Real Estate Predictions 2022 Building a more sustainable and future-proof business
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Real Estate Predictions 2022 Building a more sustainable and future-proof business
Executive Summary | Real Estate Predictions 2022
Executive Summary
Real Estate Predictions 2022
Building a more sustainable and future-proof business
From advanced analytics for the cities of the future to meeting stakeholder
expectations regarding Environmental, Social, and Governance (ESG) issues. Deloitte’s
Real Estate Industry predictions 2022, developed by Deloitte Netherlands, is an
inspiring outlook on 2022 and beyond, based on Real Estate insights. Our predictions
will help you to future-proof your Real Estate business.
Prediction 1 | Creating smarter to meet growing investor, tenant, and and Governance (ESG) issues and will have
urban environments employee expectations. According a significant impact in the short term. The
When considering the design of buildings to 60% of Real Estate respondents of proposed regulations will be in effect from
and land use planning for urban the 2022 Deloitte Center for Financial 2023, and therefore, it is essential to be
development, traditional processes result Services Outlook Survey, ESG initiatives prepared. To comply with the requirements
in a number of constraints. First of all, data- are driving new business opportunities of the CSRD, it is crucial to do a materiality
driven design is challenging, since there for their organization, and half of them analysis and baseline assessment, set your
are so many factors to consider, including think that these initiatives are giving them ESG goals within a long-term ESG strategy
economics, feasibility, social governance, a competitive edge. What can you do to and prepare your management systems
land use and capital investment. Secondly, prepare for the new market realities? and internal controls. The time to start
the planning output represents a fixed- is now.
state based on current problems, while Prediction 4 | How AI can enhance
development might take years. This makes urban planning, asset management Prediction 6 | The future of the
it more vulnerable to shifts in the market and investments housing business
or changes to the environmental and social Customized AI tools can support a review Inadequate management of aging multi-
context. Finally, it takes a lot of effort to of large files for Real Estate research, dwelling units have become a social issue.
make a plan, inhibiting our ability to quickly quality checking data and providing insights Digital transformation can help property
generate alternative scenarios or pivot into the driving factors behind trends. management companies to address
our approach. Scenario simulation and an evaluation of concerns in this field, so they can
their impact can be used to enhance key benefit from the opportunities of an
Prediction 2 | Driving into the future of decisions on investing, budgeting and increasing demand.
Real Estate planning. In this article, which includes a
The rise of Autonomous Vehicles (AVs) case study, we discuss how to harness the Prediction 7 | Mobility hubs, the
and ridesharing technology is likely to exponential power of AI for urban planning, enabler of healthy urbanization?
revolutionize urban transportation. Also, asset management and investment A major challenge in many cities across
the impact on Real Estate is likely to be decision-making for the cities of the future. Europe is the (growing) housing shortage.
profound and far-reaching. What is going to To solve this, new residential developments
happen during the coming revolution and Prediction 5 | CSRD: Booster for a are needed. Most municipalities plan
what could be the effects on urban spaces sustainable Real Estate industry these within the city borders to keep the
and Real Estate? The Corporate Sustainability Reporting surrounding areas green. Additionally,
Directive (CSRD) will radically improve the many municipalities aim to free up the
Prediction 3 | Incorporating ESG: Living scope and existing reporting requirements scarce city space that is currently used
up to stakeholder expectations and of the EU’s Non-Financial Reporting by (parked) cars. This will make the inner
business opportunities Directive (NFRD). This ambitious package city greener, healthier and more livable.
Environmental, Social, and Governance will make it mandatory for many Real Estate However, it also raises a challenge: how
(ESG) issues have emerged as a top organizations to report on all relevant can cities accommodate a growing number
focus, and companies need to respond inward and outward Environmental, Social of citizens within their borders when they
2
Real Estate Predictions 2022
are reducing the amount of space that Prediction 10 | The future of Reports have become more common.
these citizens can use to travel from A to smart buildings In fact, 92% of companies on the S&P
B? Mobility hubs are coined as the key Market participants are still facing a lot 500 Index publish a CSR Report. In an
solution for the transition to a more space- of uncertainty when it comes to smart increasing amount of countries, it is even
efficient transport system. Yet, only a few buildings. This article provides an overview mandatory to publish CSR reports annually.
of them have been realized. So what can be of current barriers as well as drivers of CSR has the potential to change the future
expected of this trend? the future of smart buildings, based on of Real Estate, and more importantly; to
a set of interviews with different market increase the value in servicing the needs of
Prediction 8 | The value of green participants from both the owner/ planet, people and prosperity. But how can
buildings developer and the user side. you integrate Real Estate as a theme into
Buildings and construction processes your CSR Report?
need to become “greener” and more Prediction 11 | The rise of digitalization
environmentally friendly. This is a cross- The Real Estate industry is growing Prediction 13 | Digital transformation
industry challenge for all stakeholders. rapidly. Investments are expanding to new The pandemic has had a significant impact
What is happening in the field of regulation, countries with investors from different on many industries, including Real Estate,
how are start-ups stepping in, and how countries seeking alternative opportunities. and will continue to do so. More citizens
can all stakeholders prepare for a Manual tax reporting solutions no will continue to work from home, more
greener future? longer meet the requirements, and poor companies will use online channels
quality and delayed deliveries can trigger to reach customers, and remotely
Prediction 9 | Building a sustainable compliance breaches at fund level. It is now operated processes will increase
future together necessary to adopt a more streamlined significantly. However, the Real Estate
In today’s corporate world, sustainability and digitalized approach. What are the industry is still in the early stages of
is a key concept. It improves the quality of options? And is there such a thing as a digitalization. What new technologies are
our lives and ensures harmony between “one-stop shop” with automated solutions key for the industry, what does the focus
humans and nature. It is well known for tax reporting? on data mean in terms of investor profile
that the Construction and Real Estate and performance indicators, and what are
industry can play a significant role in the Prediction 12 | Responsible Real Estate the biggest challenges?
