The neverending innovation story
When you think of disruptive technology some of the first things that come to mind might be computers, smartphones, robots or electric vehicles – to name but a few. PATRIZIA Chief Technology & Innovation Officer (CTIO), Dr Manuel Käsbauer, leads a team of specialists who are dedicated to innovation. From a very young age he was a bit of a ‘tech geek’ and has managed to combine his childhood passion for technology with his strong real estate expertise. We caught up with him for an interview.
estatements magazine: PATRIZIA has recently been actively investing in technology companies – what can you tell us about that?
Manuel Käsbauer: We’ve invested in companies that are related to the core of our business operations. These investments are not primarily about making quick financial returns on our investments, but rather are mainly about being useful to our day-to-day operations as a real estate investment manager. By this I mean that they contribute to the efficiency, transparency and quality of our processes and products. One such company we invested in was Evana in October last year. It’s a data and document platform that uses artificial intelligence (AI) to bring physical documents into the digital sphere. These digitised documents are then organised into a logical structure that enables people to find information exponentially faster and easier than ever before. Data will be automatically extracted from the documents and then we can use the documents and the data contained in these documents for logical workflows at PATRIZIA.
The other example of a company we invested in is Cognotekt, which uses a cutting-edge approach to AI. It’s an ideal add-on to Evana because it helps increase the accuracy with which Evana classifies documents and extracts and identifies data. The Cognotekt approach is called ‘natural language processing’ and it basically translates language into maths. A further example of an investment we made is Control IT. In contrast to the other two companies Control IT is not a start-up but an established company that provides us with an asset and portfolio management system. We’re working with Control IT to bring them to the next level in company evolution, i.e. to make them applicable across all real estate sectors, or offer cloud readiness and software as a service (SAAS). I should also mention that we have invested in a company called WiredScore. Their business provides a certification scheme, such as LEED, BREEAM or DGNB for building sustainability, which measures the digital readiness of a building. We’ve already rolled it out across a significant number of buildings in our portfolio.
"In general, innovation and digitalisation are a neverending story, but in a positive way."
estatements: What criteria do you use when making an investment decision?
Käsbauer: We follow quite a rigorous funnel system. The starting point for this is a large pool of prospective partners/solutions on a global level and then at each stage we eliminate more and more companies until we’re left with a small selection. We believe there are currently many start-ups out there that may offer attractive solutions for our business model. We already identified certain companies by using a rigorous screening process that involves examining the solution they offer, the business model and how that contributes to our business. We’ve already spoken with many of them directly about their ideas, their vision, the products they offer, who else they’re working with, their investment status, etc.
If we decide to take the process further, we will invite the shortlisted companies to one of 40 to 50 workshops we will be running each year, where they’ll come face to face with the functional departments who could be leveraging their new solutions. The next step is to start a pilot project with the potential partner lasting 3 to 12 months. After reviewing the pilot project with colleagues from the various departments, we then decide whether to continue with the company by signing an operational contract and starting a rollout across our company’s respective portfolios. If we believe a company is strategically relevant for our business, we also consider an investment opportunity.
estatements: How long will it take for PATRIZIA to reap the rewards from its investments in Evana and Cognotekt?
Käsbauer: The document classification element is something we’re implementing already. However, if we want to roll out the data extraction function across all our European offices or implement the solution in operational workflows, that could take a while. For example you have to train the artificial intelligence system in multiple languages and different data models.
estatements: How long do you think the current issue of digitalisation will remain a ‘hot topic’ for the real estate sector?
Käsbauer: In general, innovation and digitalisation are a neverending story, but in a positive way. The real estate industry only needs to catch up, for example, by using legacy software and increasing digital professionalism, so this particular hot topic will be around for some years to come. In addition, emerging technologies – i.e., cloud computing – will be game changers, so they provide us with myriad new possibilities. We have to work out the best way to put things to use, not just in general but also specifically within the real estate industry.
estatements: You touched on the usefulness of technology in improving operational processes, but what about using technology to improve things like forecasting?
Käsbauer: Let me give you an example of our global activities and collaboration with different partners – such as universities, think tanks or venture capital funds. We’ve recently been working on a pilot project with an AI specialist who’s currently doing a PhD at Harvard University on ways to further improve the accuracy of our forecasting model for rent and house price evolution. Our accuracy levels were already very high compared to our competitors, but we wanted to go the extra mile. That’s why we have been collaborating on developing a code that increased the accuracy of our forecasting by 10%. That doesn’t sound like much on the surface, but it really makes a big difference, because more accurate figures mean better informed investment and management decisions.
estatements: Are you involved in any partnerships that will help with the way you manage the living conditions of your real estate assets?
Käsbauer: We’re currently partnering with companies that produce sensors to measure simple things such as room occupancy, temperature and air quality. We’re trying these out at some of our offices. They offer potential for our asset management teams as they’ll give them all the data at their fingertips.
estatements: PATRIZIA has its own Technology & Innovation department – why does it need one?
Käsbauer: The real estate industry is probably one of the last business sectors to embrace innovative or even disruptive technologies. But nobody’s immune to being disrupted by competitive forces. There are some well-known tech brands that had serious issues after they failed to keep an eye on the competition and clients at a certain point in their evolution. And there are other famous examples of companies going out of business because they simply missed the boat. That’s why we decided that we want to have a dedicated Technology & Innovation team who will keep their eyes open for any overall trends that could affect our business, especially outside the traditional real estate industry – but of course it should also track tech trends and really focus on this topic on a global level.
estatements:What’s your overall company strategy regarding tech?
Käsbauer: The investment part is only a small piece of the puzzle. As I said, we’re following a client-centric approach, so we scout for cross-industrial global trends and look beyond our own sector. By client-centric, I mean we constantly enhance our products and day-to-day interactions with our clients. This ultimately leads to better service and a better experience for our clients, which is very important as we work in a client-focused industry. We also believe that this client-centric approach allows us to improve our operational excellence, while still making it easier for us to spot new opportunities out there and it helps us stay ahead in technology terms. At the end of the day, we’re always guided by the principle of working out how we can find the solutions out there in the technology space that will best support us as a company or industry.
estatements: To what extent will PATRIZIA continue its investment drive in the tech sector?
Käsbauer: We strive continuously to improve our operational excellence. If we spot an attractive opportunity that will allow us to boost our operational excellence – one that’s also of strategic relevance to our company – we will look into further potential investments in the future.
estatements: Thank you for the interview!