This article was recently published by INREV in IQ magazine and has been reprinted with permission.
By Byron Heffer
A successful career in real estate is built on human connections. And despite fresh memories of lockdown and the rise of AI, this is unlikely to change any time soon. Real estate is still a relationship industry. But since the institutionalisation of the asset class in the 1990s, the real estate skillset has developed and become more specialised.
Financial modelling skills are now a “must-have” for those looking to enter the industry. Platforms seek candidates with M&A skills in their bid to access corporate transactions and increase their competitiveness. Investors also need to understand the relationship of an investment manager to its LPs, as well as the different shapes of LPs globally.
Operational Real Estate
Increased investment in operational real estate – student accommodation, BTtR, hospitality, self and cold storage, senior living, and data centres among them – has brought opportunities for enhanced returns but has also created challenges in the domain of skills and talent. Investment firms are hiring in-house operating professionals to empower their decision-making across the entire life cycle of their investments. These sector specialists bring knowledge of the income drivers of operating businesses, which is a valuable skillset for underwriting and collaborating successfully with operating partners.
The Digital Skillset of Real Estate
At Ferguson Partners, we write hundreds of role specifications every year for our clients. In comparison with some industries, digital disruption hasn’t yet rewritten the real estate rulebook: traditional skills are still far more likely to appear on job specs for senior roles.
Data analytics is a case in point. There are those who don’t see advanced data skills as vital to a future career in the industry. But the time is ripe for a generational shift. The Internet of Things (IoT) is changing the collection, storage, and application of data relating to the built environment.
Consider, for example, the application of the IoT to the construction and operation of real estate. The rise of smart buildings, new methods for sharing BIM (Building Information Modelling) data, and the emergence of “digital twins” – virtual facsimiles of physical assets – have the potential to move the needle in terms of enhancing a building’s operations including reducing carbon.
Tackling the Climate Challenge
This is a positive development for the industry’s sustainability agenda. The days of seeing ESG as a “nice to have” are behind us. With 42% of emissions produced by the built environment, according to the UK Green Building Council, there is an onus on real estate companies to deliver impactful solutions. Young professionals are already playing an important role in effecting change. The environmental awareness of many young real estate professionals bodes well for the future, but newer recruits will need the right tools, training, and support from leadership if the industry is to deliver on its climate goals.
The global energy crisis has solidified the business case for updating existing portfolios to improve their efficiency. This will involve increased adoption of carbon reduction tools such as CRREM (Carbon Risk Real Estate Monitor). But new tools require new skills, and real estate investment firms must have the technical know-how to apply the data effectively.
Larger investment managers are now bringing technically trained sustainability experts in-house instead of relying solely on external partners, but the competition for talent is fierce. To implement their Net Zero strategies, firms may need to look beyond their main competitors to source the right individuals. Young professionals trained in technical disciplines such as engineering or environmental science will be highly sought after in the coming years.
The Future Skillset of Real Estate: Solving the Talent Conundrum
A future in which real estate is a fully tech-enabled, data-rich industry will need a new blueprint for developing skills, one based on continuous adaptation and improvement. Young professionals acknowledge that they are likely to re-skill at various stages of their careers. This is why organisations offering CPD training courses, like INREV, will continue to play an important role in solving the talent conundrum.
To attract data-savvy young professionals, real estate firms will need to compete with other sectors including Big Tech companies. Beyond competitive remuneration, success in recruiting and retaining employees will depend on creating more diverse pipelines of talent including those with backgrounds not traditionally found in real estate. The future skillset of real estate depends on it.
For additional information, contact Byron Heffer.