Regulations on real estate give investment managers an opportunity to streamline operations
9 March 2016
Deloitte Luxembourg filled MUDAM with participants for their latest Real Estate Symposium, covering topics on recent trends and developments in the industry from internal and external speakers.
Surveys reveal that investment managers are primed for increased operational efficiency
A central topic at the Real Estate Symposium was the results of two surveys conducted by Deloitte: the 2015 Real Estate Investment Management Survey and the 2015 European Private Equity and Real Estate Asset Servicers’ Survey. The survey participants were top players in the pan-European market, both investment managers and asset servicers, each with more than €200 billion in regulated assets.
Investment volumes have reached their highest levels since 2008 and even though assets are expensive, investor allocations to real estate have been increasing over the last 12 months. Accordingly, 2016 is a year of major changes in terms of asset class. Facing highly expensive prime locations and assets, investment managers are adjusting their strategies to generate new revenue streams and yields for investors. In particular, real estate managers are expanding their traditional offering—office, retail, and industrial—to new sectors, such as student accommodation, residential, and retirement homes. This evolution requires them to not only obtain new specific skills, but to change their business models as well.
Benjamin Lam, Partner and Real Estate Leader at Deloitte Luxembourg, weighs in: “Real estate is gaining momentum, and although it may seem counterintuitive, now is the time to seek operational efficiency. Diversifying assets during a short period of time allows managers to stay ahead of the game, but could easily get out of control if the base structure of operations does not evolve concurrently.”
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2016 will be a year of technological progress
Among both investment managers and asset servicers, a key focus this year will be on upgrading their IT systems. 47 percent of investment managers reported that they will change or upgrade their systems in the next two years. Asset servicers are even keener to improve; 73 percent indicated they will upgrade, and 36 percent will go further and completely replace their current system. This number is so prominent due to the fact that more than half of the survey respondents use more than one system to conduct their daily activities, as they often face a wide range of requirements from clients including investor and portfolio asset keeping, transaction processing, and cash position keeping, among others.
“In the last 15 years, the real estate industry has underinvested in IT. Now is the turning point to fill in the gap and move toward a more sophisticated solution,” concludes Benjamin Lam.
Read more about the survey results on Deloitte Luxembourg’s Real Estate section.
About Deloitte Luxembourg
In Luxembourg, Deloitte consists of 80 partners and over 1,500 employees and is amongst the leading professional service providers on the market. For over 60 years, Deloitte has delivered high added-value services to national and international clients. Our multidisciplinary teams consist of specialists from different sectors and guarantee harmonised quality services to our clients in their field. Deloitte General Services is a member of Deloitte Touche Tohmatsu Limited, one of the world’s leading professional services firms.