JLL, the world's leading real estate consulting and investment firm, has released a new report entitled "Strengthening Asset Resilience", highlighting the many short- and long-term strategies and trends that are likely to shape the real estate sector in the future.
"Although the direct impact of Covid-19 on market performance will be significantly extended to the resumption of business and government initiatives being implemented to strengthen the real estate market, there is a range of strategies that enterprises can adopt to ensure their continued operation," said Dana Salbak, Head of Research for the Middle East and North Africa (MENA) at JLL.
"At a time when there is uncertainty in the cash flow landscape, advance planning to ensure the resilience and longevity of assets and processes is key to long-term survival and sustainability, and the provision of various experiences based on a variety of strategies, including digital tools and technologies, will help enterprises remain at the forefront of the post-Covid-19 world."
According to the JLL report, trends and strategies that are likely to shape the real estate sector include:
From the perspective of landlords, the ability to understand building analytics and graphics and draw conclusions can help make decisions, prevent further costs, or understand overall performance and market position. The use of GIS technology, for example, to create 3D models of physical origin, will reveal the details of the area and can also help compare the performance of the asset to the surrounding area or the market in general. Similarly, techniques such as sensors can be used to understand the daily performance of the asset. When these technologies are accessible to potential investors, they will have a better ability to assess the safety of the property and follow indicators such as demand, occupancy rates and efficiency rates.
With the relative restriction of freedom of movement and the impact on the ability of landlords and agents to conduct inspections, the use of virtual world technologies and home tours using videos and spatial data on surrounding areas will undoubtedly increase interaction with tenants and potential investors.
Asset management throughout its life cycle: full attention
The asset management sector needs to redirect its attention to the problems of deferring maintenance and dealing with them carefully and carefully, which means that the sector should not focus on short-term cash and inventory management, but should be expanded to create a comprehensive picture that recognizes the importance of longer-term strategies to protect and enhance asset value.
The issue of "life-long asset management" must be a critical element of this new approach, through a more integrated approach that improves the life cycle of assets as much as possible, from the design stage to the original disposal. Although the details of the asset management plan vary from owner to owner, the starting point is usually the same. The asset management plan includes an asset status survey to collect more accurate data on the cost, status and operation of each physical asset within the building.
Effective real estate and utility management strategies
As the situation stabilizes and closure measures begin to be relaxed, attention turns to the means in which assets can return to their former state and occupancy rates as quickly, safely and effectively as possible, while ensuring that the least capital and other risks are exposed. In addition to thorough site inspection, other steps include restarting the asset in an energy-efficient manner, repairing building management systems, conducting improved diagnostics, and identifying follow-up and inspections of facilities that will not be operational for some time.
The long-term goal of owners is to improve the performance and resilience of their assets throughout their entire life cycle. The extent to which owners understand and respond to these changes by reorganizing their office assets will play a major role in identifying assets that will be more resilient and better performing in the long run.
Sustainable real estate
The JLL report notes that the current disruption is expected to accelerate the discussion of sustainability and change the focus of unit tenants and landlords towards integrating sustainability into the built environment, as a means of increasing asset resilience in the long term. The most likely benefit for building owners from the application of sustainability measures is lower energy and other operational costs in the long run. An assessment in the Energy and Environmental Design Leadership System (LEED), or any other sustainability assessment, requires attention not only to energy costs and their use, but also to factors such as contracts, processes and procedures for managing and maintaining the quality of facilities.
Landlords and landlords are also increasingly responding to the demands of current and potential tenants to ensure that occupancy levels are maintained. These demands include the integration of amenities into their facilities. A growing number of tenants will want to pay higher rent for more sustainable space. Although it may sometimes be difficult to establish a direct relationship and impact between investment in sustainability and financial returns in the Middle East, there is a growing body of evidence from overseas markets demonstrating increased returns on more sustainable assets in the long run.