Real estate, in all its forms, has and continues to provide among the best and most lucrative investment opportunities worldwide.
Yet, not all real estate investments are made equal.
Their ROI is determined by a range of factors, such as the investor’s level of risk tolerance and the length of time it takes for the investment to generate profits.
These factors, in turn, depend on various external circumstances, such as market fluctuations and increased investment competition, and more.
Real estate investment can be a daunting and complex venture, particularly for those new to the industry.
However, one particular tool has been gaining incredible traction over the past years, helping investors navigate these challenges and make more informed decisions, helping them identify the most promising investment opportunities and maximise their ROI.
And that tool is real estate location intelligence.
Using advanced data analytics and geospatial technology, location intelligence has become an indispensable instrument in the era of unprecedented times and uncertainty.
Interested in learning more about how to increase your ROI with real estate location intelligence? You’re in the right place.
In this comprehensive guide, we’ll be exploring the basics of location intelligence for real estate and the specific ways it can be used to increase investment ROI.
We’ll also look at some examples, as well as some best practices you can follow to leverage location intelligence for real estate.
By the end of this guide, you’ll understand how location intelligence works, how it can help you make better real estate decisions — and how our solutions can give you a competitive advantage in a cut-throat market.
Location intelligence: What is it all about?
So, what is location intelligence exactly?
In simple words, location intelligence is the process of extracting insights from data associated with a particular location (geospatial data) to solve a business or societal need or problem, such as:
Site selection and performance
Location intelligence can provide data-backed answers to questions such as:
- Where should we open our new store?
- Which neighbourhood/city should I invest in?
- What is the customer potential in this area?
- What is the most popular area to invest in?
- Where should I place my OOH advertising to get maximum exposure?
Consumer and visitor profiling
Through location intelligence, businesses can:
- Collect satisfaction information about every single business or territory
- Understand how they’re perceived, according to each of their store
- The socio-democratic profile of a given region
Location intelligence data can support businesses in:
- Understanding an area’s competitive pressure
- Determining whether there’s market space for a new venture in a new sector or area
- Gaining a larger share of the market and capitalise on emerging opportunities
As you can imagine, all this information is gold for investors across all industries, including real estate.
Through location intelligence solutions, those investing in real estate can quickly pinpoint the neighbourhoods in a particular area that can attract their target audience, which has the highest need for a specific service, as well as information such as why consumers choose a particular type of restaurant or store over another.
In other words, location intelligence provides certainty in a rapidly changing world.
Location Intelligence: Why is it a game-changer for real estate ROI?
The real estate market is under constant evolution.
And investment opportunities are changing in parallel.
Fortune might favour the brave — however, in real estate, fortune favours those who adapt to the fluctuating needs of the industry too.
Eliminating all the guesswork plays a crucial role in this need to adapt. And real estate location intelligence helps do just that — hence supporting investors in making better-informed investment decisions that increase ROI.
With location intelligence, investors can:
#1: Identify high-growth markets and areas and emerging trends
Location Intelligence is a powerful tool for real estate investors seeking to identify high-growth markets and emerging trends.
By scrutinising data on population growth and job market trends, investors can pinpoint areas where demand for real estate is on the rise, allowing them to stay ahead of emerging trends in real estate, such as the increasing demand for eco-friendly homes and co-living spaces.
Plus, investors can use sentiment data analysis to identify areas and points of interest that are gaining popularity over time. This allows them to stay ahead by recognising these trends before their competitors.
With real estate location data, they can quickly identify neighbourhoods with high potential for ROI and low competition. With Location Intelligence, investors can position themselves to take advantage of new opportunities in the real estate market, leading to greater long-term returns.
#2: Analyse market demand and competition
Investors can use location data to analyse income levels, age distribution, and occupation data. This information can help identify areas with high demand for properties like luxury condos or affordable housing.
Furthermore, analysing data on occupancy rates and rental yields can help identify areas with the potential for a higher return on investment and less competition.
When investors utilise location intelligence to analyse these data points, it can result in more informed decisions on the type of real estate to invest in and which areas have the most potential for long-term growth.
#3: Pinpoint underserved or overlooked markets
Location intelligence data can serve as a basis for investors to assess entering untapped markets.
LI can help investors identify areas with low supply and high demand for specific types of properties, such as affordable housing or luxury condos — helping them keep a competitive edge while remaining in line with the needs and expectations of their ideal audience.
Additionally, LI can help investors identify potential investments that are currently undervalued or overlooked but have the potential for long-term growth. Especially as market saturation and competition are at an all-time high, investors can capitalise on emerging opportunities, eventually leading to greater returns on investment.
#4: Assess the potential risks and opportunities of a location
Good preparation is half the battle won — and when investing, preparation mostly comes in the form of understanding the potential pitfalls and opportunities that investment can offer.
By analysing data related to factors such as why consumers choose a particular type of restaurant or store over another in the area and the current and past performance of any business or territory, investors are in a better position to assess and predict the performance of an upcoming investment.
Let’s take the following as an example. Imagine you’re considering investing in a restaurant specialising in Italian cuisine in a residential area near a metropolitan city.
As an investor, you can gain insights into the success or failures of restaurants in that area by analysing past data. This information is vital for the investor to identify potential risks and opportunities associated with their investment.
For example, this data can help them determine whether Italian cuisine is a popular choice among the local population or whether the area is oversaturated with similar restaurants.
