Introduction
Real estate Industry deals with the business of selling of properties i.e. land and building. With time this industry has grown by leaps and bounds. This sector has always attracted investors to invest in their money which involves a huge amount. This results into a higher level of risk which is being handled by the real estate managers, who analyses the trends and their portfolio, by taking wise decisions.
But, since the profits are fluctuating, it has become a major concern for the investors. So they want transparency in the performance of their investment which has become a key to success for this sector. But fulfilling their requirements is still not easy.
So, Business Intelligence strategy should be implemented as there is a need for it in order to stay competitive. Information transparency and the ability to assemble and analyse information quickly is an essential requirement for the success of any business intelligence strategy.
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Business Benefits of BI
- Due to elimination of manual process the operating cost is lowered down
- Reduces the chance of reporting errors
- Improves the speed and efficiency at which a company can determine specific exposure and risk, improving overall business agility
- Streamlines operations by automating and standardizing the aggregation of information from various entities irrespective of geography, technology or business model
- Establishes an architecture that will support future growth including additional assets in existing entities, new products and new platforms
Real Estate KPI
Real Estate Office
| · Advertising and promotion |
| · Average commission per sale |
| · Average commission per salesperson |
| · Commission margin |
| · Net profit |
| · Office cost (telephone, fax, and other office cost) |
| · Rent cost of premises |
| · Sold homes per available inventory ratio |
| · Total income |
| · Wages and salaries (including commissions and vehicle allowances) |
| · Year-to-year variance on average sold price |
| · Year-to-year variance on dollar volume of sold listings |
| · Year-to-year variance on sold average dollar per square foot |
Commercial Property Management
| · Annual return on investment in percentage |
| · Construction/purchaser rate: New constructed or purchased units over time |
| · Cost per square foot |
| · Equity value growth in percentage |
| · Lease events coverage ratio: Number of lease inquiries over number of available units |
| · Management efficiency: Number of leased spaces over number of staff |
| · Market share growth |
| · Monthly return on investment as percentage |
| · Occupancy cost: Cost per occupied unit |
| · Operation cost to rent income ratio |
| · Percentage of rent collected |
| · Price to income as percentage |
| · Profitability per square foot |
| · Real estate demand growth: Market rental demands |
| · Rented space usage quality: Average number of tenant visits over rented space |
| · Renting cost: Renting cost per square foot |
| · Renting return on investment: Rent income over cost |
| · Revenue per square foot |
| · Risk metrics as percentage |
| · Total property management income per property manager |
| · Usage efficiency: Available renting square feet over number of staff |
| · Utilization (vacancy) rate: Rented square feet over total square feet, or rented units over total units |
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Real Estate Investor
| · Average gross multiplier for portfolio |
| · Cost per square foot to value per square foot ratio |
| · Equity to value ratio |
| · Gross multiplier per commercial property |
| · LTV (loan to value) ratio per property |
| · Mortgage rate index |
| · Overall LTV (loan to value) ratio for portfolio |
| · Price per square foot to value per square foot ratio |
| · Profitability per square foot |
| · Property value growth (market trend) |
| · Purchase price-to-appraisal value ratio |
| · Rental value growth rate ROI (return on investment) |
Case study:
Company Profile: Trademark is a real estate firm providing Property management, investment and development services for US based regional malls, outdoor retail and mixed-used properties.
Problem: Trademark wanted to create a single trusted source of data which would replace multiple silos of financial, property, tenant and lease information and reduce the time involved to create consolidated financial statements and management reports. They also wanted to reduce the time spent on aggregating and formatting data for sales. Basically, Trademark wanted to empower their team with accurate and timely information.
Solution: Trademark used BI to solve this problem. Using BI, trademark could now get drill down financial and property reports with real-time metrics on a property and portfolio level. By using this solution they were able to increase their property portfolio by over 50% without increasing the staff. Also time taken to produce financial and real estate management reports was reduced from weeks to seconds.
To learn more about how BI can help in the Real estate sector and request a live demo, get in touch with Helical Insight
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