Digitalization of Germany’s Real Estate & its roots from brain child of this Berlin’s Real Estate Tycoon

Globally, almost all industries are witnessing the impact of digitization. Be it data gathering, processes, or even decision making, digitization is ushering in Industrial Revolution 4.0. However, similar to the previous industrial revolutions, different industries have taken up to digitization at varied rates.

While it is no surprise that Financial Services, Computers/
Electronics, and Media/
Telecommunication are leaders globally when it comes to digital adoption,

 

 

it is equally unsurprising that industries such as Real Estate and Construction are laggards when it comes to digital adoption.

In case of Europe, while the industrial uptake of digitization follows the global trend, differences are also visible across the Northern, Southern, and Eastern parts of the region

Germany, the fastest growing G7 economy in 2016 with a growth of 1.9% year-on-year and employment rate increase of 10% in the last 10 years, is best suited to take advantage of the digital disruption. While it is still behind the overall region in terms of share of digitisation potential realized (12% for Europe vs 10% for Germany), the incentives for Germany to be the driving force for digitization are many. As a result of early digitization, German economy could witness an addition of 2.4 percentage points in GDP per capita till 2030. This, in turn, can help the country partly offset the downside from an ageing population.

With this context in place, let us understand how the country’s Real Estate sector is faring when it comes to digital adoption.

Owing to its location in the heart of Europe as well a robust infrastructure, Germany’s logistics sector is booming and is one of the main drivers for its economy. The proliferation of e-commerce in the region is fuelling not only the take-up of overall logistics space (6.0m sq.m in 2015, an increase of 15% year-on-year) but also the increased contribution of new-build space in this total take-up (from 59% of total take-up in 2015 to 66% in 2016). Therefore, German logistics sector is set to continue as an attractive market in the next few years. As for retail, demand is expected to remain constant in the key locations, while declining in Tier II & III locations.

Digital companies are one of the key drivers for the real estate take-up, with Berlin being the most sought after location by such companies, followed by Munich.

While the German Real Estate market is set for growth in the next few years, how the industry adopts digital infrastructure will define its sustainability for the future. With the current adoption of digital technologies by the German real estate industry, several benefits are already being realized. Implementations such as Virtual Project Rooms, Real-time Tenant Credit Checks, and monitoring & analysis of data from Smart Home/Smart Meters are all contributing towards managing, automating, and sharing information. Such implementations have also resulted in the emergence of specialist companies, such as Aareon, BulwienGesa, and EichenGlobal, among others.

It is therefore not surprising that Real Estate IT companies are growing at a higher than industry pace.

While the benefits of such investment in digitization are mostly being realized in the residential sector, it is gradually leading to the Property Technology (PropTech) movement for overall real estate market in Germany. The movement, which saw trends such as crowdfunding, digital rental and sale of property in 2015 is now witnessing trends such as the use of virtual/augmented reality for a walkthrough of real estate projects as well as increased acceptance of co-working/remote working solutions. On the enterprise side, increased adoption of IoT based Smart Building solutions will be the norm in the next few years. This, in turn, will lead to increased efficiency as usage patterns, points of leakage, and other usable data will be readily available.

With so many things going for it, for German PropTech to truly realise its potential, a joint effort from all ecosystem players – from start-ups to incumbents, is required. With several industry titans throwing their weight behind the increased digitization of the real estate market, one such titan stands out for his contribution to the cause.

Mr Carsten Heinrich, with an experience of over two decades in the German Financial & Real Estate market, has been instrumental in the early efforts to promote the use of digital technologies. Part of the digital disruptions in the financial sector in the early 2000’s, Mr Heinrich brought with him several ideas that could be applied to the Real Estate sector.

First as the CEO of EichenGlobal and then EichenCredit, Mr Heinrich has focussed on keeping technology at the forefront to provide comprehensive solutions to customers. As a result, EichenGlobal is one of the leading property management companies in Germany that utilizes a mix of technologies to help international customers select properties.

For more information on Mr Carsten Heinrich or EichenGlobal, please visit http://www.eichenglobal.com/property-owners

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