development of a more sustainable society. Corporate Social Responsibility (CSR) is
But it is also one of the sectors with a lot the concept that an organization has a
of unreleased potential. The advancement responsibility to the society, environment
of sustainability in Real Estate provides a and economy in which it operates.
solid opportunity to tackle climate change’s Organizations can use Corporate Social
origins and consequences. How can the Responsibility reports, also called CSR
industry reduce its footprint? Reports, to communicate their CSR
strategy. Over the past decade, CSR
3
Gaming the commercial real estate talent conundrum | Real Estate Predictions 2021
Table of contents
Executive Summary 02
Prediction 1 Creating smarter urban environments 05
Prediction 2 Driving into the future of Real Estate 07
Incorporating ESG: Living up to stakeholder expectations
Prediction 3
and business opportunities 11
Prediction 4
How AI can enhance urban planning, asset management
and investments 14
Prediction 5 CSRD: Booster for a sustainable Real Estate industry 18
Prediction 6 The future of the housing business 22
Prediction 7 Mobility hubs, the enabler of healthy urbanization? 26
Prediction 8 The value of green buildings 31
Prediction 9 Building a sustainable future together 34
Prediction 10 The future of smart buildings 37
Prediction 11 The rise of digitalization 41
Prediction 12 Responsible Real Estate 44
Prediction 13 Digital transformation 47
Authors 50
Contacts 52
4
Creating smarter urban environments | Real Estate Predictions 2022
Creating smarter urban environments
How AI-powered Generative Design can enhance urban and
development planning
When considering the design of buildings and land use planning for urban
development, traditional processes result in a number of constraints. First of all, data-
driven design is challenging, since there are so many factors to consider, including
economics, feasibility, social governance, land use and capital investment. Secondly,
the planning output represents a fixed-state based on current problems, while
development might take years. This makes it more vulnerable to shifts in the market
or changes to the environmental and social context. Finally, it takes a lot of effort to
make a plan, inhibiting our ability to quickly generate alternative scenarios or pivot
our approach.
Urban and development planning is A comparison to nature blocks to inform detailed master planning.
currently undergoing a massive upgrade, To explain generative design best, let’s However, it doesn’t stop there. Each
taking a data-centric approach to design have a look at nature. When we consider typology is tested and validated based on
that leverages the power of AI and a flower, for example, we marvel at its simulating various conditions, comparing
analytics. In so doing, it introduces an agile perfection. Every nuance is perfectly one typology against the other to identify
approach to master-planning, creating a calibrated to capture moisture, to survive weaknesses and redundancies. This
centralized digital twin to manage an urban in harsh conditions, and to reproduce in a creates stronger and stronger design
ecosystem in operations. living ecosystem. However, this flower did options the model achieves acceptable
not come to be overnight. It took millions operational performance based on project
Traditional processes for the design
of years of evolution. Millions of design success criteria. In essence, thousands
of buildings and land use planning for
iterations one after the other, trial and of hours of design evolution are being
urban development render a number
error, update after update. This flower condensed into a single afternoon—
of constraints. A data-centric approach
collected information from its existence based on the power of the processor
to design, based on the power of AI and
to change its properties over time until that is running the computations. It
data analytics, could enhance a massive
it reached the peak of performance and would be impossible to achieve the
upgrade of urban and development
efficiency. Generative design emulates this same output through traditional, human-
planning. Here’s why and how.
process of evolution. powered processes.
How does AI play a part? Data-driven design Computational design as an enabler of
The rise of artificial intelligence (AI) and Generative design creates a virtual world to better human design
cloud-based processing has created test versions of a design solution. Various This does not mean that we should
a wealth of opportunities across all data are entered, for example about replace designers. Instead, we should
industries. It offers us the power to building use, building height, construction use computational design to provide
approach complex computing problems area, loss rate, cost of construction, GHG a defensible and quantifiable spatial
with incredible speed and accuracy that emissions targets, number of residents, development framework to guide detailed
exceed our human capacity. What would availability of green space, access to human-led design. Instead of doing
have taken humans weeks to complete can natural light, connectivity, and proximity feasibility analysis and concept design,
now be resolved in hours. This is the basis to transport. A generative design process human designers are able to focus on
for a revolution in the design process which then renders this information into a creative decision-making associated to
can change our approach to planning series (hundreds) of typologies and experience design, while relying on data-
buildings and cities. spatial development options through driven feasibility and project resilience.
computational design: the basic building
5
Creating smarter urban environments | Real Estate Predictions 2022 6
Driving into the future of Real Estate | Real Estate Predictions 2022
Driving into the future of Real Estate
The impact of autonomous vehicles on Real Estate
and infrastructure
The rise of Autonomous Vehicles (AVs) and ridesharing technology is likely to
revolutionize urban transportation. Also, the impact on Real Estate is likely to be
profound and far-reaching. What is going to happen during the coming revolution and
what could be the effects on urban spaces and Real Estate?
The coming urban technology1. However, even though there vehicles towards full self-driving capability.
transportation revolution has been talk of driverless cars for several In fact, the highest levels of progressive
Autonomous vehicles years, the actual implementation to date automation are now being tested in
In addition to electrification, the majority on our roads has been limited. This will locations across the world2.
of large vehicle manufacturers are also likely change in the near future, with
heavily investing in autonomous driving manufacturers rapidly progressing their
Partial automation
Conditional automation
Vehicle has combined automated
Driver is a necessity, but is not
functions, like acceleration and steer-
required to monitor the environ-
ing, but the driver must remain
ment. The driver must be ready
engaged with the driving task and
to take control of the vehicle at all
monitor the environment at all times.
times with notice.
