CapitalBAY partners with Technical University Munich: Research project on digital real estate valuation
Berlin, 21. November 2019
Berlin, 21 November 2019 – "Revolution of Real Estate Valuation" is the title of the research project that Berlin-based Capital Bay GmbH (CapitalBAY) has entered into with the Data Innovation Lab of the TU Munich (TUM DI LAB). The aim of the cooperation, which will initially run for two years, is to use statistical-econometric methods to determine property values more precisely. The TUM DI LAB team aims to develop calculation algorithms based on micro-, socio- and macroeconomic factors that influence values in order to make more precise cash flow predictions. 21st REAL ESTATE provides the necessary data.
The first step is the development of a market rent model which enables a more precise determination of the cash flows and thus the IRR for all asset classes in the business plan on which the real estate valuation is based. In a further step, an artificial intelligence is to be developed that automatically applies the individual value-raising strategies for real estate to specific object and market situations according to the dynamic method developed by George Salden. An example: The algorithm should be able to identify on its own the value enhancement potential in the existing tenant list or in the condition of the building or plot, taking into account the forecast market development.
George Salden, CEO of CapitalBAY: "The insurance industry has long since developed automated models for predicting local hailstorms. We are now working on a more accurate forecast of the cash flows of a property, depending on parameters such as demographic or economic developments that will affect the value of the property. We are thus revolutionizing property valuation, which is still based on simplified discounted cash flow models."
The necessary data for the research project will be provided by 21st Real Estate. The company, a strategic partner of CapitlBAY, has divided Germany into a system of tiles: Out of more than 55 million interacting quadrants, about 2.3 million output tiles are generated, which are broken down to a size of only 200 x 200 meters in cities. 21st Real Estate uses the latest models to analyze distance-dependent relationships between different economic variables (spatio-econometric models), machine learning and AI.
Project name: Revolution of Real Estate Valuation
Duration: October 2019 to October 2021
Project group: five students of the TU Munich; fields of study: mathematics, computer science, data engineering and data science; from five different countries: Germany, Mexico, Japan, Indonesia and Romania
Project initiator: George Salden, CEO, CapitalBAY
TUM DI LAB coordinator: Dr. Ricardo Acevedo Cabra, TU Munich
Scientific project managers and mentors: Oliver Bachmann, Senior Manager Science Lab, CapitalBAY & Dr. Maximilian Engel, Specialist for Stochastics Dynamic Systems, TU Munich
Cooperation partner: Data Innovation Lab of the TU Munich, 21st Real Estate GmbH
Introductory video of the project:
CAPITALBAY AT A GLANCE
CapitalBAY is a holistic investment manager for properties. The company offers comprehensive, industry-specific solutions for institutional and semi-professional investors. CapitalBAY manages properties across all asset classes on behalf of its clients.
Using digital tools and processes, CapitalBAY and its management companies cover the entire property value chain. Internally co-developed transaction software assists investment managers in acquisition and valuation processes. In addition, CapitalBAY focuses on property users as key cash flow drivers in the value chain.
CapitalBAY, founded in 2016, has assets under management of approximately EUR 4.5 billion. More than 200 employees work at eight locations in Germany, Luxembourg and Hong Kong. The company is headquartered in Berlin.
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George Salden CEO
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