Why Real Estate Firms Need Market and Competitive Intelligence (MICI)

Despite real estate being a mature and well-established industry, its sub-sectors have always been subject to change, owing to factors such as globalization, rapidly changing market dynamics, capital flows, demographic shifts, geopolitical issues, supply chain disruptions, ESG, flight to quality and supply-demand imbalance. These factors have collectively made real estate an ever-evolving and transforming industry – one that is highly complex and can’t be navigated without a deep understanding of the market and competition. Making informed investment and strategic decisions without market and competitive intelligence (MICI) is extremely challenging, if not impossible.

The emergence of PropTech start-ups, growing focus on ESG and sustainability, and vertical and horizontal industry integration are other factors that necessitate the need for MICI across client categories (investors, developers, owners, and occupiers) and asset classes (CRE, multifamily, residential, and industrial).

Steps Involved in Real Estate MICI

  • Step 1: Strategic Problem Identification: The process begins with enabling a clear view of the value chain to pinpoint problem areas or gaps. This is accompanied by clearly defining objectives, such as gaining market share, driving growth, expanding geographically, or making offers more aligned with market needs.
  • Step 2: Research Scoping: This step involves a listing of asset classes, for example, residential, commercial, multifamily, industrial, etc., which are a part of the problem statement, and drilling down to specific services or offers within those asset classes. Research scoping also involves formulating research questions and hypothesis, determining a research methodology based on objectives, and defining limitations.
  • Step 3: Data Gathering: The next step is aimed at gaining an understanding of data sources, linking them with identified strategic problems, and outlining a method for data collection and analysis to answer research questions or to test a hypothesis. The selection of sources depends on the end objective, time in hand, and budget, and could include secondary sources, real estate databases, market databases, expert interviews, or industry publications.
  • Step 4: Information Analysis and Insights: Unstructured data gathered from different sources is then analysed to draw insights related to the market and competition. Quantification of an industry or segment is important to gauge where actual opportunities lie. This is further supplemented by using frameworks to understand the nature, intensity, and stage of competition in a market.
  • Step 5: Decision-making: The last step involves making recommendations and strategic decision-making. This could take the form of developing a detailed capital relocation strategy; selecting optimal go-to-market strategies for future growth; understanding competitors’ approach; or taking decisions related to partnerships, M&A, or in-house development of offers.

Types of Strategic Analysis under MICI

Different forms of analysis, including statistical, content, and thematic, are used for research, based on the methodology adopted. The following are a few examples of key strategic analysis techniques that can be used to perform MICI:

Market Potential Analysis: Identifying target markets and geographies that hold the maximum opportunity through analysis of market segments, industry dynamics, regulatory landscape, etc. Within emerging markets, it is important to consider the future growth potential that could be driven by underlying drivers, breakthrough technologies or innovation that are still evolving

Market Gap Identification: In-depth benchmarking of portfolio solutions or offerings vs the competition to identify gaps in offerings and get a clear picture of broader market gaps that can be tapped into. It also involves staging of competitors, in terms of market offerings, coverage, and key strengths, for a clear understanding of product gaps

Product / Services Strategy: Assessing and landscaping competitors’ offerings and investment focus, through an analysis of their product launches, partnerships, M&A, and business expansion plans, to identify products and services that have maximum demand in the market

Brand Building and Marketing: Impactful and appealing communication strategies for products or solutions, as brand building and marketing are as important as sound offerings. MICI helps businesses make their messaging specific to the audience at whom a product or solution is targeted

Data Sources for MICI in Real Estate

A wide array of data collection sources, ranging from industry-specific databases, government-backed sources, to open-desk research, is used in real estate-related MICI. An optimal combination of below primary and secondary sources, connecting the dots between data, and developing actionable insights are vital for sound insights:

Secondary Sources

Real-Estate Specific Databases and Sources

  • CoStar
  • Engineering News Record (ENR)
  • National Association of Realtors
  • Construction Dive
  • Real Trends
  • MSCI
  • Financial firms
  • Competitors’ research reports and whitepapers

ESG Specific Sources

  • Global Real Estate Sustainability Benchmark (GRESB)
  • CRREM (Carbon Risk Real Estate Monitor)
  • Government-specific regulatory webpages (E.g., DSIRE US, Department of Energy)
  • Science Base Targets (SBTi database)
  • International Energy Agency (IEA)
  • Annual ESG or Sustainability Report

Strategic Sources

  • Syndicated industry reports
  • News portals
  • Social media channels
  • Real-estate trend publications, surveys, reviews
  • Company and deal tracking databases (Pitchbook, Crunchbase, Capital IQ)
  • Desk research
  • Investor relations documents (Annual reports, investor presentations, Capital markets day report)
  • Analyst reports and transcripts

Thought Leadership Sources

  • Whitepapers by leading real-estate firms
  • Podcasts and webinars
  • Executive or open house forums
  • Online conferences / events

Primary Sources

Expert interviews

Focus group panel discussions

Social interactions

Surveys (Online and Offline)

Key Benefits of MICI

  • Access to More Objective Data: Quantitative and objective measurement of a market and the competition assists in taking critical decisions related to investments, partnerships, market entry, development of solutions and offerings, portfolio assessment, and others.
  • Trends and Innovation Tracking (PropTech Potential): MICI helps businesses to stay updated on new market innovations (PropTech) and emerging trends to maintain relevancy. Tracking of competitors is important to keep pace with the market; it also helps uncover areas that could provide a first-mover advantage in relation to a product or service.
  • Strength and Weakness Identification: It helps understand one’s own as well as competitors’ strengths and weaknesses, market share, and strategies. MICI can help drill down strengths and weaknesses to the product-level and build detailed benchmarks to identify gaps, compared with competitors.
  • Asset-Class Potential Assessment: Understanding the market and competition can help determine asset classes that have growth potential in the short or long term. For instance, COVID-19 has given rise to hybrid working model, which is a setback for the broader ‘office’ asset class, but a boon for the industrial / logistics market, owing to the supply-chain issues.
  • Easy Regulatory Navigation: The regulatory landscape is complex, but businesses can map it to develop models that predict the future state of their market. Specifically, the rapidly changing regulatory environment across the real-estate and sustainability adds more weightage to this element and makes regular tracking of legislative changes imperative.
  • Maintaining Competitive Edge: Since there is vertical and horizontal integration happening across the real-estate market, it is of utmost significance that sector players map competitors in a manner that clearly reflects segments that exhibit maximum competition and recommends how to counter it.

How Real Estate Firms Can Leverage MICI Providers

Third-party MICI providers have expertise in relevant fields such as research, access to quality market information, and deep knowledge of industry fundamentals and trends. Therefore, several real estate firms have identified outsourcing of research and strategic workload as a cost saver and efficiency generator, besides a mode of gaining tactical advantage. Other benefits of outsourcing include risk-sharing and staffing flexibility.

The benefits do not stop there, as many research firms have digital platforms that can provide real-time access to strategic and actionable insights. MICI providers offer exceptional in-house experts and insights platforms that can create great value for companies and act as a catalyst to yield winning outcomes.

To know more about the advantages of working with third-party MICI providers, please visit https://www.evalueserve.com/product/insightsfirst-for-professional-services/.

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