Driver assistance High automation
Vehicle is controlled by the The vehicle is capable of perform-
driver, but some driving assist ing all driving functions under
features may be included in certain conditions. The driver
the vehicle design. may have the option to control
the vehicle.
Full automation
The vehicle is capable of perform-
No automation
ing all driving functions under all
Zero autonomy; the
conditions. The driver may have
driver performs all
the option to control the vehicle.
driving tasks.
When automated vehicle technology is Predictions vary, but autonomous vehicles If full automation is indeed coming
proven, and governments sanction its could account for as much as 40% of in the following decade, obstacles
roll-out, the level of change and impact on personal mileage in Europe alone by 20303. around safety and legislation can be
society will be exponential and profound. successfully navigated4.
1 Some of the largest technology firms based largely in the Silicon Valley are spending heavily on automation and ridesharing with around $23 billion in total funding
in the last 20 years (Goldman Sachs). It is estimated to grow well beyond $96 billion by 2025 and to $290 billion by 2035. This investment would mean that global
market capitalization would total an estimated 17%, and approximately 27% of vehicle miles travelled will be done in AV by 2035 (Cushman & Wakefield).
2 We can already see nations from almost every continent investing in this technology and preparing their roads for the introduction of AV within the next decade
(the Verge 2020).
3 PWC, Five trends transforming the Automotive, 2017.
4 Troy Baltic, A. C., Russell Hensley, And Nathan Pfaff. How sharing the road is likely to transform American mobility, 2019.
7
Driving into the future of Real Estate | Real Estate Predictions 2022
Ridesharing is omnipresent The changes in cost will increase we design parks and green spaces, and
Over the past few years, ridesharing accessibility and convenience, which will manage housing, services, production, and
has become omnipresent across global prove an attractive alternative to public the logistics of a wide combination of our
urban centers. Companies like Uber transport and personal vehicles. To access everyday needs.
and Lyft are now household names, and the service, users will only require a pick-
considered as genuine alternatives to other up/drop-off location before moving on to Consequence of AV on property
forms of transport, including personal collect the next user. With fewer vehicles & land use
vehicle ownership and public transport. on the road, physical resource waste, To understand the impact of AV we
Because of their long-term strategies, including CO2 emissions9, will drop must look at the coming changes in the
they are considered highly valuable by dramatically. As electric vehicles only offer development and redevelopment of
shareholders. These companies are a marginal improvement in the whole buildings and their surrounding spaces. As
continuously collecting and analyzing data life carbon emission over internal the need for parking spaces diminishes,
on how to optimize vehicle usage and combustion engines (ICE), there would what will we choose to do with those
customer service. Ultimately, their goal is to still be concerning levels of emissions spaces? It is estimated that London alone
leverage the full potential of Autonomous and raw material damage from the metal would gain an area equivalent to 5 Hyde
Vehicles (AVs) by eliminating the need for production and energy required to make Parks (approx. 7.1km2) from developing all
their largest overhead—the driver5. and run vehicles for personal use10. its car-parking space, although some of this
space would be needed for pick-up and
More space, lower costs Increased productivity from AV will drop-off points12.
The benefits of full vehicle automation, in likely play a determining factor in the
conjunction with ridesharing, will mark the rapid expansion of driverless vehicles in All this new space as well as the
biggest change in urban transportation major cities. As we begin spending our simplification of roads would allow for new
since the invention of the internal future commute with the aid of AV and developments, expansion of established
combustion engine. Some of these changes ridesharing, we could be significantly more buildings, and the creation of more green
will include the elimination of congestion of productive and have more time to focus on and public-use spaces. Lastly, this shift to
our roads when substantial automation is other tasks. Across an entire population, AV would enable governments to provide
achieved. Vehicle size and required driving this will have a direct effect on a country’s more affordable homes, drive down the
space will reduce as they will be able to economy. For example, in the US, with inequalities between owners and renters,
”communicate” and therefore travel at an average yearly time spent commuting and provide solutions to issues like the
closer distances. This will reduce road sizes estimated at a total of 9 days, leading to a current housing crisis in many countries13.
in urban areas, providing new space that is vast waste of time across an entire
no longer required for vehicles6.7 working population11. Real Estate future value
In other words, the introduction of AV
The shift to full automation will probably Implications for Real Estate will impact the value of property and the
almost immediately impact consumer The desire to live in central locations could importance of where individuals choose
costs for AV travel. This in turn will increase decrease as commuting times drop and to live. As the connection time to key
AV utilization, and decrease the usage of proximity loses value. As the urban sprawl amenities and the workplace drops, being
public and private transport services8. A continues, the opportunity to change the close to central locations loses significance.
continued knock-on effect would take place excess land—available because of AV—will Properties located within proximity to
within other service industries such as become increasingly important. We will public transport will inevitably lose their
delivery, logistics and distribution sectors. need to make decisions on how competitive advantage and market value.
5 Uber’s self-driving cars are a key to its path to profitability, 2020
6 Shetty, S, The new economy, Cars take up way too much space in cities, 2021.
7 Stokes, N. Can today’s car parks become tomorrow’s housing developments?, 2017
8 Transport & Environment, Does sharing cars really reduce car use?, 2017
9 Privately owned cars are not in use for 95% of their life cycle (World Economic Forum) highlighting a profound inefficiency in the way cars are used and
interacted with.
