curve, like marketing and healthcare, and see what data collection methods they are currently prioritising.
One such source of data is the anonymised location tracking of mobile phones. This has shown to be incredibly powerful, albeit controversial, in tracking and combating illnesses and pandemics. 2020 has significantly accelerated interest and use of this technology as it has done with many others.
Mobile tracking is the ability to anonymously track the physical movements of mobile phones to better understand human behaviour. It is legal in almost all markets, provided the data is anonymous and that the user has "opted in" to location tracking in certain apps that they use. Mobile tracking companies work with these app publishers to collate and clean the terabytes of resulting location data. Attributes, such as socio-economic data and customer segmentation (“coffee-drinker”, “regular traveler” etc) can also be attached to each signal based on the behaviours observed. Some of these data collectors are able to track as much as 50% of a country’s population.
This approach is also not particularly new in the advertising world, where it has been used to partly address the age-old challenge of attributing online activity and ads to offline buying behaviour (eg did someone see a car ad and then go and buy a car), but the applications in the real estate world can be game-changing also.
Four ways it can be used to add value in the real estate world are:
Seeing in real time how citizens actually use and travel around our cities, based on real data rather than surveys or simulations. The benefits to human-centric urban design are significant. The smartest city planners in advanced markets like Singapore are already embracing this approach in areas such as transport network planning.
Better profiling of visitors to stores, offices, residences, precincts etc allows a better understanding of what amenities and services to offer in those locations, and helps tenants make better informed site selection decisions.
Understanding the impact of large events, such as concerts and rallies, on urban spaces.
Tracking where urban visitors come from so they can be better catered to. Are they out-of-towners? Locals? Tourists?
We predict that this will become a completely mainstream analytical approach in the property world over the next 3-5 years, accelerated in part by the 2020 disruption of long-standing assumptions about how people work, commute, travel and relax.
The increasing adoption of these types of datasets will also, however, surface a number of issues. Firstly, one of the key benefits of methods like mobile tracking is the sheer volume of data produced, which leads to significant data processing and interpretation requirements. Many real estate players have become significantly more conversant with data science in recent years, but this is still not the norm. MS Excel, the industry's go-to analytical tool, will not cut it. In addition, the real estate world will have to dramatically increase its compliance, data security, and privacy capabilities. Recent high-profile cases involving companies like ByteDance (TikTok), Google and Facebook highlight the growing public and government interest in privacy and players will have to expect more scrutiny and tightening regulation.
In short, we can expect to see the same types of hiring that have been prevalent in sectors like retail, finance and big tech for some years now - namely data scientists and regulatory specialists, as well as a new wave of willing customers for cloud services providers like Amazon and Google.
If you would like to learn more about how to safely and compliantly access advanced urban insights from cutting edge datasets, please drop us a line at firstname.lastname@example.org for a chat and to learn about how we are supporting some of the world’s largest tenants, landlords and advisors.