Many real estate firms have long made decisions based on a combination of intuition and traditional, retrospective data. Today, a host of new variables make it possible to paint more vivid pictures of a location’s future risks and opportunities.
In this quickly technologizing industry, arming your team with the most robust data available and making important decisions based on the data is going to determine who wins and loses.Big data will become the key basis of competition and growth for individual firms, enhancing productivity and creating significant value for the world economy. In this white paper, we explore the real estate outlook for financial investment in 2021 and use cases demonstrating the power of data in transforming the real estate industry.
What’s inside?
Current real estate market scenario
Outlook for financial investment in 2021
Why the future of real estate lies with data
How data is boosting real estate business
Use cases for real estate data
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
Real Estate Data for Financial Investment - FUELING REAL ESTATE’S BIG DATA REVOLUTION WITH WEB SCRAPING
1. REAL ESTATE DATA FOR
FINANCIAL INVESTMENTS
P R O M P T C L O U D
Fueling Real Estate’s Big Data
Revolution with Web Scraping
2. After a slight dip in 2018, the US real estate market had started
stabilizing. However, the global pandemic shattered the world
order, and the US real estate suffered its biggest blow since the
latter half of 2020. Real estate’s new normal is also creating vast
swathes of opportunity. Dozens of cities and counties that were
once considered too small, too southern, too flat, or lacking in
amenities, culture are now finding themselves being swooned to
the top of the real estate desirability lists.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
It is mainly because people seek
warmer, healthier, less dense, better
educated, and more mobile places
to live that offer closer access to the
outdoors, better hospitals, smaller
schools, and more open space.
The shift to remote working
arrangements for people in white-
collar jobs meant that households all
across the country could rethink
where they lived. This caused a surge
in interest in vacation towns, as
wealthier Americans opted to
purchase second homes.
Meanwhile, the prospect of living
in close quarters for months on
end while waiting out the
pandemic, coupled with record-
low mortgage rates, drove
millennial households to leave
their abodes in significant cities for
suburbs across the country.
3. R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Despite the steep downturn during
the second half of 2020, home sales
rebounded in 2021. The US real
estate market is expected to grow
from $2687.5 billion in 2020 to
$2774.5 billion in 2021 at a
compound annual growth rate
(CAGR) of 3.%. The growth is mainly
triggered by rising demand for
shared office space, Ecommerce
distribution hubs, and multifamily
housing. Despite some significant
disruptions in the context of the
financial crisis, the real estate
market remains one of the stable
markets suitable for investments at
various scales.
The real estate market moves quickly, and being even half
a step ahead of the competition can be incredibly
valuable in maximizing value for investors.
The US real estate
market is expected to
grow from $2687.5
billion in 2020 to
$2774.5 billion in 2021
at a compound
annual growth rate
(CAGR) of 3.%.
4. While commercial real estate, as a
whole, is performing exceptionally
well, considering our market
conditions, not all sectors are firing
on all cylinders. However, that
doesn't mean their outlook is
abysmal.
R E A L E S T A T E : O U T L O O K F O R
F I N A N C I A L I N V E S T M E N T I N 2 0 2 1
It merely means that investors and
developers should be careful when
making certain financial
investments. Let’s look at some of
the investment opportunities for
real estate market players in 2021
and beyond.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
The real estate market has completed transformed over the past
few years. While retail was one of the best investment options for
real estate players, the demand has significantly dropped after
the pandemic. Over the coming years, multifamily housing and
shared office spaces are expected to rise in demand
Source: https://www.cbre.nl/en/real-estate-outlook/midyear-update-2020
5. Improving property fundamentals and elevated pricing
have reaped gains for investors, which should continue
through year-end as the economy grows. Besides, the risks
are lower than many other investment options, and the
returns are strong.
While it was one of the booming real
estate sectors, hospitality has taken
an enormous hit during shutdowns
due to the unprecedented drop in
global travel. This sector includes
hotels, motels, and short-term rentals
designed and intended to house the
travelling population. While we think
that hospitality will come roaring
back since there's likely to be a pent-
up demand for travel, prospects in
the next two to three years are rough,
considering many lenders aren't keen
on adding this asset class to their
portfolio.
HOSPITALITY MARKET TO WITNESS
INCREMENTAL CAPACITY
However, serviced apartments
appear particularly attractive within
the hospitality space. Besides,
government initiatives to promote
tourism are generating significant
demand for hotels in such cities,
especially for budget hotels.
