Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
The idea of data being as valuable as gold isn’t a new narrative. As we live in the information age, data adds value, context, and real-world evidence to everything it touches. But yet here we are in 2023, with data in real estate still being difficult (and in some instances costly) to acquire. In the managed residential sector especially, gaining real-time data on operational performance, ESG performance, and resident living can have a huge impact on asset valuation and ROI… which begs the question, how do you get that gold, and fast?
The 2022 Intergovernmental Panel on Climate Change (IPCC) report “stated that 61% of global building emissions could be cut by 2050 if renewable energy policies, sustainable development strategies, and water efficiency were introduced.” (RICS) Not only do we know making more sustainable decisions in real estate can lead to reducing emissions and ultimately higher green premiums, but “in the world of real estate, the use of analytics can lead to smarter decisions about property investments.” (Deloitte)
This is where ESG has gained a stronghold on the real estate industry. A clear baseline for accountability on assets, and a way to consistently report on sustainable performance. But there is a clear starting point in this equation, and its being able to use data to measure your current footprint. After all, how can you report on positive change when you don’t know where your assets are starting from. So, where do the main challenges lie in residential data acquisition, and what are the possible solutions?
Challenge #1: Gaining Scope 3 emission data
“More than half – 53% – of property investors said they struggle to collect quality data; 44% said they have concerns that data collection may breach legislation such as the GDPR; two-fifths revealed that asset managers supply inconsistent data; and 36% said the data they receive is incomplete.” (RICS)
Scope 3 data encompasses emissions that are not produced by your company itself, and are not the result of activities from assets owned or controlled by you, but by those that your business are indirectly responsible for up and down the value chain. Scope 3 emissions are also likely to be the largest share of your carbon emissions, typically 80-90% (Sustain.Life); for example, delivering materials of your products to warehouses for production, waste disposal, or business travel.
Understandably, Scope 1, 2, and 3 emissions are covered by a veil of misunderstanding and a nervousness for the acquisition of this data, and the accuracy of any data collected. But what lies behind the ability to showcase this granular data is green funding under the likes of SFDR Article 6, 8, and 9, increased asset valuations, and when it comes to managed residential real estate — resident engagement and increased retention.
“In our conversations with developers and investors, we often hear frustration with the disconnect between the availability of data and the difficulty of harnessing it for quick, actionable insights. Developers and investors have always sought to understand where to acquire property and when to trigger development.” (McKinsey)
Challenge #2: Damage to valuations without ESG data
“Between February 2021 and February 2022, 40% of respondents said they had seen depreciation of 21–30% because of brown discounts on commercial property assets which demonstrate poor ESG compliance and deferred maintenance risk that may require additional capital outlay for improvements. A further 21% have seen assets devalued by 11–20%, while 18% have seen depreciation of as much as 31–40%.” (RICS)
With the world moving at the pace it does, real estate investors and owners face a harsh reality without data on their asset portfolios — damage to their valuations. Real estate is a game of profit and transactions, and it’s not new information that without a clear ESG strategy or a clear data strategy in place, they will see the effects on the bottom line.
Data strategies in real estate cover all asset classes, but when it comes to multi-tenant real estate and managed residential the value really shines through. Data allows for increased operational efficiency and greater oversight on the day-to-day running and utility consumption of an asset. Whether it be managing waste, occupancy, heating and/or maintenance, real-time data reduces the unknowns and allows operations teams to act fast to the trends and outliers. But how do you get to these gold nuggets of granular data?
Solution #1: Automated submetering
“In the drive toward net zero, from 2025, all new homes in England will need to be built to the Future Homes Standard. This requires new build homes to emit 75–80% less carbon than homes built to 2013 standards, meaning that they need to be future-proofed with low carbon heating and high levels of energy efficiency.” (Savills)
Automations are the key to increasing operational efficiency in any sector, and real estate is no different. Automating submetering data can transform your ESG performance and can allow for massive reductions in utility costs. Ultimately, without submetering data there is no way to really understand the impact of an asset. IoT devices can do a lot, but without a baselines of energy consumption, water use or an understanding of utility use in general; sustainable changes will simply be a guessing game for an asset. Hence why key areas of SFDR funding applications include “Energy Consumption Intensity” as a key metric: “After all, it is not the raw data that creates value, but the ability to extract patterns and forecasts and use those predictions to design new market-entry strategies.” (McKinsey)
Utopi ESG Technology uses the foundations of wireless submetering data acquisition, via LoRaWAN technology. Whether it be one or three-phase electricity metering, water metering, or gas metering; our low-cost, easy to install solutions make submetering data acquisition simple, in real-time, and automated so you can concentrate on the analysis of data and making positive changes to better your ESG performance.
Utopi customers have used our submetering data and analytics to develop overheating mitigation strategies, establish optimized uses of amenity spaces, and enable active management of utility consumption. Having the opportunity to see in real time what impact certain enhancements or improvements have, makes it possible for owners and operators to test and rapidly iterate several concepts at smaller scale. This may include ventilation, shading, insulation, and alternative heating / cooling options (e.g. air source heat pumps, MVHR, IR heaters), accelerating the innovation cycle.
Solution #2: IoT sensors and smart devices
“According to the International Energy Agency, IoT technology could lower the energy consumption of residential and commercial buildings globally by as much as 10% between 2017 and 2040.” (Deloitte)
IoT sensors and smart devices, smart technology in general, are an essential way to enhance operational efficiency and sustainable actions. They provide the basis for data-driven decision-making, allowing for reduction in costs and emissions. “Sensors offer efficiencies in other areas besides maintenance and repairs. An intelligent climate control system can recognize when users leave the room, adjusting the heating or cooling in response. Lighting controls can automatically adapt to personal requirements.” (Deloitte)
For example, Utopi has innovated a unique Multisensor to collect environmental data on six key areas in every room: air quality, humidity, noise, light, temperature, and motion. Paired alongside submetering data, this environmental data allows you to model real-world insights in real time to react quickly to outliers. That could be high temperatures in unoccupied spaces, it could be high levels of toxic air in amenity spaces or even unhealthy levels of humidity — armed with this intelligence, you can measure, monitor, and react to the data. But the most valuable part of this technology is it solves the problem of collecting this important data.
The Utopi platform is then the nerve center of this data collection, allowing you to create custom reports and send alerts to your email address when anomalies are triggered. It’s all about efficiency and using data insights to drive informed decisions across a real estate portfolio. For example, our customers have found the following when using this technology:
- Found an ironing service being operated from student accommodation
- Found proof that students were smoking in their rooms
- Found ovens were being kept on full time in shared kitchens to “save time” in cooking
- Found overspends of GBP 1,600+ in one heating season alone, with unoccupied space being unnecessarily heated
What we do know is this — data is gold, knowledge is power, and in the context of residential real estate there are low-cost solutions available to gain the valuable data you need for your assets. And in this modern age, gathering essential data shouldn’t be a trade-off — insights and profit will go hand in hand… after all, data like gold is an investment that will only increase in value.
This article was written by Jonathan Burridge, CEO at Utopi.
