These are exciting times for Corporate Real Estate.
The strategic and financial importance of Corporate Real Estate is growing. Many market players expect significant real estate cost savings once real estate portfolios become transparent – and the new regulation will speed up that process. The world is becoming more and more digital, new drivers of change are coming from companies’ core business, and the economic and political operating environment is constantly transforming on a global and national level.
In PwC’s study, 16 internationally and nationally operating companies from various industries, based in Germany, Austria and Switzerland, have shared their views on professionalisation, digitalisation, regulation and value creation in real estate management. Together, these views form helpful insights into the future.
Regulation: IFRS 16 increases pressure for transparency
All companies that file IFRS accounts in line with the IFRS 16 reporting standard will be obligated to adhere to the standard from January 2019 onwards. The standard includes rules on reporting obligations from rental contracts and other leases. The biggest challenge is acquiring the data necessary for these calculations. At the same time, thanks to the high, audit-proof quality of the data, many companies see the opportunity to push forward the urgently needed transparency of existing rental properties.
The CREM departments we surveyed did not believe that incorporating leases, in addition to real estate, into financial reports in future will directly impact their strategic decisions. However, the new reporting standard will likely cause finance departments to focus more intensely on real estate management and real estate costs in future.
38 percent of companies believe they are strongly affected by IFRS 16.
The biggest potential is seen in reduction of interfaces and automation.
Digitalisation: Transparency as the basis for decisions and control
The maturity of digitalisation is still low in many companies. The study shows: the companies surveyed believe that digitalisation has high potential for real estate management. They hope it will provide them with a better basis for decision-making and controlling real estate assets. They see the biggest and most concrete potential of digitalisation in reducing interfaces between various media and applications and in speeding up the automatic processes associated with them.
PropTechs, or property technology start-ups, can provide companies with services such as ERP and BIM solutions: rental contracts can be processed automatically using customised algorithms and archived using cloud solutions. The companies will continue to see strong growth in this dynamic environment.
The companies also hope to see improvements in their data management systems, data quality and the transparency of their real estate portfolio. These issues, alongside the topic of new workplace concepts, are at the top of the agenda of the companies surveyed.
Professionalisation: Bringing together centralised management and regional know-how
The organisational models of Corporate Real Estate Management reveal enormous structural variety. Overall, we see a trend towards centralised management in regional core process responsibility. The advantage of this organisational model is that it enables centralised supervision and monitoring of real estate management while leveraging the use of local market knowledge. In this way, expertise in individual areas of responsibility can be increased and used efficiently. By outsourcing operational and corporate activities, the CREM departments can continue to concentrate on core processes that boost value creation.
Complex company processes make it necessary to merge centralised and decentralised organisations.
Contact us
David Rouven Möcker
Partner, Real Estate Consulting & Transformation, PwC Germany
Tel: +49 175 2928-906
