FrontLine Partners Viewpoint Series       Real Estate Software Market Overview          Market Sizing and Segmentation   ...
Real Estate Market Sizing        The global real estate market total asset value of $14.0 trillion dollars generates      ...
Real Estate Market Sizing        North America and Europe represent 75 percent of the market expenditure with        stron...
Real Estate Market Sizing        An estimated $16.7 billion was spent on software and services in the real estate        m...
Real Estate Market Segmentation        Six key market segments define the real estate industry                            ...
Real Estate Market Value Chain               Real estate market players have an aggregate set of valued functions that def...
Real Estate Market Segment Value Chains                While each market segment delivers its capabilities “a little diffe...
Real Estate Market Segment Value Chains                28 percent of the valued functions represent high or medium value w...
Real Estate Market Segment Value Chains                There is a close correlation between function value and technology ...
Real Estate Business Market Trends by Segment               Capital markets, owner/operator, and corporate real estate sho...
Real Estate Software Market Trends by Segment    The real estate technology market is growing to support the expanding cap...
Real Estate Software Providers         The market leaders differentiate themselves by their ability to maintain and delive...
Non-Core Real Estate Software Providers         Many non-core estate software providers have little penetration into the r...
Real Estate Software Providers Profile    Transaction processing and reporting have a robust offering across multiple mark...
FrontLine Partners Overview          FrontLine Partners (www.frontlinepartners.net) is a real estate consulting firm that ...
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FLP Real Estate Software Market Overview 2011

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Provides overview of real estate industry software market

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FLP Real Estate Software Market Overview 2011

  1. 1. FrontLine Partners Viewpoint Series Real Estate Software Market Overview  Market Sizing and Segmentation  Value Chain / Heat Maps  Trends by Sector  Competitor Positioning – Core vs. Non-Core  Emerging Opportunity in Workflow and Collaboration www.frontlinepartners.netR/E Software Market Viewpoint 1
  2. 2. Real Estate Market Sizing The global real estate market total asset value of $14.0 trillion dollars generates roughly $2.6 trillion per annum in real estate revenue Global Real Estate Asset Value (Total Asset Value), $TR The market asset value generates roughly 18% in per annum global real estate spend (revenues), $37.9 which in 2006 is $2.6 TR $34.3 $31.1 11.29% CAGR $28.2 $25.1 $23.0 $20.8 $18.8 $17.0 $15.4 $14.0 $11.8 $10.0 $8.4 $7.1 $6.0 $5.1 $4.3 $3.6 98 99 00 01 02 03 04 05 06 E E E E E E E E E E 07 08 09 10 15 16 17 18 19 20 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20R/E Software Market Viewpoint 2
  3. 3. Real Estate Market Sizing North America and Europe represent 75 percent of the market expenditure with strong spend in homebuilding, owner/operator, capital markets, and development Global Distribution of Real Estate Expenditure Market Expenditure (as a percent) by Geographic Region North America 38% Europe 37% Latin America 3% Market Expenditure (as a percent) by Geographic Region and Market Segment Asia/Pacific 22% North America Europe Asia/Pacific Latin America Homebuilding 35% 11% 10% 23% Owner/Operator 23% 15% 15% 15% Capital Markets 27% 40% 30% 5% Corporate 2% 10% 5% 7% Development/Construction 8% 20% 38% 48% Property Services 5% 4% 2% 2%R/E Software Market Viewpoint 3
  4. 4. Real Estate Market Sizing An estimated $16.7 billion was spent on software and services in the real estate market with half of that spend occurring in the U.S. Global Real Estate Technology Expenditure (2006 Estimate) Real Estate Technology Spend as a Percentage of Revenue Real Estate US Technology Spend as a Percentage of Revenue North America 0.8% Europe 0.6% Market 2006 Technology Expenditure Asia/Pacific 0.5% Segment Expenditure ($,BN) Propensity Latin America 0.2% Capital Leading $2.24 Markets Buyer Real Estate Technology Spend Owner Leading $1.47 By Geographic Region Operator Buyer North America 50% On-time Corporate $2.59 Buyer Property On-time $0.12 Services Buyer Home Lagging $0.51 Builder Buyer Latin America Europe 1% 35% Asia/Pacific Development/ Lagging 14% $0.42 Construction BuyerR/E Software Market Viewpoint 4
