Say you have a real estate company and invest in office buildings, how do you know that a potential object will give you an optimal return? NSI entered into a partnership with Veneficus and together we developed a model that allows the listed company to identify interesting office areas in the Netherlands, with growth potential of rents as a starting point.
“We are increasingly concerned with data,” says portfolio manager Dirk-Jan Lucas. We have our own team of business analysts for that purpose. For extra depth and expertise we turned to Veneficus.” NSI invests in office buildings and naturally wants to achieve a maximum return. Lucas: “For our flexible office concept HNK, for example, we want to investigate the ideal location for these offices and how that fits in with our office network.
Sharing knowledge as a starting point.
NSI was looking for a partnership where knowledge exchange was central. “We didn’t want a party that only supplies us with a product, but a party that trains my colleagues and takes them along in the whole story.” So Veneficus and NSI went to the drawing board together and the project was divided into sprints. “Then you get a product that we understand well and is in the systems the way we want it. And what’s more, my colleagues gain an enormous amount of knowledge in the process. I think that expertise is worth even more than the model. Veneficus is really a partner.
Better substantiation thanks to a data model.
With the developed model NSI can give an objective substantiation of the attractiveness of a certain location. Each acquisition is scored in comparison to an alternative in another city. This gives them more insight into the attractiveness of the location for the user and the risks of reletting are better mapped out.
Looking to the future.
“The next step is to build a model to determine which locations are interesting if we want to build a network. You also want to know what the variables are if you buy five, ten or twenty properties. Do those locations move as well? We prefer to choose a location that we can hold for a long time. In a later phase we will predict how locations change. Perhaps it is good to be in Amsterdam today, but the demographics will change in such a way in the future that it is better to buy a property in Utrecht.
‘A feeling is harder to copy than scientific evidence’
The model helps NSI to make better decisions. Lucas: “Should I now pay more in Amsterdam than in Rotterdam, or would it be better to buy an office in Rotterdam that is half the price because it is no less in terms of location? Real estate remains a subjective branch of sport. That’s what makes it so much fun. Everyone can say something about a property and have an opinion, but ultimately you try to remove that subjectivity as much as possible. That way, you try to reduce the risks and, in the long term, achieve a higher return than if you were to act purely on a hunch. Besides, feelings are also more difficult to copy than a scientific foundation.