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Digitalisation Study on theReal Estate Sector inSwitzerlandEY Real Estate Switzerland

April 2019

Digitalisation Study on the Real Estate Sector inSwitzerland

Editorial

Dear reader

In this study, we analyse digital trends in the real estate sector. After all, in these dynamic times, new potential needs to be identified promptlyso that we can help our clients maximise it on a daily basis in our consultations. This year's study examines how digitalisation can reshapeexisting corporate structures, which may soon be out of date.

We would like to thank all the market players who participated in our survey. Each of them contributed to the informative findings andforecasts, which can provide our sector with valuable guidance. We all rely on a lot of information and various sources to make successfuldecisions. We want to make our contribution here. Reading this study is only the beginning. It is at least equally important that we debate theissues with one another, question the status quo and make comparisons. We cordially invite you to join us in doing this.

Good information is the basis for a good performance. We are happy to play our part and we wish you a pleasant read. We hope that theresults are of interest to you and that you can implement them actively and successfully.

Claudio Rudolf FRICS Dr. Casper Studer MRICSPartner Senior ManagerHead Real Estate

Key findings

Study design

Detailed results of the study

Contacts

Summary


Key findings



Key findingsDigitalisation Study on the Real Estate Sector in Switzerland

Implications of digitaltransformationAlmost all participants assume thatdigital transformation will have amoderate to high impact on theircompany over the next five years.

Responsible departmentOnly around six percent ofcompanies employ a Chief DigitalOfficer (CDO), thus makingdigitalisation a C-levelresponsibility.

Planned developments in thedigitalisation process99% of respondents believe that allimportant data and information in thecompany will be available in digitalform over the next five years.

Digital technology trends99% of respondents want to deploymobile devices in their companyover the next five years. This isclosely followed by cloud solutions(86%) and by platforms & digitalecosystems (77%).

Challenges of implementing adigitalisation strategy74% and 70% of respondents,respectively, see a lack of humanresources or a shortage of skilledstaff as the biggest challenge toimplementation.

Current implications of digitaltechnologies87% of respondents see anopportunity to increase theefficiency of their core processesby using digital technologies. 78%of respondents expect faster anddata-based decision-making.

61% of survey participants expectcost-saving opportunities and 56%use digital technologies togenerate new business.

Risk posed by PropTechcompaniesOnly 17% of respondents believethat PropTech companies pose arisk to their own business model.


Study design



Study designMethodological approach

► PropTech companies► Planning/architect offices► Real estate consulting firms► General/sole contractors► Public sector

The findings are based on answers received from approximately 160companies in the real estate sector (autumn 2018). The questionnaire wasdesigned in such a way that respondents could add their own commentsand remarks in addition to answering the relevant questions.

The companies surveyed constitute a representative cross-section of the Swissreal estate market:

► Banks/insurance companies► Real estate funds► Real estate companies► Pension funds/investment foundations► Project developers

► Assessment of digital maturity in the Swiss real estate sector► Which technologies have potential?► What are the challenges facing our sector?► Which business models are particularly affected?

Topics covered by the questionnaire:


Participants in the studySector specification and annual sales

Which of the following categories does the company that you arerepresenting in this survey belong to?

What is your company's annual sales (in CHF million)?

14%

11%10% 10%

9%

7% 7%6%

5% 5% 5% 5%

3%

5%

Rea

lest

ate

fund

Dev

elop

er

List

edre

ales

tate

com

pany

Pens

ion

fund

/inve

stm

ent

foun

datio

n

Bank

/insu

ranc

eco

mpa

ny

Non

-list

edin

vest

men

tm

anag

er/fa

mily

offic

e

Prop

Tech

com

pany

Rea

lest

ate

cons

ultin

gfir

m

Brok

er/a

gent

Plan

ning

/arc

hite

ctof

fice

Gen

eral

/sol

eco

ntra

ctor

Publ

icse

ctor

Faci

lity

man

ager

Oth

er

23%

17%

16%8%

36%

Up to CHF 10 million CHF 10–30 million

CHF 30–100 million CHF 100–250 million

> CHF 250 million


60%

14%10% 8% 6%

1%

Res

iden

tialp

rope

rties

Offi

ces

Ret

ails

pace

Spec

ialp

rope

rties

Hot

els All

Study participantsUsage types/services and stage of the real estate life cycle

What usage types do you have in your portfolio or to which usagetypes do you provide services?