  5. 5. Real Estate Market Segmentation Six key market segments define the real estate industry Real Estate Market Segmentation Markets Home Development/ Owner/ Property Capital Corporate Building Construction Operators Services Markets Real Estate Homebuilders Master Plan Office Property Opportunity Funds Retail Users Communities Management Multi-Family Retail Lenders / Banks Large Block Housing Land Facility Development Industrial Management I-Banks Industrial Senior Housing Commercial Hospitality Energy Insurance Health Student Housing Construction Healthcare Telco Pension Funds Higher Education Military Housing Multi-Family Mixed Use Brokerage Government Construction Land Owners SpecialtyR/E Software Market Viewpoint 5
  6. 6. Real Estate Market Value Chain Real estate market players have an aggregate set of valued functions that define their capabilities Aggregate Real Estate Market Value Chain Tenant Property Re- Accounting/ Asset Coordination Lease Mgmt/ Risk Mgmt/ Investor Development/ Construction Leasing Legal Reporting Mgmt and Admin Facility Insurance Relations Development Improvement Mgmt•Identify •Detail •Property •Legal •Tenant Space •Lease •Monthly •Accts •Section 404 •Create •Manage the potential project ROI and Review Design & Setup/Mgmt physical receivable compl. External asset projects budgeting leasing •Lease Coordination •Tenant Rec. inspect process •Claims communica- •Position the•Pro-Forma •Construct- projections Negotiations •Tenant Space Billings •Vendor •Accts payable mgmt tions asset for model ion Mgmt •Prop. •Lease Review, •Recoveries contracts – process •Insurance •Manage growth potential •Gov’t Availability Approvals Revisions and (CAM, Tax, scheduled •Asset mgmt •Coverage external project permitting Report •Lease Approval Insurance) services •Periodic journal plan investors•Secure •Subcontracto •Marketing/ Abstracts •Tenant •Lease •Tenant Move entries •Create funds for r Mgmt Prospecting Construction Renewals In/Move Outs •Corp budgeting company project •Construct- •Tenant Coordination •Collections •Site repair, •Bank marketing•Monitor ion Progress Opportun- •Reporting •CAM Audits Maintenance/ reconciliation materials project Reporting ities •Site Design •Reporting facilities mgmt •Fixed assets •Manage Wall progress Identified •TI Budget •Prop & mgmt St. Analysts•Monitor •Lease •Bid Request Portfolio •JV accounting •Create/post project IRR Negotia- •Contract Reporting •Consolidations press tions Award •Property •Property releases •Reporting •Const. Budgeting accounting •Property Schedule •Procurement •Reporting Plan Design Mgmt • -Integrity (CAD) •Acceptance of • -Month End Premise • -Financial •Contractor Eval •Tenant Space Delivery •Reporting R/E Software Market Viewpoint 6
  7. 7. Real Estate Market Segment Value Chains While each market segment delivers its capabilities “a little differently”, there is a high degree of commonality in the underlying business processes Aggregate Real Estate Market Value Chain Tenant Property Coordination Accounting/ Risk Mgmt/ Asset Re-Devel/ Lease Mgmt/ Investor Construction Leasing Legal and Reporting Mgmt Development Admin Facility Insurance Relations Improve- Mgmt ment Home Builder Owner/ Operator Corporate Real Estate Capital MarketsDevelopment/ Construction Property Services R/E Software Market Viewpoint 7
  8. 8. Real Estate Market Segment Value Chains 28 percent of the valued functions represent high or medium value within the market segments Real Estate Function Pools of Value Tenant Property Re-Devel/ Coordination Lease Mgmt/ Accounting/ Risk Mgmt/ Investor Asset Construction Leasing Legal Reporting Mgmt Development and Admin Facility Insurance Relations Improvement Mgmt Home Builder Owner/ Operator Corporate Real Estate Capital MarketsDevelopment/ Construction Property Services High Degree of Value Medium Degree of Value Low Degree of Value Note: There is insignificant variation between geographic regions