Given the sector’s outperformance
and positive outlook for tourism
during the coming years, it is no
surprise that hospitality is attracting
more and more real estate investors
from around the world.
1.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
6. Smaller space retail such as urban storefronts and shop
space appear to be handling the fluctuations of the retail
environment well, thus assisting with the balance of the
retail real estate market as a whole.
It's no surprise that big-box retail is
dying a slow death for over a decade
now. The pandemic forced people to
adapt to online ordering to avoid in-
person shopping, strengthening the
grasp that online retailers, such as
Amazon, have on the retail market.
With the massive amount of
overhead and difficulty drawing
traffic, traditional big-box retailers will
inevitably go by the wayside.
BOX RETAIL DYING A SLOW DEATH
The financial aspect of the retail
real estate market is not exactly
booming, as tenants, landlords
and owners take the time needed
to understand the market and
apply necessary adjustments. The
data presented herein indicates
relatively moderate growth in the
market, with notable declines in
values, sales and cap rates of malls.
2.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Source: https://www.statista.com/forecasts/885066/real-estate-and-rental-and-leasing-revenue-in-the-us
7. For a real estate investor, shared office space means more
significant profit margins, diverse revenue sources, and
higher Returns on Investment.
Shared workspace operations are
witnessing a rise in demand, with
companies signing new lease
agreements. However, as a future
strategy, most companies are
expected to adopt the hybrid model
comprising flexible and upgradable
workspaces, while a section of
employees could continue working
from home. Most corporations
would avoid capital expenditures
and look forward to co-working
facilities to accelerate its adoption
rate and expansion in the coming
time.
SHARED OFFICE SPACE IN DEMAND
POST COVID
3.
The office sector is highly sensitive
to economic conditions.
According to a leading investment
and real estate management firm
Collier International, there is high
potential for growth in the
coworking industry in areas such
as hospitality management,
amenities, and value-added
services.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
8. CBRE forecasts a return to pre-COVID vacancy levels and a
6% increase in net effective rents next year, with a full
market recovery occurring in early 2022.
Multifamily properties have caught
many financial investors' eye as more
and more of the population chooses
to rent over homeownership. And as
baby boomers reach retirement age,
they're choosing to live in more
urban, walkable areas instead of out
in the suburbs, which can give
residents a better sense of
community. Affordable housing will
likely be the next wave in multifamily
investing. Undoubtedly, multifamily
housing is the best investment
opportunity for real estate investors.
MULTIFAMILY HOUSING WILL
CONTINUE TO GROW
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
4.
Multifamily weathered the 2020
recession better than most
property sectors and market
deterioration was far less than in
previous recessions. Still, it was a
tough year for multifamily as
many owners lost rental income
plus ancillary income from waived
fees, deferred rents, and
delinquencies.
9. F U T U R E O F R E A L E S T A T E L I E S
W I T H D A T A
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
In the world of real estate, a
growing number of deals rely on
data analysis. From faster, more
accurate appraisals to
sophisticated forecasts, the use of
data can lead to smarter decisions
about financial investments.
Considering all the data that real
estate and its users generate, it
seems likely that companies
having access to quality data will
enter the real estate services
market. Attributes like these
necessitate companies in adopting
data as a business model.
Many real estate firms have long
made decisions based on a
combination of intuition and
traditional, retrospective data.
Today, a host of new variables
make it possible to paint more
vivid pictures of a location’s future
risks and opportunities.
Being slow to identify subtle trends
means leaving money on the table.
Conversely, being a first-mover on a
compelling opportunity translates
into a significant advantage. Why is
it so hard to claim that spot as a
first mover? How can real estate
investors keep track of so much
data and quickly find hidden
patterns and harness them for
profitable investments? And what
has prevented them from doing
so? Conventional data harvesting
methods and data sources make it
challenging to draw clear
hypotheses and build robust
business cases.
Traditionally, real estate players
must sift through tens of millions of
records or data points to discern
clear patterns and place their bets
with few supporting tools. By the
time an investor can accumulate,
compile, and process the data
needed to distill action, the best
opportunities are gone.
10. R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Real estate data analysis for
investment purposes only started
to appear in real estate literature in
late 1996, even though economists
and financial analysts already used
several analytic tools and
techniques. Until then, terms such
as utility functions, profitability and
time value of money were
nonexistent in the real estate
appraisal and investment
literature.
With the wide adoption of
computer-based systems, it is now
possible to model and explore the
impact of various factors on assets'
value.