10 Transport & Environment, Batteries, 2021.
11 The Washington Post, Average commute time reached a new record last year, 2019.
12 Sidders and Shankleman, A Driverless Future Threatens the Laws of Real Estate, 2018.
13 Breach, Planning for the future: How flexible zoning will end the housing crisis. Centre for Cities, 2020.
8
Driving into the future of Real Estate | Real Estate Predictions 2022 It is predicted that this will encourage urban areas to take use of new unused parking spaces. This will transform residential areas, increase the ability to create greener spaces, expand current and new properties and drive commercial development14. As AV evolves and becomes fully operational, property values will naturally fluctuate again—unused spaces will become more attractive to investors and re-development will take place. Central locations will again have a new lease of life as they become a hub for new opportunities, and the demand for property and services will increase. Requirements for successful change All these developments will need careful planning and management, with sufficient consideration for socio-economic needs. Governments must play a role to prevent vast privatization of new available land, as well as consider the infrastructure required to manage this change. If the correct measures are put in place, we will likely be able to manage employment, and improve our general well-being and our surrounding environment. 14 Planners Press, Chicago, Shoup, ‘The high cost of free parking’, 2005. 9
Driving into the future of Real Estate | Real Estate Predictions 2022 10
Incorporating ESG: Living Up to Stakeholder Expectations and Business Opportunities | Real Estate Predictions 2022
Incorporating ESG: Living Up to
Stakeholder Expectations and
Business Opportunities
Five Steps to Make a Tangible Impact
Environmental, Social, and Governance (ESG) issues have emerged as a top focus,
and companies need to respond to meet growing investor, tenant, and employee
expectations. According to 60% of Real Estate respondents of the 2022 Deloitte
Center for Financial Services Outlook Survey, ESG initiatives are driving new
business opportunities for their organization, and half of them think that these
initiatives are giving them a competitive edge. What can you do to prepare for the new
market realities?
Be an Industry Leader at the Frontline leases command premium rents, and 30% Discover Financial Services. This provides
on Addressing Climate Risk? state that brown buildings (those without employment opportunities for
The CRE sector has a huge role to play in sustainability features) offer reduced rents local workers.
helping combat climate change. According to compensate tenants.
to Architecture 20301,3a non-profit Prepare for More Stringent
environmental advocacy group, buildings Align Social Initiatives with Regulatory Requirements
are responsible for nearly 40% of annual Business Opportunities As regulators step up ESG reporting
global carbon dioxide emissions. Of these, In our 2022 Deloitte Center for Financial demands, firms will soon have to prioritize
28% are caused by building operations, and Services Outlook Survey, ESG is a key these efforts. In September, the US
the remaining 11% by building materials topic. Turning to the “S” in ESG, only 50% Securities and Exchange Commission
and construction (embodied carbon). As of respondents believe their organization released a sample letter that requests
the world transitions into a lower-carbon is making strategic investments to additional information from companies
economy, Real Estate leaders can make an improve affordability and quality-of- concerning their efforts to address climate
impact: first by collecting and assessing life issues in communities in which change. Recent disclosure rules in the
data on the environmental impacts of they operate. Less than half of them European Union’s Corporate Sustainability
building operations, then by investigating say their institution is taking steps to Reporting Directive and the China
and implementing resource efficiencies, increase diversity in the tenant-mix Securities Regulatory Commission will also
and finally by partnering with to reflect community demographics. require companies to identify, track, and
developers who use sustainable Industry leaders should recognize report on key performance indicators, such
practices and materials. that stakeholders increasingly expect as carbon emissions and human
improvements in these areas. Developer capital metrics.
Green Leasing Offers Upside DL3 Realty is now on a mission to revive
By ”green leasing” we mean that tenants communities by redeveloping properties Our survey showed that for smaller firms,
either commit to or benefit from embracing in disadvantaged neighborhoods. They quantifying climate risks in their business
sustainable practices, such as waste have converted a vacated Target store into and portfolio, as well as quantifying DE&I
reduction. More and more organizations a Blue Cross Blue Shield customer care initiatives and social equity across different
are focusing on green leasing. Half center, creating access to health care for geographies, was particularly challenging.
of respondents of the 2021 RICS neighborhood residents. Another property
Sustainability report claimed that green was repurposed into a call center for
1 Architecture 2030, “Why the building sector?,” accessed October 8, 2021, https://architecture2030.org/why-the-building-sector/
11Incorporating ESG: Living Up to Stakeholder Expectations and Business Opportunities | Real Estate Predictions 2022
Five Action Steps: construction. This involves everything are driving new business opportunities, it
For CRE firms who are aiming to improve from raw materials to the use of data is time to act. Firms that take a proactive
ESG governance and impact, we analytics to help existing tenants reduce role in the field of ESG and value planet and
recommend the following actions: their carbon footprint. people as much as profits, will definitely
create a competitive edge. We hope our
• Design and implement processes to • Communicate the firm’s ESG vision and survey and five action steps will help you
record progress and hold leaders plans to investors and employees alike. embrace the new market realities.
accountable for achieving target Sustainable investing is a growing area
metrics. This would improve of capital formation. CRE companies
reporting as regulators increase can take advantage of this new wave if
disclosure expectations. they are transparent about how they
incorporate ESG into the mission of
• Create a road map that establishes and their company.
documents ESG strategy as part of the
broader business strategy. Effective • Conduct a robust climate risk
governance and long-term value creation assessment to mitigate overall risk
requires a strong focus on priorities and and inform strategies.
clear, actionable, and measurable goals.
