Data analytics drives insight into property investment

A holistic view into property locations and data trends help build a viable investment portfolio

By Joe Spring

Head of Location and Commerce, Lightstone Pty LTD

Whether you are managing a property portfolio or are looking to purchase a new or additional home, thorough data analytics helps to make better decisions because they provide observable conditions that are invaluable to efficient decision making.

Success can boil down to key data sets, for example, a functional data crunching method that works is the ‘repeat sales methodology’ which does so much more than tell you what a house is worth. It unpacks how that property behaves in relation to its environment on the market, and what outside influences – like inflation and property trends have had over it.

Additional critical data can include the property’s location, need/demand of that specific estate type, and environmental trends. These sets need to be understood clearly before the acquisition of your next real estate investment. It is essential to remember that when it comes to property, uninformed decisions can become costly mistakes.

At Lightstone we also believe in an automated valuation model that is built from our key data sets. It not only gives banks and financial institutions key insights into investments and bond creation, but it also gives real estate agents and potential buyers meaningful guidance when it comes to price evaluations and potential investment performance.

No investment is without risk, but it is not a roll-of-the-dice either. Making clear and informed decisions based on relevant and accurate data analytics allows you to anticipate trends, so you can grow and manage your portfolio more efficiently. While some may think that the factual data collection presented in colourful reports or fancy digital dashboards is not making you money, perhaps you’ve missed the invested potential it represents?

For instance, though you might at first struggle to understand how shopping mall trends impact your portfolio, tapping into digital data that can apply meaningful cause-and-effect thinking will enable you to leverage that knowledge in new, and profitable ways. Valuable business intelligence built on reliable data and location insight is critical to successful property acquisition and portfolio management.

To be successful, a property professional needs to recognise that the investment landscape can’t be accurately detailed by a simple spreadsheet. It must be recognised as a dynamic environment which needs critical data and an understanding of the location, property type and trends.

If you are not aware of the physical environment that surrounds a potential investment, how can you predict its performance? If you don’t know how your potential venture tracks comparatively to others in the same or similar surroundings, you can’t assess whether it will be a suitable addition to your portfolio. It is essential that investors are equipped to make informed decisions that will enable a profitable portfolio and not just one, isolated successful venture.