By accessing and incorporating
web scraped real estate data into
their databases and decision
making, investors can leverage the
huge power of this data for
phenomenal effect. Given the
culture of M&A within the industry
and fierce competition online,
accessing this data first may be a
matter of survival for smaller firms,
and a bulwark against disruption
for larger ones. Real estate is a data-
hungry enterprise. Thankfully, web
scraping is a powerful solution
providing firms of every size a
useful tool for monitoring
supply/demand, market trends, and
online public sentiment.
Source: https://www.halofinancial.com/properties-abroad/
11. The real estate market progresses
quickly, and being even half a step
ahead of the competition can be
incredibly valuable in maximizing
investors' value. Thanks to the high
structural nature of real estate
listing data, scraping it from the
Web is extremely useful and
provides high-quality data, at any
scale. By analyzing aggregated,
high-dimensional listing data, real
estate market players can
recommend pricing and offerings
with a greater level of confidence
and clarity.
Appraising a property's value is a
multifaceted process, but it can be
significantly improved by
incorporating the Web's rich data
offerings. Using web scraping, the
components necessary for
determining a property's value -
which vary greatly can be
aggregated and integrated directly
into a real estate agent's market
analysis. Sellers can use these
comparables to justify asking
prices. It is much easier to deal with
an unfortunate appraisal when you
know the market's comparables in
advance.
H O W D A T A I S B O O S T I N G R E A L
E S T A T E B U S I N E S S
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Case 1: Pricing Property Value with Real-time Trends
During the past few years, potentially convoluted public
records were scoured to pull comparable sales; with
intelligent web scraping, historical and real-time data related
to sales can be gathered, saving realtors and investors from
potential headaches.
How Data can Help
12. R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Time of Sale
and Proximity
With intelligent web scraping,
data related to sales and
properties from any time period
can be retrieved.
Square
Footage
Square footage may seem a
simple item to scrape, but it is
extremely useful in determining
home value when pulling
comparables.
Age,
Construction,
and Lot Size
Variables like age, construction,
and lot size can intelligently
scraped, depending on the need.
13. Every property market globally is
subject to a natural vacancy rate
(NVR), representing the tipping
point for market rental growth. By
analyzing market cycles between
negative and positive rental
change, investors can powerfully
position themselves against trends
in the market - and there's no
better way to fully understand and
establish market vacancy rates
than by incorporating Web
scraped data into your analysis.
While savvy economists might
frequently avail of all the big tech
data available to them to
determine employment trends and
market equilibrium, most agents
don't have the time, and large firms
of the recent past didn't have the
resources or expertise needed to
parse this complex data.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Case 2: Monitoring Vacancy Rates Based on External Factors
Data scraping provides the ultimate solution for scraping and
creating high-dimensional data sets, purpose-built for agents
across any industry sector. Collating this data with other types
of essential data used in real estate, buyers, sellers, and
property managers unlock massive potential in forecasting
opportunities and providing their clients with the highest
possible investment return.
.
How Data can Help
14. It's simple: property owners seek
properties that generate an annual
income comprising a high
percentage of funds invested.
While desired rental yields are in
the high single digits, market
fluctuations related to any odd
number of variables can cause
extreme yield volatility in particular
markets.
By web scraping, historical yields
confined to comparable properties
in the vicinity of a target property,
variables like the neighbourhood,
property type, square footage and
other metrics can provide real
insight for investors and prevent
blind decision making.
Furthermore, while gross yield is
often a point of frequent
discussion, net yield may be an
even more crucial metric enabled
by web scraping.
Vacancy rates, cost of insurance,
management fees, to name a few,
are all contributors to costs that
affect net rental yield. Web
scraping allows the compilation of
complex, high-dimensional data
sets from numerous real estate
websites.
Property is among the most
suitable and stable markets for
investment, but investors have
struggled to make informed
decisions until recently. Now, web
scraping tools have overcome
these trials of the past, and
investors are discovering unique,
insightful approaches to
optimizing their property
portfolio.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Case 3: Estimating Rental Yields
A few ways in which web scraping empowers investors to
estimate a property's potential and time their investment at
the top of the market are:
How Data can Help
15. Rising interest rates that
discourage some homebuyers can
drive rental yield up as rental
demand grows. A savvy investor
will scrape data for historical
interest rates and rental yields in
an area and invest accordingly to
target a high net yield.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Correlation of rising
interest rates and rental
yields
Net rental yield is also affected by
maintenance and repair expenses,
helping investors see how certain
features like AC/Garages/etc. factor
into rental yield. Informed
investors can then use the scraped
data to compare the incremental
benefit with the incremental cost.