In which phases of the real estate life cycle is your companyprimarily involved?

38%

16%

23%

8%

16%

Inve

stm

ent/F

inan

cing

Mar

ketin

g

Man

agem

ent/A

dmin

istra

tion

Dev

elop

men

t

Plan

ning

/Con

stru

ctio

n


Detailed results of thestudy



Results of the studyImplications of digital transformation

In your opinion, how much of an impact is digital transformation currently having on your company? How much of an impact will it have in thecoming 12 months? Over the next five years?

► Overall, the respondents expect digitalisationto have a growing influence in the comingyears.

► 75% of them expect it to have a strong impactin five years.

► 73% of study participants consider the impactof digital transformation to be moderate tostrong already.

► Only 10% of participants see digitaltransformation having a minor impact on theircompany over the next 12 months.28%

36%

75%

45%

54%

24%28%10%

Currently In 12 months In 5 years

minormoderatestrong

1%


Results of the studyArea of responsibility

Which department in your company is responsible for digitalisation/the use of digital technologies? (respondents could select more thanone department)

41%

19%15%

7% 6% 6% 4% 2%

Exec

utiv

eBo

ard

(e.g

.CEO

,C

FO)

ITde

partm

ent

Ope

ratio

nalu

nit(

tech

nica

luni

t)

Mar

ketin

g/Sa

les

depa

rtmen

t

Chi

efD

igita

lOffi

cer(

CD

O)

Spec

ific

role

sha

vebe

ende

velo

ped

Fina

nce/

Man

agem

ent

Acco

untin

gde

partm

ent

Oth

erde

partm

ents

% of answers

► More than 40% of respondents seedigitalisation as the responsibility ofmanagement.

► 19% of companies assign the responsibilityto their IT department.

► 7% of survey participants have assignedresponsibility for digitalisation to anoperational technical unit.

► Only around 6% of respondents employ aChief Digital Officer (CDO).


Results of the studyCurrent state of play in the digitalisation process

Currently:How advanced is the digitalisation process in your company?

45% 44%33%

21%

36% 42%

28%36%

14% 9%

27% 35%

5% 5%12% 8%

All key data and information in ourcompany is available in digital form

The digital, cross-company networkingof products and services on integrated

platforms is a priority for us

The development and networking ofour IT system environment/IT

infrastructure account for aconsiderable proportion of our

investment budget

In our company, informationtechnology has developed from being

a traditional support function to being acore competency for competitive

advantage

I agree I tend to agree I tend to disagree I disagree

► 45% of participants keep all important dataand information in digital form.

► 44% of respondents agree that the networkingof products and services on integratedplatforms is a priority.

► Only 33% of players allocate a significantproportion of their investment budget tonetworking and developing IT.

► more than half of all survey participants donot consider information technology to be oneof their company's core competencies.


Results of the studyPlanning the digitalisation process

Future (over the next five years):How are you planning to develop the digitalisation process in your company?

80%71%

43% 46%

19%23%

32%33%

6%

20% 15%

5% 6%

All key data and information in ourcompany is available in digital form

The digital, cross-company networkingof products and services on integrated

platforms is a priority for us

The development and networking ofour IT system environment/IT

infrastructure account for aconsiderable proportion of our

investment budget

In our company, informationtechnology has developed from being atraditional support function to being a

core competency for competitiveadvantage


2%

► A clear majority of respondents (80%) planto digitise all important documents over thenext five years.

► The networking of products and serviceson integrated platforms is a medium-termpriority for 71% of respondents.

► 43% of them plan to increase resources fordigital development.

► IT remains a traditional support function foronly 6% of survey participants.


Results of the studyTrends in digital technology

What trends do you currently see in digital technology?

