Real estate investing is reaching an inflection point, powered by data, says Manulife Investment Management in its most recent note to investors, entitled Data-driven real estate investing is an industry game changer.
“With increased access to different types of data, faster than ever before, there’s a real onus on real estate investors to evolve beyond traditional investment analysis,” the firm writes. They add that new data will be needed to capture a competitive edge in forecasting, market selection and investment decision making processes.
They say combining traditional and non-traditional data will uncover opportunities. They also look at the limitations of traditional investment analysis and examine how non-traditional data can help create a more holistic view of markets.
“The standardization and increased availability of data through better warehousing and digitization, along with the rise of third-party analytics providers, have created an environment where information is more accessible. As a result, it’s now possible to develop a more holistic view of commercial real estate markets,” they write. Non-traditional data can include U-Haul rental data and even Yelp restaurant reviews. “Understanding what’s happening in the market in relative real time may create an edge in understanding the forces driving change and may allow real estate investors an edge over those who only confine their analysis to lagging indicators.”
They continue, saying data analytics and machine learning algorithms have now made it possible to stitch traditional and non-traditional data together to make forecasts about the future more quickly. “While the application for real estate investing is new, the potential is tremendous.”
