Does Data Add Value to a Property Investment?
I wrote an article, recently, asking whether, as it does with cars, a Full Service History adds value to a property. Now, I want to go one step further and ask whether data itself adds value to a property.
To extend the question: Does the gathering and recording of data add value to a property in the same way that physical, structural improvements do?
It might seem incongruous, at first, to suggest that a house, for example, can increase in value without any physical improvements or considerable market shifts; that, without even having to touch the property, you are able to demand more for it. But I don’t think it’s too wild to think you can.
People want insight, people value transparency. As Roger Stone said, in a rare moment of truth, fear is more influential than hope. Data works to erode that fear by answering the unanswerable questions of an anxious buyer.
I have spoken before, about the subversive power of practical information, and gave the example of ground subsidence. The fact that a house sits in a neighbourhood which is known to be built on weak land acts to dictate its value. Data insight can act ot subvert that fact by revealing to potential buyers that this house in particular has been underpinned, quashing the threat of subsidence. I would argue that this piece of practical data adds value to the property.
Allow me to paint you a picture:
A young couple want to buy a home. Their current budget limits them to two bedrooms but they know that, soon, they want to start a family. Therefore, one of their requirements is a home which has the potential to be extended, either vertically or horizontally, at some point in the future.
Now imagine, if you would, that the couple find a property they like and, due to their interest, the agent provides them with a range of data and information about the property.
From here, not only can they see whether the property is listed or sits on preserved land, but they can also see whether it has been extended in the past and, if so, when; they can see a record of any previous proposals sent to the council and whether they were approved or rejected; they see the names of trusted service providers who might be able to advise them on the property’s potential for expansion; they know whether any tree preservation orders stand to prohibited any hopes of future construction; they can track how the value of the property has changed over the years; and they can see what kind of mortgage they’re likely to get, thus knowing how much they will have leftover in their savings for future renovations.
The couple now know that nothing is standing in the way of extending the property, and they also know that stamp duty, council tax, nor mortgage rates are going to cause them financial concern because they’ve had easy access to that information from the very start.
Is the property now more valuable to that young couple than it was before they knew all of these facts? Has value been added to the house without having to even touch it?
It’s like a good wine, or a finger up the...
Data improves over time, growing more comprehensive with each passing year. If done well, done right, data’s value is evergreen.
It’s like applying for life insurance, most providers will insist you have a medical checkup to see what state of a person they’re getting involved with. They’ll ask if you smoke and how much, if you drink and how much, if you exercise and how often. Is there a history of heart disease in your family?
They don’t only want to know how you live now, but also how you’ve lived in the past; that’s where the truth is found. If your past is a healthy one, you get a better deal on your health insurance. If, however, you’ve lived like Keith Richards, the quote will reflect as much.
And so, with property, if you can offer a richly detailed biographical history of a house, well maintained, and meticulously cared for, can you not expect to achieve a higher asking price when it comes to selling? Is the knowledge of a recent boiler replacement not as valuable as the physical act of replacing the boiler?
Getting a bit philosophical aren’t I? A bit, if a boiler is replaced in the forest but no-one knows it’s happened… So for fear of descending into the abstract, I’ll move on.
Conceiving a Digital Twin
I think there’s one more really important thing to consider when pondering whether data adds value to a property investment, and that’s the fact that tomorrow is arriving at an increasingly rapid rate.
The power and potential of data in the future dwarfs that which we see today. We will look back at what we have now and wonder how we ever got anything done. The conversation around one particularly influential innovation of the future, Digital Twins, is already well underway.
A Digital Twin is the digital representation of a physical property, either on the screen or, increasingly, projected through augmented and virtual reality. They are destined to become an absolute norm in the property industry, allowing owners and landlords to know exactly what is going on inside a building, from energy use to connectivity.
The implementation of web-connected smart devices and sensors, a.k.a The Internet of Things, allows for every conceivable data point of a property to be recorded. I mean everything - just look at what these guys at Disruptive Technologies are up to.
These Digital Twins will be used to eliminate waste, preempt and remedy maintenance issues, ensure utmost security, increase efficiency, and save costs. They will, as I say, become the industry norm.
This means the value that data brings to an investment is even greater, but we can’t wait for Digital Twins to be the norm before gathering the required data. We need to be collecting the data today so that, when the Twin is widely introduced, we are ready to pack it with historical information. The recording of data today makes for seamless adoption of the Digital Twin, and the value of the Digital Twin is, I absolutely promise you, going to be gargantuan.
To round it up...
Does the gathering and recording of data add value to a property in the same way that physical, structural improvements do?
I would say yes, it does. But, an increasingly impatient social ecosystem, instant and accessible knowledge if far more valuable that that which you have to search and wait for.
This means that the data which is already available, from databases and local council archives around the country, needs to be gathered and curated in order to have great value. This is something which my team and I at Sprift are working hard to do. But on top of curating the already available information, we’re also gathering practical data such about land usage, repairs history, service providers, building utilities providers, and stamp duties. Data points which, by and large, are not widely collected.
In the future, data collected and recorded today will start working even harder to add value to a property as it informs the foundations of the Digital Twin. There is no way of ignoring what the future is bringing to the property industry, so, even if you don’t agree that data adds value to an investment today, a failure to record it will leave you with a vast chasm to overcome tomorrow.