87% of real estate investment managers across North America, the UK and Europe aim to reduce operating costs by 18%
Identifying and generating cost savings cited as the lead factor shaping real estate investor sentiment
Investors turn to innovative tech but fear being left behind by competitors
An overwhelming majority (87%) of institutional real estate investment managers are planning to reduce their operating costs by 2023 by an average of 18% to accelerate the pace of recovery from the Covid-19 pandemic, according to a new study1.
North American real estate investors are the most committed to cost cutting and have set the most ambitious goals with 93% aiming to slash current expenditure by almost a quarter (23%) ahead of those in the UK (89% and by 17%) and Europe (83% and by 15%).
The new study, ‘Maximising New Growth Opportunities in the Real Estate Sector’, was commissioned by Auxadi, a leading provider of accounting, tax and payroll services to real estate, private equity and multinationals, and was based on interviews with 100 senior-level real estate investors based in the UK, Continental Europe and North America with average assets under management of €13.5billion.
According to the research, identifying and generating cost savings will be the most important factor shaping real estate investor sentiment over the next two years, cited by almost half (47%) of respondents along with responding to an increased demand for reporting transparency and analysis.
To improve operational efficiencies, almost half (47%) of investors believe the solution lies in adopting innovative technology such as Artificial Intelligence and The Internet of Things (IOT). Coupled with this enthusiasm is a fear of failing to truly implement this technology successfully, with 39% stating that they are already falling behind their competitors and a further 34% stating that keeping pace with technology is a challenge.
As well as focusing on cost savings, the research indicates that investors will take a more circumspect approach to transaction activity, with 42% adopting a ‘wait and see attitude’, 41% ‘proceeding with greater caution’ and 37% citing ‘persistent uncertainty about pricing’.
Victor Salamanca, CEO at Auxadi said: “Following a long bull run, falling valuations resulting from Covid-19 and an ever-growing compliance and administrative burden has brought the urgent need for cost reductions into sharp focus. For most real estate managers, driving greater operational efficiency has become the overriding objective over the next couple of years, particularly given the level of caution around deal flow in the current investment climate.”
“Forward-thinking managers are using this period to radically overhaul their operating models through increased investment in technology and the strategic outsourcing of non-core elements such as investor reporting, accounting and company secretarial support to third party providers with proven expertise and best-in-class technology. The key for success would be to make the right choices, and not just rely on investing in technology but lead the change and make the best use of any investment in IT.”
To view a copy of Auxadi’s ‘Maximising New Growth Opportunities in the Real Estate Sector’ report, please visit: www.auxadi.com/en/real-estate-report
Notes to editors
1 Research conducted by Pure Profile among a panel of 100 senior-level real estate investors in April 2021. Respondents were split evenly between the UK, Continental Europe and North America
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Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.