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Leveraging Data Analytics for Smarter CRE Decisions
If you’re slowly treading in the world of real estate investments, there can be a thin line between swimming in profits, and sinking in losses. Especially talking about commercial real estate, when the market is growing faster than ever:
Leveraging data and real estate analytics in your real estate investment strategy can make all the difference to making profitable CRE investments.
Why Investors Should Use Data Analytics for Smarter CRE Decisions
For a long time, investors and investment managers have based their real estate investment strategy around two things: intuition, and location.
While location is still the No. 1 factor in a profitable CRE venture, instinct based decisions can only get you so far.
The state of the market economy, the demographics of an area, the location’s main industry, whether there are any government or institutional plans for investment, all these factors can change the course and value of a commercial property from an investment POV.
Why Are Data Analytics Important for CRE?
Before we dive into how modern real time data collection platforms are changing commercial real estate investment, it’s important to understand how data & analytics is used in making commercial real estate investments.
Commercial real estate consists of commercial properties such as office buildings, huge shopping malls, hotels and resorts, shared office spaces, and retail outlets. CRE provides a myriad of opportunities for investors to dip their toes into.
With the right data & insight on hand, investors can turn these investment opportunities into profitable real estate investments.
How To Use Data Analytic Techniques in CRE
Data analytics in the commercial real estate industry allow investment managers to make key informed decisions about a commercial property. These mainly work in 3 important ways:
Evaluating A Commercial Property’s Value
Pricing, both in terms of current value and potential value of the property is a key factor in investing in commercial real estate. By using data analytics, and machine learning built in platforms, investors can get access to real time changing data about:
- The Age of the Commercial Asset
- Condition and Current Value
- Appraisal for Evaluation
- Projected Future Price
This data can allow you to make well informed investment decisions without having to rely on hearsay and instinct.
Improving Consumer’s Investment Process
Apart from helping investors determine the value of the commercial investment, analytics and artificial intelligence are also very useful for one thing: identifying suitable buyers and filtering out any essential requirements or deal breakers.
These might include:
- Investment cap
- Geographical Location
- Property’s Past Transactions
- Management Teams
- Builders
This information is helpful for investors to narrow down commercial properties that best meet their criteria, so they can devote time to properties that fit their agenda instead of wasting it.
Keeping A Closer Eye on Market Fluctuations
Just like how the weather can affect your mood, there are innumerable factors that can affect the worth of your property, and its tenancy. To maintain a profitable CRE investment, it is absolutely essential to monitor economic and business trends and see how they affect real estate.
Here are a number of things that can affect the value of commercial properties in an area:
- Accessibility Through Public Transport
- Demographic Trends
- Connectivity to Shopping Complexes
- Cultural and Political Significance of the Location
Analysing and keeping an eye on these market trends can help you best interpret the trajectory of your commercial real estate investment.
This is where modern data analytic tools that facilitate commercial real estate investing come in.
Some Data Analysis Tools Used in Commercial Real Estate Investing
| Data & Analytical Tools | Description |
| Market Research Reports | Reports analysing market trends, demographics, and competition to identify profitable CRE opportunities. |
| Demographic Analysis | Study of population data to understand demand for CRE in specific areas. |
| Geographic Information Systems (GIS) | Integration of geographical data to analyse spatial patterns for optimal investment locations. |
| Financial Modelling | Mathematical models to forecast financial performance and assess ROI, NPV, and IRR of CRE investments. |
| Lease Analysis | Examination of lease agreements to evaluate income potential and stability of CRE properties. |
| Comparable Sales Analysis | Comparison of recent property sales to determine valuations and pricing trends. |
| Cap Rate Calculation | Calculation of Cap Rate to assess potential ROI and profitability of CRE properties. |
| Risk Assessment Tools | Tools like simulations and sensitivity analysis to identify and mitigate risks associated with CRE investments. |
| Market Forecasting Models | Statistical models to predict future market trends, including rental rates and property values. |
| Environmental Due Diligence | Assessment of environmental risks and compliance with regulations for CRE properties. |
How Data Analytics Are Shaping the Indian CRE Sector
As per a report from Mordor Intelligence, the commercial real estate market in India is expected grow at a Compound Annual Growth Rate of 21.1% over the next 5 years. This will allow it to reach an unprecedented value of U$D 87 billion by 2028. And by 2029, the market will reach U$D 106.05 billion.
There are a number of factors for this significant growth. Housing units in urban and suburban areas have increased, there is growing demand for shared office workspaces, and the rise of fractional ownership investment in commercial real estate.
Cities like Bengaluru, Mumbai, Chennai & Delhi NCR have emerged as hotspots for commercial real estate investments. Now is the best time to leverage data and analytics for smarter investment decisions.
Assetmonk specialises in fractional ownership of commercial real estate, enabling investors to pool their resources and invest in high-value properties. With a minimum entry ticket of only 25 Rs lakh, fractional ownership provides investors with unprecedented access to lucrative real estate assets.
Bottom Line
Talking about commercial real estate, JLL India Real Estate Market report for Q3 forecasted significant office space absorption of approximately 45 million square feet in 2024, easily exceeding the benchmark set in 2023.
Looking forward, India’s commercial real estate sector paints a picture of potential and opportunity. With its fractional ownership model, Assetmonk invites investors to become active participants in this story rather than passive observers.
Assetmonk is leading the line in providing fractional ownership models for commercial properties; ushering in a new era in the dynamic real estate sector in India. This deliberate choice ensures that both seasoned and growing investors can partake in the benefits of commercial real estate ownership.
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