92% 92%83% 83% 82%

72% 70% 66% 61% 59%

41% 42%

6% 8%9% 13% 13%

21% 26%24% 32% 32%

55% 51%

8% 5% 7% 10% 8% 9% 7%

Dat

ast

ruct

ure

Mob

ility/

mob

ilede

vice

s

Big

data

/dat

am

inin

g

Clo

udte

chno

logy

Build

ing

Info

rmat

ion

Mod

ellin

g(B

IM)

Plat

form

san

ddi

gita

leco

syst

ems

Augm

ente

dre

ality

/virt

ualr

ealit

y/m

ixed

real

ity

Inte

rnet

ofTh

ings

(IoT)

Artif

icia

lint

ellig

ence

Bloc

kcha

in/s

mar

tcon

tract

s

3Dpr

inte

rs

Rob

otte

chno

logy

Relevant Not relevant Unknown

4%4%4%2%

► 92% of participants see data structuring asa key relevant trend.

► According to the survey participants,mobile devices, big data, cloud technology,BIM and platforms are also relevant trendsin the real estate sector.

► Only 3D printing and robot technologyremain marginal trends for more than halfthe respondents.


Results of the studyPlanned digital technologies

Which digital technologies do you intend to deploy in the future (over the next five years)?

85%

53% 51%39% 38% 33%

26% 24% 20% 20%10% 5%

14%

33%26%

32% 30% 38%

29% 38%31%

24%

24%

18%

12%17%

20% 23% 14%30% 15%

26% 41%

34%43%

8%6% 8%

11% 16%13%

32% 32%

9% 7% 12% 7%

Mob

ilede

vice

s

Clo

udso

lutio

ns/c

loud

serv

ices

Plat

form

san

ddi

gita

leco

syst

ems

Big

data

/dat

am

inin

g

Virtu

alw

orks

pace

s

Augm

ente

dre

ality

tech

nolo

gy

Inte

rnet

ofTh

ings

Smar

tcon

tract

s

Bloc

kcha

in

Artif

icia

lint

ellig

ence

/sel

f-lea

rnin

gsy

stem

s

3Dpr

inte

rtec

hnol

ogy

Rob

otte

chno

logy

I agree I tend to agree I tend to disagree I disagree I am unfamiliar with technology

1% 2%2%5%

5%4%

1% 2% 2%

► Almost all respondents intend to deploymobile devices in the future.

► More than half of the survey participantswould like to use cloud technology in thefuture.

► 12% of participants do not know whatsmart contracts are.

► More than half of respondents are notplanning to use artificial intelligence, 3Dprinting or robotics.


Results of the studyCurrent implications of the use of digital technologies

Currently:What impact does the use of digital technologies currently have on your company?

58%

36%28%

23%17%

7%

29%

42%

33%33%

20%

23%

11%20%

33%33%

38%46%

6%11%

25% 24%

Increased efficiency inour core processes

We can make faster,data-based decisions

or forecasts

Cost and/or personnelsavings

Generation of newbusiness by usingdigital technologies

Is a core part of ourbusiness model

Poses a risk to ouroriginal business

model


1% 1%

► 58% of participants agree that the currentuse of digital technologies has increasedefficiency.

► A significant majority of respondents seepotential in improving decision-making andforecasting processes.

► Digital technologies are already opening upopportunities for new business for morethan half the survey participants.

► Only around one-third of players currently(tend to) see a risk to their originalbusiness model.


Results of the studyFuture implications of the use of digital technologies

Future (over the next five years):What impact will the use of digital technologies have on your company?

83%

63%56%

42%

29%18%

15%

30%

29%

30%

30%

23%

6%13%

19%

23%

34%

9%18%

25%

Increased efficiencyin our core processes

We will be able tomake faster, data-based decisions or

forecasts

Cost and/orpersonnel savings

Generation of newbusiness by usingdigital technologies

Will become a corepart of our business

model

Poses a risk to ouroriginal business

model


1%1% 2%1%

► 83% of respondents expect additionalimprovements in efficiency through the useof digital technologies.

► The survey participants increasingly expectopportunities for new business (42%).

► 41% of participants (tend to) consider thatdigital technologies pose an immediate riskto their original business model.


Results of the studyChallenges of implementing a digitalisation strategy

Presentation title

Where do you see the greatest challenges for your company in implementing your digitalisation strategy?

28% 26%20%

13% 11% 8% 6% 7%

46%44%

25%43%

38%

34%33%

23%

17%21%

35%

24%

29%

33%43%

70%

9% 9%

20% 20% 22% 25%18%

Lack of human resources Shortage of skilled staff No digitalisation strategy Lack of knowledge aboutpotential applications in the

current business model

Data is not available in astructure that can be

analysed

Lack of financial resources Low employee acceptance Digitalisation and the use ofdigital technologies are notrelevant for our company


► A lack of human resources and a shortageof skilled staff were identified as thegreatest challenge in implementing adigitalisation strategy.

