Real estate investment professionals have registered a broad satisfaction with the level of data quality in their sector – a result described as “surprising”.
The finding comes from Funds Europe research that showed a level of satisfaction with data quality in real estate – yet also reveals that poor data quality is hampering fund raising.
Called ‘Data at the crossroads’, the report was carried out in association with fund administrator Vistra Fund Solutions and the results were discussed in a related webinar recently that included Christopher Woodley, head of performance and data management at Savills Investment Management.
“Firms are forced to abandon strategies because their operating models simply aren’t resilient enough to manage data complexity”
Nick Fitzpatrick, who moderated the webinar, said the result was surprising given the high level of attention in recent years given to the challenge of data management in the funds industry.
“This [finding] surprised me. It still feels to me that pretty much every asset management conference we go to, whether it’s public or private markets, liquid or illiquid, people still find data a challenge – the sorting of it, the quantity of it, the making sense of it, the management of it,” said the moderator.
Christopher Woodley of Savills IM said this finding had “surprised me a lot”.
“Throughout my career, data has always been a consistent pain point for various functions within any of the businesses I’ve worked in, be it complaints with data sourcing, data silos, the cleansing of data, having to manually manipulate it.”
“So, in an age where I think we’re more awash with data than we ever have been before, I think those issues will certainly persist within the investment management space. Without proper data strategies, you can only see those pain points intensifying.”
He said that the scale of how data should be improved becomes evident when a firm embarks on a data strategy project and begins to “really challenge the status quo”.
Casper Hesp of Inrev said that in the past two decades the industry has made substantial improvements with data.
“About 20 years ago, there was no index available for non-listed real estate funds on a European scale. Now we have them widely available. And [Inrev] launched our DDQ questionnaire, we launched our standard data delivery sheet, we launched reporting guidelines, and that helped to make the industry more professional, and that’s why you could argue that you could be quite happy where the industry is. But I fully agree … there’s still a lot of room for improvement.”
Strategies abandoned due to poor data
Described by Nick Fitzpatrick as the “most urgent finding” in the survey, the research showed that poor data quality had impacted either the ability for GPs to raise funds or led to the abandonment of strategies for 64% of respondents.
Marc Harris of Vistra Fund Solutions noted that this was “profoundly serious and paradoxical” when contrasted with the earlier finding about reasonable data satisfaction levels.
“Sixty-four per cent is actually an ultimate proof that there is poor data quality within the industry,” he said.
A lack of standardisation, complexity and the “technical debt” within real estate investment firms has “killed progress”
“When data lacks that standardisation, it requires immense manual effort and bespoke workarounds just to produce a single report. So, that complexity represents a huge burden and technical debt on a business. Strategies just fall by the wayside because they’re not financially viable and prevent everything from scaling.”
“It’s essentially the cost of fragmentation. Firms are forced to abandon strategies because their operating models simply aren’t resilient enough to manage data complexity.”
The webinar discussion featured:
- Casper Hesp, CEO, InRev
- Hannah Holt, director for real assets, Alpha FMC
- Marc Harris, head of real assets, Vistra Fund Solutions
- Christopher Woodley, head of performance and data management, Savills Investment Management
