Nordic real estate industry moves digital

The Covid-19 pandemic has accelerated the pace of digital transformation in the Nordic real estate industry.

From a slow start, businesses in the sector are primed to scale-up plans to deploy advanced digital solutions and tools to drive cost efficiencies in both the outfitting and maintenance of their largely residential property portfolios

Moreover, the rapid transition to digital is attracting the attentions of major pan-Nordic technology companies, like Telenor. The Norwegian broadband and 5G market leader established a new company in March to develop IoT-enabled customised smart building solutions. 

Nordic real estate industry chiefs were warned about the negative competitive consequences of failing to invest in smart building technologies in a February 2021 report, commissioned by Telia and produced by the Boston-headquartered international management consultant firm Arthur D Little.

The Digitalisation of buildings in the Nordics and Baltics: How IoT and data insights are transforming buildings report alerted real estate owners to the significant challenges posed by Covid-19 to the future competitiveness of the industry. The report urged the industry to generate greater efficiencies through digitisation.

“Although Covid-19 has put the real estate industry in the spotlight, the challenges existed before the pandemic began. Increasing urbanisation, environmental awareness and the ever-growing digital demands of tenants mean that facility owners need to embrace digital tools to stay competitive. The time to start is now – if someone's going to disrupt this industry, it should be the industry itself,” said Björn Hansen, head of IoT at Telia.

Although the Telia report revealed that 87% of real estate facility managers in the Nordic and Baltic countries recognise the potential of digitalisation as an efficiency tool, a substantial 70% have yet to devise a long-term strategy to digitalise their buildings.

The unfolding of the Covid-19 pandemic triggered a massive shift in labour force patterns resulting in a surge in distance working. In a matter of weeks of government ordered lockdowns across the Nordic and Baltic countries in March 2020, working from home became the norm for many company employees, and particularly those in administrative roles.

The sea change in working patterns resulting from the pandemic means that facility owners have a heightened need to evolve their service offerings if they want to compete with the digital-native businesses entering the market, said Agron Lasku, the head of telecom, IT, media and electronics at Arthur D Little.

“A new generation of digital-first companies have made their way into the real-estate market over the last decade, disrupting the century-old business models with digital services for renting, leasing and managing facility-related activities,”said Lasku. “To defend their turf, and to capture new revenue streams, facility owners need to step up their game, rethink the scope of their operations and accelerate the digitalisation of core services.”

The report identified internet of things (IoT) and data insights, such as crowd-movement data, as core technologies to drive digitalisation within the real estate domain. For real estate owners, digital solutions are seen as having the capacity to elevate cost efficiencies and improve revenue streams by providing real-time data for building operations in addition to information about how people move in and around buildings.

This value-added data, the report said, serves to aid analytics and insights while enabling enhanced decision-making and prediction by facility managers.

Traditional real estate operators are faced with the fundamental challenge of either reforming their business models to embrace digital transformation and compete with digital-first disrupters, or risk the danger of being left behind to become largely obsolete actors, said Kristofer Ågren, head of data insights at Telia.

“When combining insights from IoT data and anonymous mobility data, facility owners can develop a deeper understanding of how a building is operating, make more accurate forecasts, and learn how mobility patterns inside and outside a building affect utilisation,” he said. “Such insights have not alone proven vital during the pandemic but they are also crucial to managing efficient and sustainable buildings going forward.”