12 December 2023
In the dynamic world of real estate, innovation is becoming increasingly important as investors look to achieve both social and financial objectives. Bouwinvest is actively committed to implementing new products and services that accelerate its contribution to these objectives. Manager Innovation Micha Reusen and Business Innovator Gilles de Jong explain why innovation is so crucial for Bouwinvest. From serving its clients’ interests to maximising sustainability and managing risk: what is driving the constant search for improvements?
Innovations do sometimes emerge by accident, like penicillin or the microwave oven. And experimentation can sometimes unintentionally create a solution that is in high demand. What is important at that point is to apply innovations on a small scale and discover the pros and cons, before then moving on to the next stage of development.
This is a familiar scenario for innovators Micha Reusen and Gilles de Jong: it is sometimes difficult to predict just how an innovation journey will unfold. Their role is to see whether and how a new product or service can contribute to Bouwinvest’s objectives. After all, the stakes are pretty high. The investors who invest in real estate through Bouwinvest, the tenants who live and work in the buildings managed by the various funds, and the management organisation itself are all keen to see a positive impact on Bouwinvest’s sustainability objectives, tenant satisfaction and investment returns. Innovation is not something you can do ‘just like that’.
“We want to put something new in place to accelerate progress, so we can continue to make a difference in the long term,” says Manager Innovation Micha Reusen. “But to do that, you have to keep in mind how an innovation makes a contribution in concrete terms, whether it is scalable and what risks are attached to its application. Our clients want just one thing: the reassurance that their investments are performing well. To be in a position to contribute to that, you have to be forward-looking and that means being innovative.”
According to Business Innovator Gilles de Jong, this can involve a variety of risks. “Innovation always involves risks, but so does not doing anything. Innovation can actually help you to mitigate risks.” Bouwinvest makes strategic choices and assesses risks carefully. Gilles: “We take a thorough approach to managing risks and increasing the chances of success. Our job is to see the right things and interpret them for ourselves: how do we match any external opportunities that arise with what we stand for?”
For example, what we want to achieve with an innovation is clear in advance, and we often use small-scale pilots and applications to gain experience before any large-scale roll-out. This approach means we can see at any stage whether the innovation will really add value. Innovation is a long-term strategy, and the solution is not to avoid risk entirely, but to take controlled steps to take advantage of new opportunities and to implement them.
This also applies to your internal organisation. Gilles: “You see organisations embracing lots of technological solutions related to data availability, processing and use. An example is the use of software to gain greater insight into environmental and social performance. For example, this gives us more insight into opportunities to further reduce the energy consumption of buildings, which ultimately also contributes to tenant satisfaction. Because this can reduce our tenants’ energy bills. It also ties in with our clients’ desire to help prevent climate change (Paris Proof). While the focus used to be primarily on the financial benefits, today it is also about the social aspect and focusing on tenant satisfaction.”
Sustainability and returns: the importance of innovative solutions
Sustainability, or on a slightly broader level ESG, plays a major role in the real estate sector. Consequently, sustainable real estate is in high demand. Monitoring data to reduce energy consumption is a simple example of innovation in sustainable real estate. Bouwinvest can use advanced software and data analysis, to identify a building’s energy performance and take appropriate measures to improve it. Bouwinvest is also well advanced in the field of climate adaptation: thanks to data and the proper processing of that data, Bouwinvest can gain insight into the physical climate risks that could affect its real estate. This is highly valuable information for both current and new investments. And by continuing to innovate on the sustainability front, Bouwinvest can not only take its social responsibility, but also optimise its financial returns: an increasing number of studies show that sustainable real estate achieves higher capital values.
“Sometimes a building can meets every standard and be labelled ‘Paris Proof’, and yet the energy consumption of that building can still be too high, either due to improperly calibrated installations or unexpected adjustments by users. Thanks to new software and data analysis, we can identify the cause of the higher energy consumption, which in turn enables us to take appropriate measures,” Micha and Gilles explain.
Innovation as an engine for future-proofing and growth
Micha: “Bouwinvest does not see innovation as an end in itself, but as a way to remain future-proof and to continue to meet expectations. Opportunities emerge quickly and technological developments are moving at lightning speed. In collaboration with the various departments within Bouwinvest, we try to determine how a solution can add value to a fund or mandate and then link this to our strategic objectives. And the more complex an innovation is, the greater the commitment we need from the organisation. And to do that we all need to be on the same page. By constantly responding to this, the organisation can continue to make a difference and remain successful in a dynamic sector.”
Both the Bouwinvest organisation and its clients want and expect to receive well-founded insights more quickly and more often. Gilles explains: “We live in a time when you can use an app to order two avocados and have these delivered to your front door within 15 minutes, for the same price as at the supermarket. This trend and those expectations are carrying over to our industry, where we have to respond to the high demands and expectations of our clients.” To achieve that it is important to work with and on the basis of data and to have clear goals. And of course, we need to do this in collaboration with various areas of expertise, because sometimes adjacent issues such as privacy legislation, IT security and new payment systems come into play.
Strategic fit and success rate
It is essential to assess the strategic fit and success rate of innovations, says Micha. “This means assessing how the innovation aligns with the strategic objectives we have set out. The success rate is determined by how concrete and feasible an innovation is according to our assessments. Micha: “For example, we need to know whether users really want it and whether we can also realise it. The aim is to select and apply the best innovations, so that we remain ahead in terms of achieving our financial and social goals.”
The return on innovation is greatest when a successful experiment can be repeated on a larger scale. An interesting example of innovation can be found in the NEXT building in Eindhoven. This is part of a European innovation project and includes numerous aspects of sustainability, privacy and IT. Although it is a pilot, we immediately implemented the new applications in 90 apartments. “In such unique projects, not all solutions are scalable. However, individual elements can be implemented on a larger scale. In the case of NEXT, one example is the smart dishwasher that makes optimal use of the energy grid and a resident’s daily routine. In that sense, the NEXT project acts as a showcase for new developments and technologies that involve us deliberately going one step further,” Micha says.
The pace of new developments is constantly increasing and the demand for smart solutions is on the rise. According to Micha and Gilles, there are still three specific fronts on which we can make or conduct research into additional gains. “Firstly, we have circularity, where we can take steps in the area of circular kitchens, materials passports and research into making circularity concrete in collaboration with clients. Secondly, we can use smart technology to make use of more data from buildings, so we can make better and faster decisions. In addition, (generative) artificial intelligence offers opportunities to increase effiency and create new solutions. This starts with determining how we can apply technology and identifying the user cases that are most relevant to Bouwinvest’s business. We are already working hard on this front.”