In the same way, you can analyse this data to identify factors that might have contributed to the success or failure of past restaurants — for instance, location, marketing strategy, prices, menus, customer service and ambience.
Based on this analysis, the investor can determine the critical success factors and avoid the pitfalls that led to the failure of past restaurants to understand potential investment opportunities and risks.
#5: Use sentiment to spot optimal investment occasions
Sentiment and popularity data can be crucial in identifying the best investment opportunities to maximise real estate ROI.
For example, analysing sentiment data from social media platforms and online reviews can reveal positive perceptions and enthusiasm towards a particular property or location.
Suppose several people express positive views about a newly built shopping centre, complimenting its location, facilities, and services. In that case, it implies a high likelihood of an increase in future commercial real estate demand and value. This makes it a desirable investment opportunity.
Investors can use sentiment data to make informed decisions, like investing in neighbourhoods with positive sentiment and high popularity or concentrating on high-demand property types. This strategy helps maximise real estate ROI by aligning investments with market dynamics and consumer preferences.
The power of location data in real estate investment
Discover how JLL, a worldwide provider of commercial real estate services and ranked 185 on the Fortune 500, enhanced their solutions with our comprehensive data reports on specific locations throughout the United Kingdom — resulting in 50% cost savings compared to their prior approach.Read JLL's success story
6 best practices to boost real estate ROI using location intelligence
By now, you should better understand what location intelligence is and why it’s taking over the real estate market investment.
But how can you be sure you’re using the right location data correctly? We’ve compiled some of our best practices to help you ensure you’re making the best data-based decisions on any potential investment.
#1: Make sure you have clear investment objectives
If you’re unsure about your destination, getting there might be difficult. Similarly, it might be hard to reach your investment goals unless they’re clearly defined.
Data can help you gain insight into many aspects of any real estate investment.
Setting your objectives clearly — that can be anything from identifying high-growth markets to analysing property value or understanding risks and opportunities — will help you guide your analysis to help you make the best decisions for better ROI.
#2: Collect the correct data
Collecting the correct data that are both high-quality and relevant to your needs is an essential part of your data-backed investment strategy.
Relevant data, in this case, means data about sentiment, popularity, sustainability, diversity, and more — all of which are included in our location intelligence solutions.
By combining this data, you can gain a 360-degree view of the local real estate market, on which you can base your investment decisions.
#3: Get data from multiple sources
Getting data from diverse sources is just as important as collecting the correct data.
After all, you want to have a complete picture of any information available before making any decisions — whether it’s data-backed or not.
By leveraging data from various sources, such as business information, geo-localised data, online feedback and customer behaviours, you can gain a comprehensive understanding of the current real estate market.
In this way, you can also cross-reference your data to validate its accuracy, reduce risk, and ultimately make more informed investment decisions.
#4: Analyse and visualise your data
Visualising your data is an essential part of informed decision-making using location intelligence.
Especially when dealing with vast amounts of data, visualisation can help you better identify trends, patterns and relationships, which could affect your investment decision. You can do this by using interactive maps, for example, highlighting the distribution and concentration of businesses.
The following example shows the concentration of over 1,500 freelancers in a specific area of Berlin, Germany.
Suppose you plan on investing in a coworking space or a working cafe. In that case, you can consider areas with a high concentration of freelancers currently underserved in terms of places they can work from.
Similarly, data visualisation tools such as heat maps can show the intensity or lack thereof of existing sites — at a glance.
By presenting data in an engaging and accessible way, you can also, as an investor, report to all stakeholders in an easy-to-understand and interactive way — regardless of their fluency in data.
#5: Evaluate property performance
So you’ve understood location intelligence, why it’s helpful, and how to use it best to improve your real estate ROI.
The final step is to measure that ROI.
Keeping track and evaluating the property performance of your location-based strategy won’t just indicate what about them is working but will help you understand what and where you need to adjust.
This is essential to ensure your location intelligence initiatives drive ROI and whether they’re giving you the boost you need to meet your business objectives.
You’ll need to set KPIs, such as sales, and customer engagement. You’ll also need the right processes to effectively assess your strategies’ effectiveness — keeping you on track for success or supporting you to change your approach.
#6: Rely on experts for location data
We’ve concluded that location intelligence is a precious tool when investing in real estate. However, we’ve also seen how crucial the quality and accuracy of the data are, as they can significantly impact the success of your investment.
That’s where relying on an expert in the data field comes into play.
Data Appeal’s unique mix of AI-based quantitative and qualitative data includes business information, geo-located data, online feedback, and customer behaviours of any point of interest, brand, and territory worldwide.
This means you’re equipped with the right tools to make safer assessments and conduct in-depth analyses of any territory to pinpoint the areas with the best potential for buying and selling properties.
With our location intelligence and data enhancement solutions, we can provide you with the information you need to assess the performance of any business or territory, with reliable data that goes up to 5 years in the past.
In short, you can have a snapshot packed with the insights you need to make the most informed investment decisions — giving you a headstart to success.
Plus, with our interactive maps, you’ll be able to:
- Emphasise how businesses are distributed and concentrated in any neighbourhood
- Analyse each area in more detail by zooming in or out
- Click or hover over POIs for additional information like category, GPS coordinates, contact details, Sentiment score, number of reviews, etc.
- Assess areas based on Sentiment score, popularity, and amount of online content using filters
- Use filters to choose a business category and view its location in the city
Ready to make smarter real estate investments?
Learn more about how location intelligence can revolutionise your upcoming investment strategy.Request a demo