Abstract
Special edition introduction for journal of general management, autumn 2023
Welcome to the special edition of ‘Real Estate Management and Strategies: The Next Decade’, guest co-edited by Profs. Andree De Serres, Patrick Lecomte, Helene Sicotte. We are thrilled to present a curated collection of papers that delve into the future of real estate, following the success of the previous special edition on Real Estate in the Digital Era published in 2019 by Journal of General Management.
The special edition is divided into four parts (digital revolution, sustainability, real estate investments, and new geography of real estate investment), each making valuable contributions to the future of real estate management and strategies. Firstly, we present two articles that focus on the digital revolution. The invited paper by Prof. Lecomte sheds light on the rapid changes occurring in the real estate industry due to new digital technologies. While the previous special edition on real estate in the digital era highlighted industry reluctance toward adopting these technologies, this edition is encouraged by the industry’s swift adoption and transformation, embracing new technology and digitalization. Prof. Lecomte’s article delves into the economic nature of behavioural control within the domain of smart real estate. It sheds light on how the concept of control has been central to the implementation of smart technology. Notably, control assumes a new significance in the context of smart technologies, raising questions about human freedom and free will within physical spaces. The article examines Coase’s theorem and Ostrom’s common pool resources to address the delicate balance between ensuring space users’ freedom and implementing regulations for pervasive technology in buildings. By offering insights into the regulation of socially acceptable norms for control and the establishment of appropriate smart spaces based on property rights, the article contributes to our understanding of navigating this intricate landscape.
The real estate industry is currently undergoing a digital revolution, necessitating multidisciplinary research efforts to navigate this transformative landscape. In this vein, we present the next article by Prof. Silva and colleagues, focussing on the profound impact of digital technologies on real estate activities. The authors argue that the application of digital technologies has the potential to enhance salespeople’s performance, albeit requiring a new model that accounts for digitally oriented skills and sales strategies. Their research findings highlight how the utilization of digital tools in sales activities can empower salespeople in the real estate market and significantly improve sales performance. Furthermore, a digital orientation has a far-reaching impact on marketing strategies, enabling instantaneous customer interaction and enhanced responsiveness from the firm.
While firms often prioritize short-term economic performance through the utilization of digital technologies, Prof. De Serres interview piece with Nathalie Palladitcheff, President and Chief Executive Officer, Ivanhoe Cambridge (Montreal, Canada), underscores the significance of sustainability, in terms of ESG (environment, social and governance) factors for the development of business strategies. Within the real estate industry, climate change and sustainability have taken centre stage, considering its substantial impact on ESG elements such as the built environment, raw material usage, social innovation through spatial design, placemaking, and the application of digital technologies. It highlights the pivotal role the industry plays in fostering a holistic approach that integrates environmental sustainability, social well-being, and effective governance practices.
Expanding upon the significance of ESG investment and innovation, Prof. Higgins’ article delves into the challenges faced by local governments in managing their real estate operations and creating investment value within the institutional real estate sector. The proposed solution is a Sovereign Public Sector Property Fund framework, which aims to assist local authorities in generating long-term stable income streams through the implementation of good governance practices, portfolio diversification, and community engagement to foster connections between people and place. The framework focuses on the structure and operations required to establish a systematic process for identifying prime public sector real estate assets and maximizing their value through effective procurement strategies and portfolio diversification. Additionally, the article emphasizes the potential for creating valuable opportunities and enhancing governance through the involvement of an independent board. By offering this framework, Prof. Higgins provides a valuable blueprint for local governments to navigate the complexities of their real estate operations while simultaneously generating sustainable economic benefits and fostering community development.
Continuing the exploration of institutional real estate investments, Prof. Newell and Marzuki’s article sheds light on the emerging trends surrounding alternate real estate sectors as investment vehicles for institutional investors. The authors conduct a comprehensive survey across multiple countries, examining the risk-adjusted performance and portfolio diversification benefits of various alternate real estate sectors when compared to standard asset classes within institutional portfolios. The study reveals that the drivers of alternate real estate sectors differ significantly from those of conventional economic growth drivers. This distinction holds considerable importance from a risk management perspective, particularly in light of the transformative impact of the COVID-19 pandemic on traditional office, retail, and industrial real estate investments, as remote work and changing consumer behaviour reshape the market landscape. Within their article, the authors emphasize the role of non-listed real estate funds in risk management within a broader investment portfolio, effectively reducing exposure to risk. They further highlight the criticality of integrating ESG considerations as an essential component of strategic business management activities, as it plays a pivotal role in attracting capital investments. By addressing these key aspects, Prof. Newell and Marzuki’s research provides valuable insights into the potential benefits and considerations associated with alternate real estate sectors, empowering institutional investors to make informed decisions, manage risks effectively, and align their strategies with ESG principles.
In the final article by Mr. Ogunbiyi and Dr. Oladokun, the focus is on examining the key indicators adopted by practitioners to drive the performance of real estate consulting firms specializing in estate surveying and valuation in Lagos, Nigeria. The authors conduct a survey and evaluation of both financial and non-financial indicators that hold significant importance for current performance and future considerations over the next decade. This article provides valuable insights into how these key performance indicators, encompassing both financial and non-financial aspects, shape the monitoring, evaluation, and decision-making processes for professionals involved in estate surveying and valuation. Understanding these indicators becomes crucial, especially as the real estate industry embraces digital technology and grapples with various challenges within the realm of general management. By exploring these key indicators, Mr. Ogunbiyi and Dr. Oladokun offer important metrics that can aid practitioners in optimizing their performance, enhancing their decision-making processes, and aligning their strategies with the evolving landscape of the real estate industry.