Digitalisation has already brought numerous changes to the real estate industry: smart buildings, virtual tours, BIM, working in the cloud and much more. These are all individual solutions that certainly have a right to exist in their own right and offer added value. But how can the entire value chain along a property be digitalised? Moving away from individual solutions towards an overall system whose interfaces interlock seamlessly? In my opinion, digitalisation can only succeed if we manage to use closed workflows.
Digitalisation ultimately means nothing more than breaking down barriers. With the necessary data, we are bringing mobility to immobility. And in doing so, we are trying to break new ground.
Firstly: At CapitalBay, the focus is on people, the users of the property. Houses and flats in which people live, work, study or are cared for in old age are a reflection of their users. We take the perspective of these people. Secondly, we look at the entire investment cycle. And thirdly: CapitalBay endeavours to map as many processes as possible digitally.
We are focussing on two core areas: huming, by which we mean making people feel at home in enclosed spaces, and trading, i.e. the automation of purchasing, structuring and sales processes. More on this later. Huming, worunter wir das Beheimaten von Menschen in umbauten Raum verstehen, und das Trading, also die Automatisierung von Einkaufs-, Strukturierungs- und Verkaufsprozessen. Näheres dazu später.
All of this leads to a completely different way of valuing properties, a different way of dealing with the property and a different way of generating cash flows. Our aim is to create a sustainable relationship between user and owner that goes far beyond the mere letting of converted space. This also includes forward-looking products and services that benefit users, retain them and increase cash flow.
Dynamic valuation method as a basis
The idea behind our daily work is the "dynamic method". It is based above all on one realisation: if you want to avoid bad investments and at the same time calculate realistic potential returns, you cannot rely on conventional valuation methods because they only look at a property selectively. The decisive factor, however, is not the value on a specific date, but the view of the entire investment cycle
So it is not "location, location, location" that is the be-all and end-all, but "timing, timing, timing". In other words: when will who want to rent or buy, at what price and on what terms? How will the value and cash flow of a property change? When do I get in? When do I invest in the property? When do I get out?
Trading: Recognising values
The paradigm shift "away from static and towards cyclical valuation moments" is already manifesting itself in trading. At CapitalBay, all property offers undergo an IT-supported real-time comparative analysis. We use the transaction software 21st, which we co-developed, for this purpose. The application finds properties, automates their valuation and orchestrates the due diligence digitally. This allows us to analyse more than 1,000 transactions every day.
The assessment is based on data available nationwide. We have divided Germany into 55 million quadrants and geocoded each street. Several million data records lie behind these quadrants: demographic, economic and socio-economic, prices and property data. At the touch of a button, we receive comparative data and can see where in the cycle the property offered to us is located. With the help of this big data analysis, we can calculate future development cycles and rental trends and better assess risks.
The entire acquisition and transaction process as well as the capitalisation of a property should take place digitally. Buyers and sellers meet on our platform. This allows us to develop products with a precise profile and manage the exchange of financial and property products - following the example of the stock exchange.
Huming: Away from stone, towards people
The most important protagonist is still missing from our analysis: the user. This brings us to huming. Huming is derived from home and human. Huming leads to the core paradigm of CapitalBAY: away from the stone and towards the human.
How can the value of a property usually be increased? By reducing vacancies, increasing existing rents, increasing rents due to fluctuation, expanding space in or around existing properties and conversions. CapitalBay goes one step further with mass customisation. Similar to a car company, we create the same chassis and develop a customised interior based on it - in line with the respective operator strategy and target group. This makes it possible to achieve more rent per square metre because different services - furniture, concierge, security, internet or telephone service - are offered at the same time.
My vision of the future: people look for a flat and configure it according to their wishes. They enter the postcode area, the number of square metres, the furnishings - from the fitted kitchen and furniture to accessories such as towels, crockery and bedding - and of course the rent they are prepared to pay. The appropriately equipped flats are around twice as expensive as the usual comparable flats. In return, future tenants receive a better product. The highlight: with CapitalBay, they receive a discount system, a bonus programme. Every time our tenants consume something via the CapitalBay portal, they receive a "Humi". A fit pensioner couple takes care of the garden and clears the snow? The couple's rent is reduced by x per cent. A single household takes out insurance through our Huming programme? Part of the monthly rent is credited to them. The family buys a car through us? Two months' rent credited. Travelling the world: three months' rent. All of our tenants' purchases are made via our portal. We pass on the volume discounts achieved to our tenants. (Is that so? Who pays the discounts?) We become Google or Amazon on the other side of the doorstep.
Basically, it's like this: the tenant wants a low rent for a high product, the owner wants a high rent for a low product. We create the link between tenant and owner and offer more product through numerous services. This increases the yield. In this way, we unite all interests and create systemic value for both parties.
Source: Real estate industry (Haufe Verlag) No. 06/2019
