By Philip Stott, Executive Director, Caisson iO
Originally published by Green Street News
New Technology Marks Another Watershed Moment for Data in Property Investment
Shortly after we entered the 21st century – when the world discovered it wasn’t going to fall prey to a digital “millennium bug” – I was recruited to help the American property management platform, Yardi, enter the European market.
Yardi is something of a household name in property now, but the remit then was to introduce it to a business world which was just beginning to understand digital potential.
This was a job which gave me a close understanding of what all the different participants in the property investment world needed in terms of systems which would make them more efficient. It was an invaluable experience and after a few years at Yardi and learning from mentors, including the business’ inspirational founder Anant Yardi, I felt ready to embark on my own venture.
I had met my future business partners, and together, we saw the potential to use data and systems to launch a property investment business, Caisson.
Growing data focus
Even though we started with no assets under management, our business plan emphasised strong ICT support and systematic data collection. We began developing a dataset to track liquidity and stock flow in the market, which also enabled us to analyse annual trends.
Over the next 16 years, we accumulated annual data tracking billions of pounds of market turnover. This data was initially a simple register, but evolved to include details like property region, type, units, capital value per square foot, yield profile, and vacancy rates. Analysis of this data enabled us to identify attractive deals and provide monthly deal flow reports to investor clients.
As our transactions increased, we recognised the need to expand our team to manage assets, which marked a pivotal moment in our growth. We understood that progress wouldn’t always be linear and that costs would rise as we scaled.
Our approach to transactions was increasingly guided by data, which we found improved risk analysis and decision-making. We created additional datasets to track market transactions across asset classes and our data platform grew to encompass more than 500m sq ft of industrial and logistics space.
We incorporated government data on business start-ups, population and expiry rates to build a metric assessing industrial space per capita for each UK town. This granular analysis allowed us to track supply-side changes and market trends, identifying spikes in liquidity and price points. Similarly, we could track the impact of market events such as general elections, the rise of online retail, and how they led to observable shifts in occupancy and vacancy rates.
“AI represents a tremendous opportunity to unlock greater value from market data.”
Our merger with iO Group in 2023 was a natural progression, drawing on long-standing relationships and complementary skill sets. It also brought further data insight into the business from our combined £1bn-plus of assets.
Given current geopolitical turmoil and the stop-start recovery of the UK economy, it’s now more important than ever to be able to see what is happening across your own portfolio and more widely across the market.
Accordingly, AI represents a tremendous opportunity to extract more value from market data and use it to inform strategy around everything, from a rent review to a multi-million-pound acquisition.
Partnership approach
Having experienced the work and resource required to build and maintain in-house systems, the ability to connect with the growing world of AI solutions represents a major opportunity.
In line with this, we have begun collaborating with Pantera, which has built a platform that makes transactional and asset management modelling faster, clearer and easier to communicate. For us, they are also a partner with whom we can build bespoke systems that our specific needs. This sort of partnership between tech expertise and proprietary data is now the key to operating in the property investment sector.
“If used selectively, AI can supercharge a business.”
When engaging with AI, one of the main caveats you need to remember is that while the large language models (LLMs) like ChatGPT have generated a lot of AI hype, they are essentially information gatherers and – while they are superb at turning a body of information into a required content style – they are not a verified source.
A core part of the LLMs’ approach is to answer users’ questions with content that other users have inputted. So, if you ask them to write your investment committee report or portfolio update, be aware that any data you include may be shared with a third party.
However, there is much more in the AI toolbox than the language models and, if used selectively, AI can supercharge a business. In the same way that Caisson used the first flowering of ICT tools back in the noughties, AI is going to enable a whole new raft of property investment businesses and change the way we do business.