  9. 9. Real Estate Market Segment Value Chains There is a close correlation between function value and technology expenditure in the real estate market, except in accounting/reporting Real Estate Technology Expenditure by Function Tenant Property Re-Devel/ Coordination Lease Mgmt/ Accounting/ Risk Mgmt/ Investor Asset Construction Leasing Legal Reporting Mgmt Development and Admin Facility Insurance Relations Improvement Mgmt Home Builder Owner/ Operator Corporate Real Estate Capital MarketsDevelopment/ Construction Property Services High Degree of Spend Medium Degree of Spend Low Degree of Spend Higher Functional Value than Technology Expenditure Note: There is insignificant variation between geographic regions
  10. 10. Real Estate Business Market Trends by Segment Capital markets, owner/operator, and corporate real estate show strong growth potential in the U.S. market Homebuilding Capital Markets » The growth in homebuilding has slowed. Builders are now looking » There has been significant expansion in growth of funds under to consolidate and cut-costs. management and institutional investment in real estate. » Many domestic homebuilders are looking for international » Few systems can handle the complex layers of visibility from opportunities. property level all the way through to fund and investor reporting level. » It is estimated that the top five homebuilders in the US represent 7-9% of the total homebuilding market. » There is a shortage of software solutions in the market, so there is a high degree of customization to platforms. » The top-tier technology solutions market place is highly competitive, while the mid-tier market does not offer end-to-end » Real estate performance has fueled investor demand as a solutions. separate asset class and significant queue of capital raised; seeking deployment. » There is an increasing consolidation & globalization in the market.Corporate Real Estate Owner/Operator» The top 10 corporations on last » Globalization of the year’s Buildings magazine census owner/operator sector is a key controlled more than 2BB square trend in this sector, as feet of real estate. exemplified by the latest Key Real» Flextime and telecommuting are estimates of 244 REITs in 24 Estate Trends countries. anticipated to reduce the typical square footage requirements. » 28 countries are likely to have» In the last five years corporations REITs in the next 24 months. began focusing more on real estate » Recent trends toward mergers, technology. acquisitions and privatizations» Creating appealing workspaces of previously public REITs. with ergonomic design is a top Owners are interested in Development/Construction Property Services » priority for leading companies. utilizing business intelligence Tools to assist in this endeavor are » Global infrastructure » “Green” principles are not tools to be able to analyze the on the radar of corporations. development will drive the only seen as part of real business according to internal construction sector in the estate development, but measures of KPI. coming years. throughout the industry as cost-efficient operating. » Private sector funding may provide some of the capital » Volatility in energy markets needed to build much needed leads companies to meter infrastructure. monitoring and other technology solutions.R/E Software Market Viewpoint 10
  11. 11. Real Estate Software Market Trends by Segment The real estate technology market is growing to support the expanding capital base Homebuilding Capital Markets » The top-tier technology solutions market place is highly » Integration of fund accounting software with core accounting competitive, while the mid-tier market does not offer end-to end systems has become a priority. Integration allows for more solutions. robust and integrated reporting capabilities. » Homebuilders favor technology that demonstrates a clear ROI and » The capital markets desire a more effective solution for fund is designed specifically for the homebuilding industry. accounting and reporting. » Virtual design centers are being attempted by some builders; an effective sales and marketing tool is needed in homebuilding » An effective warranty tool is needed for the homebuilding industry. Owner/OperatorCorporate Real Estate » Companies have a strong desire to» Today, corporations use Integrated purchase software to meet their Workplace Management Systems needs but have limited solutions. (IWMS) to effectively manage key metrics such as total square » Smaller to mid-tier providers can not footage and vacancy status. Key Real scale up and big providers want big Estate Trends