Article | Intelligent Investment
Identifying the ROI of leveraging big data in property
We ask the experts how the arrival of big data is opening up new pathways to ROI across an array of commercial property types.
October 2, 2024
Data is changing the world in ways like never before. In the property realm, the impact is just as significant with progressive property owners leveraging big data to derive new solutions to grow their return on investment. These gains can come in the form of enhancing property values, meeting ambitious sustainability goals, capturing the best occupiers and making the right investment decisions.
Naturally, it broaches the question of how data is currently being used to achieve this. And it’s a question that was recently addressed in our Talking Property Podcast featuring insights from Carl Brooks, CBRE’s Global Leader of Sustainability for Property Management, and Chris Nunn, the General Manager of ESG for Scape, Australia’s largest student accommodation provider.
“ESG data and reporting systems were more common in commercial real estate companies managing office portfolios, but now we're seeing the same level of ESG expectations moving into alternative asset classes including residential for rent.
"It's the same global institutional investors investing in office, retail and industrial as those who are investing in Scape. We've got a large cohort of leading multinational investors from Europe, Canada and the Middle East, and they all apply those same high ESG expectations from their experience in commercial real estate to investing in the living space.
“Our investors certainly expect rich ESG data and reporting. And there's also an internal drive for asset optimisation and minimising utility costs.”
Deepki is one of the innovative tools currently being utilised by CBRE’s experts to help answer these types of questions. The French-based data company monitors billions of square feet of real estate across 65 countries to help property investors and managers optimise sustainability performance. Brooks has been pivotal in deploying Deepki’s capabilities to CBRE’s global property management clients.
"In the past, it's been hard to collate data because sustainability is such a broad field with broad terms,” he explains. “It covers everything from energy and utilities to waste, to biodiversity, to social value, to health and safety. In collating sustainability data, you are bringing it in from multiple sources, even within each of those categories.
“Trying to corral and aggregate data into one place means that the quality is inconsistent and the ability to bring it all into one lens is a bit of a challenge.”
Deepki’s capabilities allow it to act as a funnel, bringing all of the disparate sources together to deliver clarity when trying to enhance property performance.
“Deepki has the ability to create bespoke asset attribute data and surveys that can capture all the different types of information about the portfolio and the assets that we need to report to our investors,” adds Nunn.
“ESG data is absolutely critical and is the foundation of a sustainability linked loan such as the one that Scape struck with its consortia of lenders for our core program on that $1.47 billion debt facility,” says Nunn.
“The interest rate discount was 0.05% or five basis points; that equates to a $750,000 interest rate saving every year that we hit the sustainability loan ESG targets.”
Scape chose two ESG targets: Switching to a hundred percent renewable electricity across the portfolio by the end of the loan tenor in three years and having all their core program assets rated using Green Star performance.
Deepki analysis is conducted by his team who work with clients to prioritise where and when to make investments in the performance of those buildings. This ensures that the client isn’t focusing on the wrong solutions or the wrong buildings.
"If buildings are performing well, then let's leave those alone for now and let's focus on those which are likely to be impacted were there to be a sale in the offing. That's one area around protecting the client's bottom line, by protecting asset value,” says Brooks.
“The second area is related to the Net Operating Income of the buildings themselves. This looks at the operational efficiency of the building, ensuring that we're able to keep the cost of occupancy down alongside all the sustainability features, hence making those buildings more attractive than the building next door.
“There's a growing evidence base that sustainable buildings are not only maintaining or increasing their value, but also being more attractive to potential occupiers and protecting that rental income over the long term.”
“With some of the themes around value, there’s a clear benefit to maintaining sustainability and making it a priority. The question isn't ‘can we afford to go for net zero?’ The question is ‘can we afford not to?’
“Because the longer we leave things, the more expensive it becomes. I think there is still a move, particularly with our large institutional investor clients, who recognise that sustainability is just good business.”
Data essentially forms the foundation for keeping portfolios under constant triage, identifying ways clients can better mitigate risk while exploiting opportunities that can arise from knowledge-based decision making. In today’s constantly evolving property environment, data removes much of the potentially expensive guess work of the past.
Listen to the full podcast to hear how else we’re using advanced data to elevate your assets.
Naturally, it broaches the question of how data is currently being used to achieve this. And it’s a question that was recently addressed in our Talking Property Podcast featuring insights from Carl Brooks, CBRE’s Global Leader of Sustainability for Property Management, and Chris Nunn, the General Manager of ESG for Scape, Australia’s largest student accommodation provider.
