The Place Race

Should we be wowed by the where?

It's an interesting time to be working in alternative data. Long overlooked as a mostly academic pursuit, it has never really caught the full attention of the real estate industry, which has, with reason, commonly seen it as unreliable, hard to manipulate and difficult to drive business outcomes.

As with many things, COVID hasn't been the sole driver of change here, but it has certainly been a catalyst. Dramatic changes in human behaviors, unseen in a century, have rendered our previous assumptions about space usage largely obsolete, providing the largest opportunity to rethink and redesign our urban spaces since the post-war period. Knowing what, and indeed who, is where, when, is suddenly of great interest and, more importantly, value.

This has coincided with notable technological developments that have made it easier to both collect and process large volumes of "alternative" location data (mobile phone locations, social media content, transaction data, censuses etc). Put all these things together and we find ourselves in a world where the "power of where" is suddenly a significantly more coveted weapon in decision-makers' arsenals.

It is, therefore, not surprising to see significantly increased funding and M&A activity in this space. In the last month alone, we have seen bumper capital raises by the like of Safegraph, Placer.ai and Cherre ($45m, $50m and $50m respectively), and just this week Singapore-based Near.co announced its significant acquisition of US-based UM (previously Uber Media), positioning it as a major global player in this space. Just last year, Foursquare acquired Factual, which had itself raised over $100m.

The move towards consolidation in this space is understandable. The nature of data businesses is that there is exponentially increased value the more data you have access to. This is particularly noticeable in the alternative data space, where seemingly benign datasets can become incredibly powerful as a part of a broader picture. Take Safegraph, for example, who can merge POI data, building floorplans and mobile phone location data to create a very powerful (anonymous) consumer tracking and profiling solution.

As we have seen in the real estate "traditional data" world, with the likes of CoStar, Real Capital Analytics and Corelogic, we can reasonably expect to see a consolidated number of "alternative data" giants emerging over the next few years. Unsurprisingly, the US will likely take a lead here, though some EMEA and APAC players like Targomo and Near.co are prominent also. If, as McKinsey suggests, alternative data could be more insightful than traditional data in the real estate sector, then could indeed be scope for the emergence of some truly huge new alt-data players (CoStar is the largest traditional data player with a market cap of $34bn).

What remains to be seen is the role that the FAANG gang will play here. Amazon has recently announced it's move into the location data space, and with its Maps and Android offerings, Google/Alphabet is very well positioned also. Apple is being much more bearish, understandably concerned about the privacy, and reputation, risks involved in becoming a harvester and merchant of location data.

In short, this is certainly a space to watch and could well be the place to be.

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