deals.» Corporations are late adopters of technology to manage their real » Companies that have implemented estate assets and typically do not these solutions are now moving their implement technology until it is focus from back to front office absolutely necessary; that is functions. beginning to change. » Standardization of traditionally» Corporations that require systems complex business processes in the find that the solutions are still Development/Construction Property Services areas of leasing and CAM is being developing and do not fully meet implemented by some in the the industry needs. » Supply chain management. » Business technology is owner/operator segment. providing increased security.» The corporate real estate market is » On-line catalogues are » Electronic funds transfers, common in highly fragmented and providers common for today’s » Meter monitoring with real Europe today, are beginning to have a real challenge in selling construction purchasing. time data is important for become more common in the US as their solutions. energy management. well. » 5D CAD software is anticipated to be the CAD » Property managers have » Utilities cost containment and technology of the future. many of the same technical utilization management that feed data trends as the owner/operator into the ERP solution are on the radar. segment.R/E Software Market Viewpoint 11
  12. 12. Real Estate Software Providers The market leaders differentiate themselves by their ability to maintain and deliver quality technology Real Estate Market Providers Positioning Emerging Players Market Leaders “Building Industry Technology” “Setting the Industry Software Trends” Yardi Resolve Intuit MRI Cougar Accruent Tririga CTI Limited Ascendix Realm/Argus Primavera Peracon Sitera Manhattan JD Edwards Kardin Famis Fraser Williams Corrigo Skyline Real Data RealPage Bricsnet Virtual Premise AMTdirect Workspeed Net Facilities Niche Players Visionary Players “Serving Specific Industry Needs” “Emerging Technology Players” Corporate Owner/Operator Capital MarketsNote: Major ERP companies have been excluded R/E Software Market Viewpoint 12
  13. 13. Non-Core Real Estate Software Providers Many non-core estate software providers have little penetration into the real estate market, but provide services to real estate companies Non-Core Real Estate Market Providers Positioning Emerging Players Market Leaders “Building Industry Technology” “Setting the Industry Software Trends” Proforma ♠ Mega International ♠ iGrafx ♠ IDS Scheer ♠ ♥ SAP ♥ Business Objects ♠ ♥ Cognos Casewise Telelogic ♠ ♥ Information Builders EMC ♠ ● Open Text ♥ hyperion ♥ Oracle ● Stellent ♥ SAS ● Hyland Sybase ♠ ♥ Actuate ● Interwoven ♥ MicroStrategy ● Vignette Savvion ♠ ● Tower Software ● Xerox Tibco ♠ ● Objective Ultimus ♠ ♥ Applix ♥ QlikTech ● Xythos ♥ Spotfire ● Day Software ♥ Panorama ● SunGard ● Cimage Niche Players Visionary Players “Serving Specific Industry Needs” “Emerging Technology Players” Business Intelligence Collaboration WorkflowNote: Major ERP companies have been excluded R/E Software Market Viewpoint 13
  14. 14. Real Estate Software Providers Profile Transaction processing and reporting have a robust offering across multiple market segments, the same is not true for collaboration and work flow – an emerging market Capital Markets Homebuilder Owner Operator Corporate RE Realm Yardi MRI Skyline JD Tririga Accruent Edwards Business Analysis Business Intelligence Transaction Processing Reporting Collaboration No real estate market solution currently exists Workflow Core Value Player ParticipantR/E Software Market Viewpoint 14
  15. 15. FrontLine Partners Overview FrontLine Partners (www.frontlinepartners.net) is a real estate consulting firm that works with banks, institutional investors, lenders, owners, intermediaries, and service providers in the commercial real estate and financial services industry to help them accelerate growth of their business or reposition their business models and assets. FrontLine Partners offers a number of services ranging from strategy formation, corporate and business development, mergers and acquisitions, capital sourcing, work- outs and corporate restructuring. For additional discussions, please contact our Managing Partner: Jim Vincent (214) 369-2085 jim.vincent@frontlinepartners.netR/E Software Market Viewpoint 15
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