Why data makes a difference in property
The relationship between data and commercial property performance isn’t just theoretical. Nunn says that ESG data is critical for many different aspects of managing a real estate portfolio, including at Scape where student accommodation and build to rent is the specialty.“ESG data and reporting systems were more common in commercial real estate companies managing office portfolios, but now we're seeing the same level of ESG expectations moving into alternative asset classes including residential for rent.
"It's the same global institutional investors investing in office, retail and industrial as those who are investing in Scape. We've got a large cohort of leading multinational investors from Europe, Canada and the Middle East, and they all apply those same high ESG expectations from their experience in commercial real estate to investing in the living space.
“Our investors certainly expect rich ESG data and reporting. And there's also an internal drive for asset optimisation and minimising utility costs.”
How property data is collected and used
Property owners embarking on their net zero journeys currently face the daunting challenge of obtaining data to provide clear insights. The underlying question remains around how owners can collect, analyse and leverage sustainability data in order to make the right investment decisions - such as whether to hold and enhance an asset or sell.Deepki is one of the innovative tools currently being utilised by CBRE’s experts to help answer these types of questions. The French-based data company monitors billions of square feet of real estate across 65 countries to help property investors and managers optimise sustainability performance. Brooks has been pivotal in deploying Deepki’s capabilities to CBRE’s global property management clients.
"In the past, it's been hard to collate data because sustainability is such a broad field with broad terms,” he explains. “It covers everything from energy and utilities to waste, to biodiversity, to social value, to health and safety. In collating sustainability data, you are bringing it in from multiple sources, even within each of those categories.
“Trying to corral and aggregate data into one place means that the quality is inconsistent and the ability to bring it all into one lens is a bit of a challenge.”
Deepki’s capabilities allow it to act as a funnel, bringing all of the disparate sources together to deliver clarity when trying to enhance property performance.
“Deepki has the ability to create bespoke asset attribute data and surveys that can capture all the different types of information about the portfolio and the assets that we need to report to our investors,” adds Nunn.
Using data to unlock new capital
Can the right data be the key to unlocking untapped capital? For companies like Scape, it already has. Last year it received a billion-dollar sustainability linked loan which provided an opportunity to convert debt into sustainable financing.“ESG data is absolutely critical and is the foundation of a sustainability linked loan such as the one that Scape struck with its consortia of lenders for our core program on that $1.47 billion debt facility,” says Nunn.
“The interest rate discount was 0.05% or five basis points; that equates to a $750,000 interest rate saving every year that we hit the sustainability loan ESG targets.”
Scape chose two ESG targets: Switching to a hundred percent renewable electricity across the portfolio by the end of the loan tenor in three years and having all their core program assets rated using Green Star performance.
Using data to increase the bottom line
The benefits of data don’t just end at accessing capital through sustainability linked loans and better terms of finance. Brooks identifies two additional benefits they’ve seen in the form of protecting or increasing the asset value itself.Deepki analysis is conducted by his team who work with clients to prioritise where and when to make investments in the performance of those buildings. This ensures that the client isn’t focusing on the wrong solutions or the wrong buildings.
"If buildings are performing well, then let's leave those alone for now and let's focus on those which are likely to be impacted were there to be a sale in the offing. That's one area around protecting the client's bottom line, by protecting asset value,” says Brooks.
“The second area is related to the Net Operating Income of the buildings themselves. This looks at the operational efficiency of the building, ensuring that we're able to keep the cost of occupancy down alongside all the sustainability features, hence making those buildings more attractive than the building next door.
“There's a growing evidence base that sustainable buildings are not only maintaining or increasing their value, but also being more attractive to potential occupiers and protecting that rental income over the long term.”
Pursuing sustainability in a challenging economy
There’s a perception that sustainability in business is often only pursued in ideal economic times. This isn’t the case, according to experts like Brooks, who believes that it’s simply conflicting priorities right now as opposed to green initiatives being entirely deprioritised.“With some of the themes around value, there’s a clear benefit to maintaining sustainability and making it a priority. The question isn't ‘can we afford to go for net zero?’ The question is ‘can we afford not to?’
“Because the longer we leave things, the more expensive it becomes. I think there is still a move, particularly with our large institutional investor clients, who recognise that sustainability is just good business.”
Data essentially forms the foundation for keeping portfolios under constant triage, identifying ways clients can better mitigate risk while exploiting opportunities that can arise from knowledge-based decision making. In today’s constantly evolving property environment, data removes much of the potentially expensive guess work of the past.
Listen to the full podcast to hear how else we’re using advanced data to elevate your assets.