Commercial real estate outlook: Redefining business models

Surabhi Sheth, Real Estate research leader, Deloitte Services LP, November 18, 2015

As we started planning our annual outlook for 2016, we felt that many of the day-to-day challenges and opportunities haven’t changed that much from last year. Rather, we observed that our clients are increasingly talking about trends that are evolving fast and carry the potential to disrupt the industry over the next decade. Excited by that buzz, we conducted an outlook ideation lab to brainstorm with many of our leading commercial real estate (CRE) practitioners in the US and Canada about the trends and priorities that are likely to cause significant disruption in the industry. While we kicked around several trends, technology-led disruption dominated the discussion. Now you may well be asking, what’s new about this trend?

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Can small-business insurers have it both ways with direct sales?

Sam Friedman, Insurance research leader, Deloitte Services LP, November 11, 2015

While small-business insurers and their agents may not necessarily be facing an existential threat of disintermediation by direct sellers at the moment, the escalating ease and pervasiveness of web technology for direct-to-consumer distribution is revolutionizing the way most US industries interact with clients, and insurance is no exception.

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Global commercial real estate opportunities: Are you ready for Africa?

Saurabh Mahajan, Real Estate assistant manager, Deloitte Services LP, November 4, 2015

It is an exciting phase for global commercial real estate (CRE) as investors continue to show increased interest in international property investments.1 Particularly, investors from emerging economies such as China have grabbed attention with their increased appetite for property in developed economies, as they seek more stable and liquid CRE investments. The United States, Australia, and United Kingdom have been the top three nations for Chinese outbound real estate investments between 1Q 2014 and 3Q 2015.2 Meanwhile, investors from developed economies have also been increasing their exposure in foreign CRE and seem more confident in emerging market opportunities. Cross-border CRE investments by US investors grew 60.3 percent year on year (YOY) in 2014 to 70.2 billion,3 the highest since 2007. While the bulk of US investments were in Europe, Japan, and Australia, there were 11 new emerging markets, including Jamaica, Fiji, and the Maldives, where US investors bought properties for the first time between 2007 and 2014.4

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Talent in financial services: Understanding the generational gaps

Jim Eckenrode, Executive Director, Deloitte Services LP, October 28, 2015

I was recently in Las Vegas at the BAI Retail Delivery conference, where retail bankers and technology leaders come together to discuss mutual concerns and objectives. Many of the presentations dealt with evergreen issues like what to do with the branch in the digital age, how to improve sales and relationship management, and the role that mobile banking can have in transforming the industry.  But one topic seemed somewhat new for this year: talent and culture. There were several sessions that dealt with this issue, including:

  • Driving profitability through employee engagement–an evidence-based perspective
  • Building a culture of innovation…beyond the innovation lab
  • Hiring for tomorrow, today
  • “Culture” changes the game in driving profitability

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Cyber risk: A strategic imperative for the insurance industry

Nikhil Gokhale, Manager, Insurance, Deloitte Services LP, October 21, 2015

Who could blame insurers for asking themselves whether or not they really want to be in the cyber insurance business? Stories about serious website breaches are appearing all the time in the media, and those are just the events we’re hearing about publicly. Industry reports suggest that most cybercrime incidents go undocumented and relatively few companies come forward with information on their losses, since regulations mandate disclosure only when personally identifiable information is breached, and given the reputational and legal implications.1

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What role should board members play in dealing with disruptive innovations?

Val Srinivas, Banking & Securities research leader, October 14, 2015

I had the good fortune to attend the 2015 NACD Global Board Leaders’ Summit in Washington, DC recently. Not only was it the first time I attended such an event for board directors, I have to say it was also a fascinating experience.

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The Internet of Things and financial services: Too much—or not enough—of a good thing?

The Internet of Things and financial services: Too much – or not enough – of a good thing?Jim Eckenrode, Executive Director, Deloitte Services LP, on October 7, 2015

The word “transformation” is thrown about quite a bit these days, but one would be hard pressed to dispute the notion that the Internet has truly transformed our world. Although the roots of the “world wide web” go back to the late ‘60s with the development of Arpanet by the Defense Advanced Research Projects Agency,1 it is really since the early ‘90s when Marc Andreesen and a few of his fellow students developed Mosaic, which was the first web browser.2

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Mobility: Real-time construction field data at your desk

Mobility: Real-time construction field data at your deskSurabhi Sheth, Real Estate research leader, Deloitte Services LP, September 30, 2015

Imagine a large construction project at a remote location. Amidst the dust and grime of the job site, the architects, engineers, contractors, and sub-contractors visualize a lifelike building based on interactive 3D models using the latest building information modeling (BIM) technology and access them through their mobile devices. Contractors and architects use augmented reality capabilities on mobile devices to analyze construction design, which tends to include discussions on potential design changes that may be required between design and construction.1 Combined with the use of drones or wearable technologies such as Google Glass, field information (including video format) is captured in real time, synced with mobile devices, and shared uninterruptedly with stakeholders on and off the field.2

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Follow the tech sector’s lead on customer relationships

Follow the tech sector’s lead on customer relationshipsSam Friedman, Insurance research leader, Deloitte Services LP, September 23, 2015

Insurance companies concerned about the threat of being disrupted by more web-centric competitors could likely learn quite a bit by studying the experience of auto manufacturers, which are also facing potential sea changes in their business model and value proposition thanks to strategic threats posed by emerging technologies.

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Can banks and marketplace lenders collaborate to create a more robust financial system?

Can banks and marketplace lenders collaborate to create a more robust financial system?
Lincy Therattil, Banking & Securities manager, Deloitte Services India Pvt. Ltd, on September 16, 2015

Recent articles on disruption caused by marketplace lenders have me wondering if incumbents could collaborate with these new entrants to create a more robust financial ecosystem. After all, marketplace lenders claim to have built more efficient platforms that bridge the funding gap in the consumer credit and small business finance market.

The banking world, understandably, has been reluctant to fully embrace these disrupters.1 Some expect marketplace lenders to capture a meaningful share of US banks’ lending profits in the medium term.2 Marketplace lenders, who until recently have been targeting less credit-worthy customers or smaller loans, have been rising in popularity even among prime banking customers due to their sophisticated and efficient processes. In fact, these lenders are expanding in other areas like student loans, market, auto loans, and mortgages.3

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