Cities and homes need to be built on data

Construction activity is set to continue apace in Denmark in the coming years. Which is great, as long as we do it right.

Housing is going up like never before. New buildings and apartment complexes are shooting up on every corner in the big cities, and investors are keen. I think this is great, because the past five years heading up a rental housing portal have made it very clear to me that there is a massive shortage of rented accommodation in this country.

Construction activity is set to continue apace in Denmark in the coming years. Which is great, as long as we do it right. Fortunately, there are better opportunities than ever before to build housing that matches demand. The key to predicting preferences and maximising occupancy, and to validating your investment, is data-driven construction.

Many firms in the property sector are already good at using data effectively and applying this knowledge to build what the market needs. But new tools are now gaining traction and have the potential for even greater precision when making wise, strategic use of the insights they give us.

In other words, we need to forget gut feeling and drop the “that’s the way we’ve always done it” mentality in favour of data-driven decision-making processes – and, of course, experience. Decisions founded in data are good because they are made on a factual basis, which often saves time and money. Those who manage to use data in this way will also be those who build the strongest and most resilient businesses.

Needs and requirements for housing are constantly evolving, so we need to get even better at anticipating trends and sensing where the market is headed – and data are a key management and decision-making tool here.

They give already skilled property developers opportunities to predict occupancy, evaluate investments and identify the pain threshold for tenants looking for a given type of accommodation in a given part of town, right down to street level. And we must never forget that using data generally optimises the time a task takes.

To give an example, the right data make it possible to nail down very precisely what the perfect home would look like for a middle-aged couple in Kolding or a young person in Copenhagen.

In Kolding, our data show that terraced houses with 90 square metres of floorspace at rents of DKK 8,600-8,800 per month are in very great demand – and are not noticeably less attractive even if they are three to five miles from the city centre. Moving east to Copenhagen, and more specifically the central district of Nørrebro, we can see that the strongest demand is for the smallest flats with 31-33 square metres of space. Rents for these are DKK 6,800-7,200 a month, giving a sensible price per square metre in the district of around DKK 2,600. Unlike in Kolding, though, proximity to the city centre is very important.

With intelligent urban development based on data, we can not only meet demand and people’s needs, but also strengthen firms in the property sector.

We have only just begun, and more and more are waking up to the potential of data. For me, it is almost magical how, year after year, we can use data to say something about the rental market in the past, the present and, not least, the future.

The article is published by Finans. Read the original article in Danish here.