Big Data in Real Estate
Role of Big Data in Real Estate
Big Data is changing traditional ways of working in real estate. New technologies help to collect large amounts of information, and do it more efficiently. Data is becoming easier and cheaper to store, organize and analyze. All this allows investors and tenants who are looking for premises to more fully assess the risks or determine investment strategies.
In real estate, data has always played an important role in decision-making, but only not long ago we have begun to collect it digitally. With the help of mathematical models and algorithms used in the analysis of big data, today you can get information in such volumes that previously would not even be possible. The process of forecasting the future has become much easier due to the relevance and accuracy of this data.
Data Collection and Processing
Data processing is the key to success. However, data collection is only the beginning. There is more and more data creating each year. In fact, 90% of the total global volume of big data was created in the last two years.
Mobile communications and other technologies have opened up a new reality for business: we generate more information than we can process, or we process the wrong data. The quality of the information collected is important as well.
Real estate market leaders regularly update their sites, providing up-to-date information on prices, trends in the sale and purchase of real estate, as well as such characteristics as the transport situation and the demographic composition of certain regions.
How is Big Data Used in Real Estate?
Currently, commercial real estate uses more detailed information processing algorithms than several years ago; they often take into account factors such as air quality in a particular area and popular routes, as well as more traditional data, such as the asking price of a building and the amount of the transaction.
For example, retailers are interested in knowing where their competitors are physically located, what is the economic and social portrait of people visiting these locations, and how traffic relates to purchases.
Modern models provide higher accuracy and the ability to adapt to a wide range of requirements. We can understand what happened at a particular facility for 10 years, even if we have never been there, and make decisions based on high-precision data. A few years ago, consultants had to inspect all objects in person.
In Profits Group one of the ways we use Big Data is in Property Management of vacation rentals. For example, we analyze vacancy rates, prices of all other rentals, day of the week, holidays and man other parameters in order to calculate price for the specific night and therefore increase revenue.
In order to draw the right conclusions, you need special skills. That is why there is currently such a high demand for Big Data specialists, not only in the real estate sector, but also in any other business. Big Data experts are the most sought after professionals, and such vacancies account for 10% of the labor market demand. In 2017, IBM published a forecast according to which the number of vacancies in data science and data processing in the United States will increase by 364 thousand, and the total number will reach 2.7 million by 2020.
Big Data and Ethics
More and more advanced and affordable technologies are entering the market, so the demand for Big Data analysis is only increasing. Moreover, the difficulties associated with the storage and analysis of huge amounts of data coming from billions sources is only one look at the challenges.
There are also serious social and ethical challenges. For example, of protecting personal data are becoming increasingly relevant. European Union introduced GDPR (General Data Protection Regulation) acting as of 2018 to regulate data collected and processed by the companies. Unfortunately, digital world evolves faster than new regulations within governments. That is why analysts are required to more responsibly and ethically approach the use of information, which is at the same time one of the key competitive advantages in the field of commercial real estate.
The competency of processing Big Data is becoming the same norm for companies as the availability of IT or administrative departments. Those companies that cannot adapt will simply cease to exist in a couple of economic cycles, as they will lose the ability to change their positioning in the market and monetize the data obtained due to both improving the services provided and selling this information.
