The commercial real estate market offers an attractive investment opportunity because of its consistent returns, passive income, and growth potential. However, no investment is completely free of risk. The possibility of taking a loss can be nerve-wracking for investors, especially those who are new to the CRE market. And when experiencing the effects of market volatility, some previously loyal and committed investors may become spooked. As a result, firms may start to see fewer repeat investors responding to new deals and opportunities. Firms may also begin to receive more questions and demands from investors concerning the performance of their existing deals.
Read ahead to learn why tech adoption is critical for forward-thinking firms who want to attract and retain investors, even during commercial real estate market shifts.
Enabling Smarter, Faster Decision-Making
Today, data analytics and artificial intelligence (AI) can be used by investors and investment managers to manage risks and complexities more effectively than ever before by enabling investment professionals to more quickly identify patterns and opportunities and to predict future scenarios. For investors, being able to monitor and manage these risks can result in faster decision-making, lower transaction and operational costs, and efficient portfolio optimization. Forward-thinking firms are aware that these insights can greatly impact the investment process and realize how leveraging technology to provide more data could increase their chances of securing repeat investors. But, to secure these repeat investors, firms must be willing (and equipped) to satisfy their ever-changing expectations.
Specifically, as the market shifts investors’ expectations and demands regarding data and insights is likely to become stronger than ever before. Market shifts cause an accurate assessment of risks to become even more essential as investors begin to review their portfolios performance more often so that they can determine the best actions to take. Leveraging the data and insights to perform benchmarking allows firms to gain an economic, situational, and/or market advantage which can be used to execute faster on change and identify portfolio opportunities.
Providing Trust and Transparency
As the market continues to shift, investors’ demands to receive frequent updates and unrestricted access to the details and performance of their portfolios will drastically increase. Having 24/7 on-demand access to performance insights ensures increased control over their investments, creating comfort and confidence amidst any potential unpredictability and the risk that comes with investing.
Because the data and insights that are collected and stored by firms often contain highly valuable and sensitive information, including investment data, investors’ personal contact info, and private bank account information, transparency is a critical component of a healthy relationship between sponsors and their investors. CRE technology tools, like an Investor Dashboard, provides investors with convenient, secure, and unlimited access to data. Additionally, tools like an Investor Portal can be used to securely store and access important documents. This unlimited availability not only creates an opportunity to showcase a firm’s commitment to transparency, but it also becomes a way to further establish trust with each investor.
Monitoring Performance and Protecting Returns
Although monitoring the performance of a portfolio is important during each stage of the investment lifecycle, in times of volatility an extra attentiveness to how investments are performing becomes even more critical. While some investors may have forgotten that risk-management matters, history shows us that it is the effective preservation of capital during shifts that truly drives successful long-term investment outcomes. The adoption of a platform, such as RealPage IMS, makes it easier than ever before to be transparent with investors. Particularly, when the market shifts, fostering an open exchange of information facilitates a smoother transactional process. Additionally, openly sharing insights with investors to aide them in making more informed investment decisions is critical in the midst of an ever-changing market.
Firms who leverage asset and investment management technology during a time when investors expect and demand it most will position themselves for present and future growth. With the help of technology, they will have the necessary tools in place to both attract and retain repeat investors.
You may also be interested in Adapting to Changing Opportunities in the CRE Market.