► 56% of participants (tend to) agree thatthere is a lack of knowledge about thepotential applications of digital technologyin their current business model.

► Employee acceptance seems to exist inprinciple; only 6% of participants see thisas a significant challenge.

► 49% of respondents consider that achallenge is posed by the fact that data isnot available in a structure that can beanalysed.


Results of the studyPropTech companies

How would you evaluate the following statements about PropTech companies?

► A majority of participants (tend to) agreethat the Swiss real estate sector offersenough potential and prospects for growthfor PropTech companies.

► There is also broad agreement thatPropTech companies can contribute torevenue growth.

► 83% of participants assume that PropTechcompanies will not pose a risk or are notlikely to pose a risk to their businessmodel.27%

20% 17%

4%

52%

49%

25%

13%

19%

24%

27%

52%

7%

31% 31%

The Swiss real estate sectoroffers enough potential and

prospects for growth for PropTechcompanies.

PropTech companies can help toincrease our sales.

We actively support PropTechcompanies, for example by

providing assistance with contentor making a financial contribution

to the company.

PropTech companies pose a riskto my business model.


2%


Other statements made by the survey participants

On the future development of thedigitalisation process in companies:'End-to-end processes and theelimination of media breaks in valueadded chains will represent a vitalcompetitive advantage.'

On the technologies that are to beused in the future:'3D printing and robotics couldplay a role for our partners inconstruction and maintenance butnot in our asset managementfunction.'

On the impact of the use of digitaltechnologies on companies:'Development and planning willbecome more complex and costlier,and the results will be moreaccurate. However, the cost isalready very high so there is nopotential to make significantsavings yet. Moreover, theinvestment costs involved intraining and infrastructure and inthe implementation of newprocesses are also high.'

On the impact of the use of digitaltechnologies on companies:'In particular, the available datavolume and thus the speed willincrease. Processes will change.'

On the challenges of implementing adigitalisation strategy:'The upcoming digitalisation stepsare extremely complex. We are notsure if we will be able to do thisourselves over the next three to fiveyears, or if we will have to manage itvia a platform. We are continuouslylearning and observing and remainopen and flexible to any kind ofchange.'

On PropTech companies:'PropTech companies are extremelyimportant in acceleratingdigitalisation in the real estateworld. The traditional serviceproviders (e.g. land managers,architects) would do well to invest indigitalisation.'

On the future development of thedigitalisation process in companies:'As a pension fund, we do notoperate in a competitiveenvironment. Unfortunately, thisremoves any pressure or does notallow it to arise in the first place,which would be useful anddesirable, especially with regard todigitalisation.'


Authors of the study

Senior ManagerTransaction Advisory ServicesTel. +41 58 286 42 48Email [email protected]

Dr. Casper Studer MRICS

ManagerTransaction Advisory ServicesTel. +49 30 25471 11926Email [email protected]

Alexander Hellmuth

Senior ConsultantTransaction Advisory ServicesTel. +41 58 286 41 67Email [email protected]

Stefanie Michelberger

ConsultantTransaction Advisory ServicesTel. +41 58 286 38 96Email [email protected]

Dominic Iseli


Other EY contacts

PartnerHead of Real Estate TransactionAdvisory ServicesTel. +41 58 286 39 32Email [email protected]

Claudio Rudolf FRICS

PartnerSector Head of Real Estate, Hospitality &ConstructionTel. +41 58 286 46 86Email [email protected]

Daniel Zaugg MRICS

PartnerHead of Digitalisation GSATel. +41 58 286 31 08Email [email protected]

Martin CecconKarl Frank Meinzer MRICS

PartnerHead of Real Estate Transformation AdvisoryTel. +41 58 286 58 09Email [email protected]

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EY’s organization is represented in Switzerland by Ernst & Young Ltd, Basel, with tenoffices across Switzerland, and in Liechtenstein by Ernst & Young AG, Vaduz. In thispublication, “EY” and “we” refer to Ernst & Young Ltd, Basel, a member firm of Ernst &Young Global Limited.

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