calendar 30.11. 2017

Martin Rodeck (ZIA) on the digitalisation study

Martin Rodeck, Managing Director of OVG Real Estate in Germany and innovation officer of the German Property Federation (ZIA), answered a few questions on the digitalisation study in an interview.

On a scale of 1 to 10: how digital is the property industry today?

You cannot really make any generalised statement about the real estate industry as a whole. Some sectors, such as estate agencies, are already well advanced, other fields in the real estate industry, such as property and facility management, have, on the other hand, undergone less change through the digital transformation. In general, however, we can say that we have a tremendous backlog compared with other branches of industry – and that applies across all company sizes and segments of our industry.

How do the individual segments differ? Are large housing companies further advanced with the digital transformation than small and medium-sized property owners?

Positive examples are to be found in all sizes of companies in the property industry. The decisive point is what the digitalisation strategy looks like. In general, it can be said that many companies have understood that digitalisation is a matter of top management, both in large companies and in small ones. Initially, you should ask yourself what you want to achieve. What processes have to be simplified? How can I expand my own business model? What new approaches can I take? And, of course, in general, answer the question: how can I simplify my daily life using the possibilities digitalisation offers? But for that you always need a budget and error tolerance. In larger companies it is naturally easier to scale things up. So smaller companies should also resort to cooperation agreements, e.g. with start-ups – and as, “pilots”, simply try out things.

How big is the tenants’ demand for digital products and services?

That is the crucial question with everything to do with digitalisation. Nowadays, a whole lot of things are possible but not everything is necessary. Nevertheless, we are frequently much more digital in our everyday lives than in our jobs. While we are already used to controlling our home with our smart phones and doing shopping directly on a tablet, we find things slightly more difficult in our jobs. Here, we frequently use processes in the same way as we did 10 to 20 years ago. The tenant is therefore sometimes already more digital than the landlord – the industry has to catch up.

Smart home appliances - sales in millions of euros
Sales of smart home devices in 2017 in millions.

Are digital products and services becoming part of the extended business model for property owners, alongside property rentals?

Of course, they should be. Otherwise landlords will lose an important part of the added value of their property investment. We must always remember that others could get themselves a slice of the cake if we don’t do it. In many sectors we have already seen how platforms and providers have pushed their way into the tenant-owner-relationship. Initially that has no effect on classic income from rental and leasing but it does mean that you are completely disregarding important potential returns with which you could optimise your own business model.

Follow suit with digitization
It is not just smart home devices that belong in a digital apartment. In times of digitalisation, landlords should catch up and expand their business model so they are not left behind by the competition.

What can service providers do to support the property industry in the digital transformation process?

Service providers should play their role as drivers of innovation. In our digitalisation study, many respondents saw, for example, providers of technical building services as well as property and facility managers as definite innovators. Investors and project developers, on the other hand, tended to be regarded as observers of the digital transformation in spite of the huge potential for change. So for service providers that means actively driving the digital change forward. However, in addition to developing and refining technology, that also means convincing people in a large variety of ways. A willingness to experiment and error tolerance have seldom been so important as they are today – all market players must understand and internalise that.

Here you’ll find the digitalisation study of ZIA and EY Real Estate. (only German)