Share this road map with stakeholders In the 2022 Deloitte Center for Financial
and key decision-makers to help assess Services Outlook Survey, the responses
risk and move initiatives forward. of more than 400 global Real Estate firms
are discussed in detail. As Environmental,
• Intentionally incorporate ESG into the Social, and Governance (ESG) have become
business from the start of a project a key factor to meet growing investor,
to how it is managed daily, post- tenant, and employee expectations, and
12Incorporating ESG: Living Up to Stakeholder Expectations and Business Opportunities | Real Estate Predictions 2022 13
How AI can enhance urban planning, asset management and investments | Real Estate Predictions 2022
How AI can enhance urban planning,
asset management and investments
Advanced analytics for the cities of the future
Customized AI tools can support a review of large files for Real Estate research, quality
checking data and providing insights into the driving factors behind trends. Scenario
simulation and an evaluation of their impact can be used to enhance key decisions
on investing, budgeting and planning. In this article, which includes a case study,
we discuss how to harness the exponential power of AI for urban planning, asset
management and investment decision-making for the cities of the future.
Understanding current and future complicates the study of their true impact This analysis can be augmented by linking,
supply-demand dynamics on Real Estate demand. where possible, future Building Information
Urban planning, asset management and Modelling (BIM) and smart city data.
investment decision-making are key factors This is where machine learning and AI Ultimately this will enable asset managers
for the cities of the future. They require tools come in. Existing historical data can to interact with these customized and
a clear understanding of the current and readily be incorporated into such a tool or highly interactive analytics, made
future supply-demand dynamics and algorithm in a structured and standardized available in easily digested formats.
underlying macro-economic factors. way. Next, relevant information can be Wherever and whenever. The solution
Currently, this is a challenge. The Real reproduced by means of a consistent can assist property owners and asset
Estate market data that is required for standard Extract, Transform and Load management companies, in addition to
city and master plans, including supply, (ETL) Process. providing planning departments and
transactions, price and rent information, developers with the information needed to
typically comes in disparate source Scenario analysis based on enriched support demand-driven decision-making.
formats. Also, the correlation of economic data sets is helpful as well, as it can show
metrics, such as Gross Domestic Product the impact of future trends. These data
(GDP), oil price, and construction financing, sets incorporate asset-level information,
is often not clearly articulated. This macro-economic data and public opinion.
Figure 1: Real Estate data framework
Sample datasets
Population
Household income Foreign Direct Investment
Scenario analysis Geo spatial Decision drivers
Local and Global GDP
Domestic consumer spend
Test hypotheses Understand trends Understand key trends
Employment by sector Oil price at a district/ and seasonality
geo spatial level inherent in your data
Analyse what-if-scenari- Overlay economic Understand the key
Commercial licenses os by adjusting data to generate a driving factors
economic levers holistic view of real influencing the real
estate demand estate demand
Tourist arrivals
Leverage scenario Identify population Overlay and
insights to better density changes compare key
inform real estate milestones against
Tourist spend planning decisions macro-economic trends
Real Estate demand
14How AI can enhance urban planning, asset management and investments | Real Estate Predictions 2022
Defining the data framework • Offices: Information on employment by final solution also enabled a sophisticated
The starting point for building a customized sector and the GDP growth forecasts to scenario modeling component where the
forecasting tool is the review of a range estimate demand for offices, i.e. GLA. users can plan for certain cases, identify
of variables and interlinkages driving Real potential key drivers and ultimately ensure
Estate demand. In order to define the • Industrial: Assessment of industrial that better planning takes place for large or
framework for the forecasting analysis, sector employment, trade and small scale events in the future.
historic data can be assessed to find a e-commerce activity.
potential correlation of factors. A fully customizable consumption layer was
Customized tools can support a review of
built as a web-based and mobile-friendly
large files for Real Estate research, quality
The above framework can be delineated interface for key stakeholders in the Real
checking data and providing insights into
further into sector level demand Estate development lifecycle to access
the driving factors behind trends. Scenario
drivers, including: the outputs and forecasts. This included
simulation and an evaluation of their
macro-economic and sector-specific
impact will then enhance key decisions on
• Residential: Scenarios forecasts, the ability to run scenarios for
investing, budgeting and planning.
changes in low, medium and high impact
– Net additional demand for residential drivers, and to use the tool to gain a full
units can be overlaid with information Case study: The use of Deloitte’s
view of the Real Estate landscape. The
on household income, pricing/rents Intuition accelerator to build a
solution also enables key stakeholders
and occupancy by district. forecasting tool for a city planning
to interact with the tool in different ways
department in the GCC
through an easy-to-use interface, further
– Transaction data for residential units, Deloitte has developed an integrated
driving adoption in the business.
which reflects investor and occupier decision-making framework for a
demand, can be factored into the city planning department in the Gulf
Forecasting is split into two different
analysis to derive a demand-supply gap Cooperation Council (GCC). The tool was
stages. The training step facilitates the
analysis for the sector. created to study the historic trends within
creation of the models while the second
the residential, retail, office, hospitality
• Retail: An assessment of consumer step is the deployment of the models into
and industrial sectors, along with relevant
spend, retail asset transactions, the solution.
macro-economic indicators to provide
occupancy by district and Gross Leasable forecasting for key metrics using Deloitte’s
Area (GLA) per capita to review supply time series accelerator, Intuition.
gap, if any.
