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Inflation Insulation: What REITs Need to Know about Staying Competitive amid Inflationary Pressures
Rising inflation rates, economic uncertainty, and a decline in the demand for office space are creating fresh challenges for real estate investment trusts (REITs) that are operating in an already challenging marketplace. With the US Federal Reserve hiking interest rates through 2022, it has become increasingly prohibitive for REITs to borrow funds or make portfolio acquisitions. The most viable option for REITs to stay competitive in this environment is to focus on strategic execution and innovation. Additionally, they will need to generate assured income streams to insulate themselves from the fluctuations of an unpredictable economy.
Modular Automation for Significant Business Efficiencies
Keeping in mind that the economy will be sluggish in 2023, many REITs are likely to slash their tech budgets; however, this could prove to be short-sighted as technology can be a dominant tool to innovate and improve business efficiency. According to Deloitte’s 2023 Commercial Real Estate Outlook1, more than 43% of respondents identified process automation as their top target capability for PropTech, followed by 35% for marketplace data and analytics, and property visualization through AR/VR at 33%.
The writing on the wall is clear. Real estate firms need to explore how PropTech tools can help unlock business potential in the long run, and this is where a transformation partner can help. By leveraging a third-party provider’s expertise in functions like risk management and internal audit, property management, tax accounting and reporting, portfolio management and CRE development, REITs will be able to focus on enhancing core services and improving operational efficiency. REIT firms that can ride out the current slump and reposition themselves by adopting technology will see another period of sustained growth in the coming year.
Creating an Inflation-proof REIT with RRD GO Creative™
RRD GO Creative™ can help you meet all your real estate accounting and finance, administrative, data management, and analytics requirements with a mix of relevant technologies, efficient processes, and skilled resources. Using innovative methodologies and tailored solutions, our experts work with you to improve your bottom line, enhance operational efficiency, and build a scalable environment.
Beyond cost efficiencies, we help you plan better for market surges and downturns by offering visibility into trends, supporting decision-making, and managing performance. For more information on how you can create an inflation-proof business, contact me at: sampathkumaar.sridharam@rrd.com.