On October 13th, the third annual Harvard Real Estate Conference took place at the Harvard University Graduate School of Design (GSD), and presented a vibrant panel discussion on this year’s timely topic–Leadership and Entrepreneurship: Transforming The Real Estate Realm. It brought together six distinguished leaders and disruptors in the real estate industry, from investment companies to fin-tech enterprises, in order to unravel and dissect today’s dialect between “disruptors” and “disruptees.”
From Europe to North America, speakers were gathered across the globe to include Todd Eagle, Managing Director of Goldman Sachs; Matthias Lücker, Chairman of FREO; Jean Romain, Former Co-Head of Colony Capital; Imdat As, CEO and Co-Founder of Arcbazar; Emmanuel Lumineau, CEO and Co-Founder of BrickVest; and Marc Rutzen, Co-Founder and CTO of Enodo Score.
Organized by MDes Real Estate and the Built Environment (REBE), the graduate degree program at Harvard University, Prof. Dr. Bing Wang, the faculty Director of MDes REBE began with opening remarks and welcomed the conference speakers. She, later joined by Prof. Frank Apeseche, moderated discussions to invite the speakers to identify opportunities and challenges within the established real estate realm and to explore and predict transformative industry trajectories and possibilities in real estate practice that are ripe for future disruption.
Todd Eagle, Managing Director of Goldman Sachs, started by aptly setting the stage for discussion between the interplay of today’s real estate trends and the impact of technology as intermediaries to flow of capital wealth. He continues to observe a steady rise in REIT investments, specifically in the public market, and notable emergences of new asset types including student housing, data centers, and single family rentals. Eagle, from the perspective of a veteran to the real estate investment banking industry, recognizes the important influence these intermediary “disruptors” have onto the industry. As such, his role is to help them navigate the real estate landscape, and in turn understand their objectives in order to raise capital or forge vital relationships between interested investors and high growth ventures. There is still ample room for growth as traditional investors begin to embrace technology again as a vital competitive edge.
Matthias Lücker, Chairman of FREO Group, kicked-off the discussion by jumping right into today’s state of economy. He explored the ramifications of ECB QE tapering, which deepened EU economic unpredictability following Brexit and in anticipation of the upcoming elections in Germany, France, Spain, and the USA. Lücker predicts for European real estate’s growth to be limited to only the best assets that are in low supply within central submarkets like Madrid. With global turmoil, Europe is on the defense, yet there still remains lucrative investment opportunities of positive leverage that leads to yields in the 7% range. Many investors are left with an ample supply of “dry powder,” or potential investment capital, in search for the right yield to invest in. Their preference continues to be real assets, and specifically commercial real estate properties. To that point, Lücker identifies the opportunity for innovation to lie within Europe’s appetite for flexible live-work-play amenities.
Up next, was Co-founder and CEO of BrickVest, Emmanuel Lumineau, a serial entrepreneur who uses technology to match-make between capital wealth and real estate assets. He recognized the opportunity at the intersection of FinTech and Real Estate, and capitalized on scalability that doesn’t compromise on performance. Lumineau is partnered with two other Co-Founders, one of whom is a Harvard MDes REBE Alumni, Thomas Schneider, and together they join the crowdfunding movement to make the real estate investment process more transparent, less costly, and in effect more accessible to a broader range of investors. He pinpoints the key to understanding investment as a risk-adjusted return. As such, BrickVest is structured to leverage the use of big data and artificial intelligence to automate and optimize the task of underwriting risk.
Also from Europe was speaker Jean Romain, former Co-Head of Colony Capital. When prompted for his foresight on who the leading proponents for innovation in the real estate industry are today, he points our attention to the demand from the critical mass. The ensuing trend from tenants today is flexibility, in both space and services. To resolve such demand is the increasing use of technology, which is currently more prominent amongst propco’s through the “brick-and-mortar” of design, but is also slowly taking traction within opco’s like hospitality. Romain’s takeaway is that the real estate industry will have no choice but to adapt to the new knowledge and techniques in order to remain competitive.
Another Harvard alumni to join the panel is Imdat As, CEO and Co-Founder of Arcbazar, who holds a Doctorate of Design (DDes) from the Harvard GSD. He is the brainchild behind the crowdsourcing platform that enables emerging designers and architects to tap into the large home-improvement market from anywhere in the world. The most impressive project hosted on the platform to date is the highly publicized Obama Prudential Center, which garnered international attraction from students and architecture aficionados and professionals alike. In essence, Arcbazar has disrupted the traditional delivery method of design acquisition by expediting delivery speeds while simultaneously broadening the clients’ access and outreach to a pool of global talent.
The final speaker of the afternoon was Marc Rutzen, Co-Founder and CTO of Enodo Score, a commercial real estate platform that analyzes the investment potential of multifamily investment properties. Rutzen and his team rigorously program algorithmic solutions that leverage quantitative data to identify the best possible determinants between forecasted return and location specific real estate properties. At the front end, Enodo Score presents a clean and simple user interface that demystifies the complexity of real estate valuation, and communicates clearly the resultant key trends and findings. The goal of the company is to find the most efficient and accurate method of identifying the best real estate market fit for an investor. Current methods include robust testing of value-add strategies that drive actual real estate value, and critical comparisons between investment opportunities.
Across the panel, there was unanimous agreement that any new business model being proposed must be compelling on both ends by clearly defining its value propositions. In order to survive, players of the real estate industry need to embrace change and retain talent. Interestingly, when the “disruptors” were asked whether prior knowledge of real estate became an enabler or a restrictor during their entrepreneurial pursuits, the answers were twofold: on the one hand, prior knowledge enables one to better understand the dynamics among players and how players could best interact with the new technology; on the other, it at times may restrain the curious mind to seek out unseen opportunities for innovation in the industry. Nevertheless, timing and the ability to listen to the changing tides of the industry and market is key.