Intuition is a bespoke forecasting engine
• Hospitality: Tourism indicators and
that automates the process of identifying
information on multiple occupancy
unique and complex trends within a data
factors and the average length of stay to
set by passing the data through different
estimate the total demand in the number
algorithms, to pair the most predictive
of room nights.
algorithm with the provided data. The
Figure 2: Forecasting overview
Model Training Model Deployment
• Uses past data to create • Uses current data to predict
the models variables into the future
• Validates the models based • Integrates with the solutions to
on historic data provide scenario analysis views
15How AI can enhance urban planning, asset management and investments | Real Estate Predictions 2022
The training step takes the raw data and Models deployed within the solution run Once the data is uploaded, it is
transforms it into training data for the quarterly, using data from the uploaded transformed for ingestion into the model,
machine learning model. These models data template. The data template is the checked for stability and baseline forecasts
are validated for accuracy and are then fully categorized information for each are produced and stored. The baseline
incorporated into the solution to Real Estate sector that supplies both the forecasts are validated and, along with the
make forecasts. forecasting model and the performance model, used for the scenario analysis.
indicators dashboard.
Figure 3: Scenario analysis extract
Residential Sector Scenario Impact Comparison
A comparison of scenarios in the residential sector indicating whether the demand
has been met or if there is an undersupply or oversupply of units
70000 -
60000 -
Demand (Units)
50000 -
40000 -
30000 -
20000 -
10000 -
0
10000 20000 30000 40000 50000 60000 70000
Supply (Units)
Source: Deloitte
Harnessing the power of AI
As the above case study demonstrates, to
thrive in a disruptive economy, key decision
makers can harness the exponential power
of AI to drive real, tangible outcomes. This
will help them to greatly improve the urban
planning, asset management and investment
decision-making that is needed for the cities
of the future.
16How AI can enhance urban planning, asset management and investments | Real Estate Predictions 2022 17
CSRD: Booster for a sustainable Real Estate industry | Real Estate Predictions 2022
CSRD: Booster for a sustainable
Real Estate industry
The EU’s new sustainability directive as a game changer for
Real Estate
The Corporate Sustainability Reporting Directive (CSRD) will radically improve the
scope and existing reporting requirements of the EU’s Non-Financial Reporting
Directive (NFRD). This ambitious package will make it mandatory for many Real Estate
organizations to report on all relevant inward and outward Environmental, Social and
Governance (ESG) issues and will have a significant impact in the short term. The
proposed regulations will be in effect from 2023, and therefore, it is essential to be
prepared. To comply with the requirements of the CSRD, it is crucial to do a materiality
analysis and baseline assessment, set your ESG goals within a long-term ESG strategy
and prepare your management systems and internal controls. The time to start
is now.
Purpose and background aims to radically improve the existing commitment and ambition aren’t enough
The EU Green Deal aims to turn an urgent NFRD reporting requirements to increase for Real Estate organizations to achieve
challenge into a unique opportunity by transparency of corporate progress their sustainability objectives.
cutting 55% of CO2 emissions by 2030 and in terms of sustainability, and to align
achieving climate neutrality in 2050. As part sustainability reporting with financial The CSRD extends the EU’s sustainability
of this effort, the EU introduced an action reporting. Companies will have to report on reporting requirements. Also, it applies to
plan to finance the transition to carbon how ESG issues affect their business as well all listed companies and large companies
neutrality. Also, it introduced several as on the impact of their activities on the on EU-regulated markets that meet any
regulations to support the achievement environment and on society. two of the following three criteria:
of this goal, including the Sustainable
Financial Disclosure Regulation (SFDR), the Why is the CSRD affecting the Real • ≥ 250 employees
EU Taxonomy, and the proposed Corporate Estate industry?
Sustainability Reporting Directive (CSRD) The Real Estate industry is responsible • ≥ €20mln of assets on balance sheet
as the success of the EU’s Non-Financial for approximately 40% of CO2 emissions
• ≥ €40mln of net revenue.
Reporting Directive (NFRD). and greatly impacts our daily lives. To
meet the EU’s climate and energy targets The widening of the scope is expected to
The purpose of the CSRD is to strengthen for 2030 and reach the objectives of the come into effect as of 2023. It will have a
the foundations of sustainable investments European Green Deal, more and more Real significant impact on more than 50,000
in the EU’s transition to a fully sustainable Estate organizations commit themselves companies in the EU and over 1,700 within
and inclusive economic and financial to sustainable climate targets such as zero the Netherlands, many of which are Real
system, in accordance with the European emissions, and keeping global warming Estate organizations. This is due to the
Green Deal and the UN Sustainable below 1.5 celsius. However, with the new nature of the sector with its fairly high net
Development Goals. The proposed CSRD CSRD reporting requirements, merely revenues and balance sheet totals.
18CSRD: Booster for a sustainable Real Estate industry | Real Estate Predictions 2022
Figure 1: Relevance of the CSRD
CSRD
EU Taxonomy SFRD
(Sustainable Financial
Disclosure Regulation)
CSRD reporting will become applicable for Real Estate
organizations meeting at least two of three requirements:
>250 employees >€40m of revenue >€20m of assets
What is going to change for the Real in order to comply with the CSRD, Real • Perform a double materiality assessment
Estate industry? Estate organizations must have a long- to determine which ESG issues are
Because of the CSRD, Real Estate term sustainability strategy and extend material for your organization from both
organizations can no longer report on sustainability management to include both an inward and outward perspective.
their financial status without mentioning inward and outward sustainability risks
their environmental and social impact. In and opportunities. Because the Real Estate • Perform an ESG baseline assessment for
order to do so, it is essential to follow the market is stimulated by financing and your material ESG issues to determine
materiality concept when determining investments from a wide range of investors, your starting point.
which ESG topics you should report. understanding sustainability performance,
• Set measurable ESG goals in line with
Materiality is the concept that defines why strategy and sustainability risks and
the EU Green Deal and UN Sustainable
and how specific issues are significant for opportunities will become increasingly
Development Goals.
a company. By introducing the concept of important for attracting capital, gaining a
”double materiality”, organizations need to competitive advantage and achieving your • Develop a future-proof ESG strategy
consider both the impact of climate-related sustainability goals. that includes, among other things, your
risk and opportunities on the company’s purpose, vision, objectives, performance
value (”financial materiality” or ”inward What can you do now? indicators, a strategic roadmap and
impact”), and the external impacts of the The CSRD will be a major game changer in policies required to comply with EU
company’s activities on the environment corporate ESG reporting with far-reaching legislation and mandatory third party
(”environmental and social materiality” or implications for the Real Estate industry. limited assurance as of 2023.
