Leveraging Technology to Identify, Assess, and Manage New Opportunities in the Investment Marketplace
As the marketplace becomes more diverse and complex, the number of new opportunities abound. While new asset classes, geographic regions, and demographic segments provide opportunities for growth and scaling the business, assessing the risk in new, unexplored segments can be tough. Since the market is in the midst of a relatively healthy and stable position, new asset classes are even more intriguing and worth exploring. Fortunately, technology can be leveraged to alleviate the struggle of evaluating and then managing new opportunities once they have been identified and assessed.
RealPage IMS recently partnered with Preqin and MACC Venture Partners to discuss how to identify opportunities and assess risk in the market.
Click here to watch the on-demand webinar: Identifying Opportunities and Assessing Risk.
Identifying New Opportunities
Today, technology is no longer a “nice to have” but rather a “must have”- especially for investors who are seeking new investment opportunities. But these forward-thinking investors are presented with additional risks and challenges that come along with investing in new, unexplored segments, which include difficulty raising capital, lack of liquidity, and poor corporate governance.
Competitive investors understand the importance of partnering with firms that are using technology and recognize the significant impact that selecting the right vendor can have on the success of their portfolio’s performance. Technology can be leveraged to identify new opportunities by assisting investors in getting out of their old way of doing things and simplifying tasks that are often time consuming and can detract from value-add activities. With the relief that technology’s 24/7 on-demand access provides, as well as the insights and data that can be extracted by leveraging it, investors are able to use their time to more accurately identify new opportunities and diversify their portfolios.
Assessing the Risk of New Opportunities
Once new opportunities have been identified, technology makes it easier to stay on top of these new markets and to effectively assess the performance of their investments. However, changes in the CRE landscape have driven an increased scrutiny of investments, a result of the industry’s shifting risk tolerance, competitiveness, and economic uncertainty. Even so, Peter of MACC Venture Partners suggests that “[even with the changing landscape] over the last 10 years [investors’] allocation for what they want to put into real estate has gone from about 4% or 5% to even as high as 20% of the capital that they have to invest in different vehicles”.
With such a significant increase in the percentage of funds being allotted to different investment vehicles, a lot more is at risk when assessing new opportunities. Investment management platforms, like RealPage IMS, provide an integrated software platform that can be leveraged to make more informed investment decisions. Through valuations and benchmarking, modeling can be used to assess new market risks and ensure that investors feel comfortable with how an asset is performing.
While navigating the risk that accompany portfolio diversification can be tough, these 5 steps can be used to mitigate them:
- Invest with different sponsors
- Invest in properties with varying degrees of risk
- Invest in a variety of asset classes
- Participate in passive investing
- Invest in funds
Managing New Opportunities
The CRE industry is constantly evolving, and technology continues to be an agent of this change. As the market continues to shift, managing new opportunities, which is already often a difficult task, is likely to become even more arduous. In fact, 87% of executives believe technology will be needed to keep up with the industry’s evolution. Therefore, upgrading the firm’s tech infrastructure has become an important factor in being able to effectively monitor and optimize portfolio performance. When the portfolio is strategically monitored, new opportunities are more likely to produce the ROI that investors seek.
Ultimately, understanding the current valuation of the portfolio, modeling the investments, and leveraging new opportunities by modernizing the business with upgraded technology infrastructure are key in successfully identifying, assessing, and managing new opportunities. And when new opportunities are managed accordingly, portfolio expansion and diversification is more easily accomplished.
To learn more about identifying, assessing, and managing new opportunities within the market, watch the free on-demand webinar.