Feature specific
Web scraping is not just content
specific but audience-specific.
Many commercial data sets may
give a rough idea of market
metrics, but only fine-tuned
scraping of numerable listings,
agreements, etc can give insight
into the private rental market that
comprises a significant amount of
rentals. With this missing data, we
are missing a significant and
targeted group of investors and
renters.
Private party leases
With empirical data extracted
from rental websites, investors can
gain information about which size
houses they should buy to expect
a given rental yield. If an investor
wants X% of yield in a certain
district, then they can use web
scraping to determine what
property makeup and sq. footage
will provide the highest payout.
Size of property
Rental yields vary year over year,
but scraping historical rental details
can help tell a story about a
property or neighborhood.
Knowing how a property's rental
value tracked with the trajectory of
its property value provides
immense insight into the % yield
one can expect
Historical trend
16. The US real estate market at large
generates key indices that excite
investors or evoke fear, but the
variability market by market is one
of the characteristics of the
industry, which makes web
scraping so valuable. Web
scraping has historically been used
to investigate specific questions
narrowly.
However, as the real estate
market evolves, web scraping
might prove a vital tool for a
company of any size to find an
edge. That edge lies in being able
to determine how a market is
going to perform in the future.
Understanding market direction is
a prerequisite for being a
consultative investor or realtor,
and is critical for informing
decisions empirically with an eye
towards what's coming next.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Case 4: Understanding Market Direction
The markets in which investor
activity is climbing point toward a
market consensus that the area will
appreciate in value. Web scraping
specific parameters like the net
growth in investor activity, ratio of
investors, ROI, etc., can offer
quantitative metrics to compare
various "hot" markets.
Property investment
Though many will claim intuition about a market heating up
or cooling off, aggregating hard, empirical data is critical for
both accuracy and foresight.
How Data can Help
17. Real estate is a competitive
industry, with companies of all
sizes fighting to stay relevant and
gain market share. In the race to
keep on top of market direction,
one's biggest mistake would be
shortsightedness. Utilizing tools
like web scraping to challenge
one's intuition and analyze how
competitors respond to the
market is vital. Knowing and
understanding your competitors'
strategies is half the battle,
especially in this industry. The data
sets enable competitor tracking
and empower firms to deconstruct
competitor strategy.
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
Monitoring changes in
competitor pricing
Many in the industry become
concerned when houses start
taking over 5-6 months to sell on
average. A "buyer's market" may
have some benefits, but in terms
of market direction, it points
toward a cooling market.
As we have seen in recent
recessions, there is also a breaking
point for real estate bubbles that
are the product of overextended
lenders. Thus, web scraping to
estimate average time on the
market and variance from list price
means it's possible to see
correlations between these
metrics across a large data set.
Tracking how long
properties are on the
market
18. Real estate is more complicated,
notably because so many uncertain
factors go into determining prices.
Buying or selling a property always
involves a bit of gambling on pricing
and transaction time. However, big
data solutions are transforming the
real estate sector. Big data makes
purchasing property much easier,
transparent and provides a lot of
options for investors. Indeed the
future of the real estate industry lies
in the successful utilization of big
data in analyzing information from
multiple sources.
Although 2020 has been an
unprecedented year globally, it has
been able to create certain unique
opportunities for the real estate
sector that are likely to usher in a
new era of innovation and digital
transformation going forward.
With the democratization of newer
platforms and the offering of
newer investment avenues, the
COVID-19 pandemic has brought
about massive shifts in investment
preferences that will continue to
outlive the pandemic. As a result,
we expect real estate demand to
remain robust and the sector to
emerge resilient over the near-
future.
As the internet continues to grow,
the amount of data it generates
grows with it, opening new
opportunities for all types of
businesses to improve their
processes and make more
informed decisions. Incorporating
such data streams into your
organizational processes you can
ensure your business is disruption-
proofed and fully prepared for the
world of tomorrow.
C O N C L U S I O N
R E A L E S T A T E D A T A F O R F I N A N C I A L I N V E S T M E N T S
R E F E R E N C E S
https://www.cbre.com/research-and-reports/apac-real-estate-market-
outlook-2021
https://www.aberdeenstandard.com/docs?editionId=3ba5dbbf-a3b1-
410f-957b-d71989d29205
https://www.mckinsey.com/industries/real-estate/our-
insights/understanding-real-estate-as-an-investment-class
1.
2.
3.
19. P R O M P T C L O U D
www.promptcloud.com
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