”outward impact”). Real Estate organizations, investors,
regulators, auditors and other stakeholders • Set up reporting and monitoring
In addition to mandatory requirements, will all need to devote significant time and procedures in order to keep track of
we do believe that the CSRD will be a resources to prepare for the implications your ESG goals over time and reassess
major game changer for the industry in of the CSRD. Given the significance of the material ESG issues.
terms of transparency and insight into CSRD and the time required to be prepared
sustainability risks and opportunities. Also, in 2023, these are the key topics you should
it will help Real Estate organizations with start considering now:
a strong ESG performance attract capital.
19CSRD: Booster for a sustainable Real Estate industry | Real Estate Predictions 2022
Figure 2: The double materiality perspective in the context of reporting climate-related information
Financial Environmental & Social
Materiality Materiality
To the extent necessary for an ...and impact of its activities
understanding of the company’s
development, performance
and position...
Company impact on
climate can be
financial materials
Climate change Company impact
impact on company on climate
Company Climate Company Climate
Primary audience: Primary audience:
investors consumers, civil society,
employees, and investors
Recommendations of the TCFD (Task Force on
Climate-Related Financial Disclosures)
Non-financial reporting directive
20CSRD: Booster for a sustainable Real Estate industry | Real Estate Predictions 2022 21
The future of the housing business | Real Estate Predictions 2022
The future of the housing business
Future requirements for the property management of
multi-dwelling units
Inadequate management of ageing multi-dwelling units has become a
social issue. Digital transformation can help property management companies to
address concerns in this field, so they can benefit from the opportunities of an
increasing demand.
The challenges of existing so they can benefit from the opportunities Second, by improving the existing
housing stock of an increasing demand. This requires inefficient workflow. Examples are online
For a long period after World War II, four measures: (1) digitalization of distribution and storage of general and
Japanese governments aspired to increase property management, (2) division of board meeting materials, conducting
the housing supply and raise its quality. property management specifications into resident surveys online, digitalizing
This changed when the population started standard and optional, (3) support for self- inspection and maintenance records,
declining in the 2000s. Policy switched management of multi-dwelling units, and and introducing an accounting system. In
towards using existing housing stock. (4) collaboration between players in particular, the distribution and collection of
However, one of the problems in utilizing the industry. paper materials is inefficient and expensive
stock is the inadequate management of in terms in terms of labour as well as
ageing multi-dwelling units. The owners, Digitalization of property management distribution costs (postal, transportation,
or those who inherit a used property Property management services today and storage costs). Additionally, switching
in a multi-dwelling unit, often do not include participation in and running of to online exchanges between the head
understand the value of such a property general and board meetings and other office and managed properties will reduce
that has been left vacant. They fail to sell face-to-face duties, and duties that require the number of site visits by head office
or lease it to others, or do not participate human labour such as cleaning, inspection, staff, freeing up time for them to make
in the consensus-forming for repair or and patrols. Because of the personal door-to-door on-site visits.
rebuilding the property. nature of the services, digitalization has
not progressed in the industry as a whole. Lastly, the data accumulated in these
This problem is not limited to Japan - it is a As the problem of labour shortages digital operations can be used to improve
social issue shared by countries all over the becomes increasingly severe, property the quality of services - and resident
world. Management systems for multiple- management firms seeking to shore up satisfaction. By introducing IoT equipment,
dwelling complexes in major countries in their top-line revenues will need to improve for example, the air conditioning and
Europe and the US are similar to those in efficiency in order to increase the number lighting environment in common areas can
Japan. The framework details differ, but the of condominium units handled and be optimized, and upkeep and predictive
complexes in these countries also have managed per employee. The digitalization maintenance can be performed based on
management associations composed of of property management will improve the state of wear and tear of equipment
all unit owners, with decisions made at a efficiency in three specific ways. and devices in order to fulfil
general meeting. Sometimes, management residents’ needs.
is outsourced to a management company. First, simply as a replacement of labour,
In Japan, for example, the tasks outsourced by means of e.g. cleaning robots, IoT It is likely that new digitalized services
to management companies include support technology for inspections and patrols, will continue to be introduced for various
for general meetings and association and chatbots for handling complaints. All aspects of property management. But even
management, accounting, caretaker duties, of these will help keep down personnel before that, the introduction of a number
cleaning, and maintenance and inspection costs. Human employees can then focus on of services that already exist is expected
of buildings and facilities. added value areas where the human touch to proceed. Whether or not property
is preferable. Moreover, the personnel management is digitalized is a key factor
Digital transformation can help property freed up by these measures can be used to for competitiveness.
management companies to address increase the managed unit capacity.
concerns about inadequate management,
22The future of the housing business | Real Estate Predictions 2022
Division of property management In the case of a high-grade multiple- Depending on the kinds of services
specifications into standard dwelling complex, the emphasis will be demanded by the management association
and optional on face-to-face communication, with a and the upper limit on management and
The second measure is to classify property building superintendent on permanent outsourcing costs, it might be interesting
management specifications as standard duty as in the past. Some of the to consider the possibility of switching to
and optional: defining the provided digitalization initiatives introduced in (1) self-management.
