PHOTO
In the real estate industry in the Middle East, data analytics is relatively new trend unlike in the retail or hospitality sectors that have made huge strides in using data analysis to determine patterns and inform strategy.
Data and sustainability are some of the standout megatrends for the region’s real estate industry in 2020, according to Thierry Delvaux, CEO of Middle East and Africa, JLL.
He reiterated in an email interview that 2020 would be characterised by opportunities to optimise “the usage and performance of existing real estate” in maturing markets like the UAE.
Many aspects of the sustainability agenda revolve around real estate, he said.
“One critical element of this debate that has experienced a fundamental paradigm shift in recent years is that of energy consumption. The previous scepticism about the benefits of creating green and clean real estate assets is now being replaced by a realisation that there are real financial benefits of doing so.”
He pointed out that a JLL survey some time ago had found that a key obstacle to managing real estate assets was lack of data and analytics.
“We ran a global corporate real estate trends survey a while back, where over 50 percent of respondents suggested the lack of effective data and analytics inhibited their ability to accurately measure value and generate insights. This ultimately impacts how you manage your building and track its performance,” he explained.
Amassing data
So, what kind of data should real estate investors and developers be looking at to inform their decision-making? The JLL said “a pyramid” with traditional data as the basis of analysis could be the starting point.
“Traditional data includes building level and aggregated market information such as operating income, costs and cap rates,” he said.
The second level, Delvaux continued, involves benchmarking traditional data against the wider community and city data, like overall supply-demand metrics, lease comparables, mobility data and sensor information.
“The third layer is overlaying all this with third party data, such as credit card transactions, to measure retail sales at a specific mall, for example,” he said.
He pointed out that solutions like digital twins, which is a digital replica of the real-life asset, allows property manager, owners, developers and investors to have the insight and information they need from an asset to improve operations, increasing efficiency, and track performance.
“By incorporating and embedding sensors and other digital measuring tools within your physical asset and connecting it to the digital replica, you are able to track real-time and live information within your building,” he said.
On the operational front, for example, if a certain function within a building, like a water heater, is faulty, built-in-sensors would enable the asset manager to ‘look inside’ the property, and pinpoint the source of the fault. In some cases, these sensors can even anticipate the fault, which would help the asset manager pre-empt long and costly maintenance processes, according to the JLL chief.
“Similarly, if you are a property owner or even investor, sensors could give an indication of the footfall to your building, so you can continue to track performance; you could even compare current lease rates to comparable buildings,” he said.
Sustainability measures
On the relationship between life cycle asset management and sustainability practices, Delvaux said the proliferation of data and life cycle costing models “that come from managing your asset closely” have helped quantify some of the financial savings that can be made from investments in sustainability practices, such as energy-efficiency.
The buildings and construction sector, globally, is responsible for almost 40 percent of energy and process related emissions, according to the United Nations Environment Programme (UNEP).
“This figure would be higher in the UAE given its dependence upon air conditioning for much of the year,” he said. Therefore, investing in sustainability could save property owners, developers and investors significant amounts of money.
A recent report on green buildings by HSBC and EY pointed out that energy efficiency alone could potentially drive cost savings of up to $459 billion with an investment of $16-270 billion.
In fact, building energy-efficiency has been assigned a strategic role in Dubai’s target of achieving 30 percent reduction in energy consumption by 2030, said Delvaux, adding that the emirate is poised to launch soon an operational energy rating system for buildings.
He said the rating system analyses actual data from properties and assess those against the most suitable benchmark data for that type, size and activity of building.
“It will then apply a rating to that building against pre-set criteria, allowing both owners and tenants to benchmark their space against their competitive set. Owners of poorly ranked buildings will then be able to identify areas in which they need to invest to increase the efficiency of their assets to an acceptable level.
In October 2017, Zawya had reported that Dubai is considering an energy labelling scheme for buildings.
In April 2019, state-owned super energy service company Etihad ESCO had announced its high-efficiency lighting installations and retrofitting projects had achieved total savings of 114.75 million kWh of electricity and 132.15 million gallons of water, amounting to 55.7 million UAE dirhams ($15 million) in 2018. It has set a target of retrofitting more than 30,000 existing buildings in Dubai by 2030, which is expected to generate savings of 82 billion dirhams ($22 billion).
(Reporting by Anoop Menon; Editing by Mily Chakrabarty)
#UAE #RealEstate #Digital #Sustainability #EnergyEfficiency #LifeCycleCosting
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2020