property management services based may be incorporated. Optional services
on factors such as the multi-dwelling can be added relating to the frequency Looking at the future of property
unit grade, resident demands, and of inspections and patrols, the extent of management, the services provided by
management and outsourcing costs (see assistance with running management the management company will likely
Figure. 1 below). Currently, the quality of association general and board meetings, match the services expected by residents.
property management, and especially and the promptness of response to Communication with residents will be
resident satisfaction, greatly depends on emergencies such as loss of keys or water key to determine the level of property
the quality of the representatives and leaks. Other possibilities are the provision management needed and how much
management staff. This means that even or introduction of services such as residents are willing to pay for this.
if the property management agreement housework and house cleaning.
itself does not change, and there is no
difference in the provided services, the In the case of a middle-grade multiple-
skill in handling the duties by staff will likely dwelling complex, digitalization could take
impact resident satisfaction. By clearly the place of face-to-face communication.
articulating in writing the kinds of services This will reduce management costs.
to be received, it is easier to meet the For instance, by introducing robots
expectations of residents. and sensors, online notifications and
announcements to residents.
Figure 1: Example of standard and optional multi-dwelling unit management services
Service level
Management Services Optional Services
High
In-person Superintendent Handle Full-scale trouble Provision or
support for onsite and accounting response service referral of
holding general monitoring by services shopping,
and board patrols child care, and
meetings other life services
Application-based Remote Introduce Self-handling of
support for holding surveillance by accounting trouble response
general and board security services, and have
meetings cameras a management
association handle
Ordinary
23The future of the housing business | Real Estate Predictions 2022
Support for self-management of Even in highly specialized areas such services on a BPO basis for the managed
multi-dwelling units as drawing up long-term or large-scale properties of other firms, in service areas
The trend of rising multi-dwelling unit repair plans, there are expectations for or locations where it has an advantage.
management fees may well lead more advice and consulting from third-party By focusing its own resources on its
management associations to look closely standpoints. By leaving basic property strengths, it will be able to manage
at the third option: self-management. management up to the management operations efficiently.
Rather than distancing from those association and providing only highly
associations that choose this option, we specialized services as options, it should be Such collaborative relations are also
can expect demands for providing support possible to provide high added value and possible from the viewpoint of digitalization
for self-management, making use of the high unit price support. of property management discussed in
digitalization of property management (2). Companies that develop digitalization
introduced in (1) and of the division of Although self-management support itself tools, could introduce their own tools to
management specifications into standard may not lead directly to big profits, actively other companies, obtaining rental or usage
and optional as discussed in (2). engaging in such support is important fees, and reducing their maintenance costs
for maintaining good relations with through scale. The tool users, meanwhile,
Possible ways of supporting self- management associations performing can keep down system development costs
management include provision of support self-management. Group companies and reduce their management costs.
applications and other software. Even will reap profits when future large-scale
if the management association lacks refurbishments or rebuildings are being There are limits to what a company can
specialized knowledge and experience carried out. do on its own in the face of the severe
in property management, the costs and problems of labour shortages and rising
trouble of management can be reduced Collaboration between players in personnel costs. By actively pursuing
if the association can provide one-stop the industry collaboration with ”the competition” while
assistance for tasks such as keeping Another important measure is to making the most of a company’s own
track of contracts with service providers strengthen collaboration between areas of specialty, the multi-dwelling units
and of orders, organizing occupant and “competitors”. Companies that insist management industry as a whole benefits
owner information, and managing repair on providing services on their own may and develops.
reserve fund income and outgo. Leading increasingly find themselves coming up
management firms have released self- short on resources and costs. They could
management support applications in outsource them to other companies
recent years. Also, companies offering in the industry by classifying property
similar services have appeared among management services into standard and
Real Estate tech companies, so it is likely optional, and carving out a portion of these
that competition will heat up for self- services. At the same time, a company
management support applications. might take on certain management
This paper is an excerpt from the report “The Future of the Housing Business―Prescriptions for real estate companies during the
housing transformation era” presented in June, 2021.
https://www2.deloitte.com/jp/en/pages/real-estate/articles/re/future-of-housing.html
24The future of the housing business | Real Estate Predictions 2022 25
Mobility hubs, the enabler of healthy urbanization? | Real Estate Predictions 2022
Mobility hubs, the enabler of
healthy urbanization?
Transitioning towards transport modes with a smaller
physical footprint
A major challenge in many cities across Europe is the (growing) housing shortage.
To solve this, new residential developments are needed. Most municipalities plan
these within the city borders to keep the surrounding areas green. Additionally, many
municipalities aim to free up the scarce city space that is currently used by (parked)
cars. This will make the inner city greener, healthier and more livable. However, it also
raises a challenge: how can cities accommodate a growing number of citizens within
their borders when they are reducing the amount of space that these citizens can use
to travel from A to B? Mobility hubs are coined as the key solution for the transition to
a more space-efficient transport system. Yet, only a few of them have been realized.
So what can be expected of this trend?
The challenge: conflicting claims for mode of transport. Yet, from a collective the solution to the ”space challenge”. A
scarce city space point of view, we want safe, livable, and transition from car-dominated travel to less
Individually, we want our trip from A to B to sustainable cities with a high quality of space-intensive modalities such as public
be fast, cheap, and comfortable. Therefore, public space. Comparing the ”footprint” transport or bicycles is necessary to free
for many citizens, the car is their preferred of different transport modes reveals up space.
1 4 0 m2
7 m2
5 m2
2 m2
ped estrian (walking)
b ik e (15 km/h)
T ram (50 occupants)
C ar (driving at 50 km/h —1 passenger)
26You can also read
