Multidimensional drivers of change - A transformation process of real estate business models: Empirical evidence from the German real estate industry

The real estate industry in general and its business models in particular are facing a transformational process, caused by fundamental and multidimensional changes in technology, economy and society. The approaching transformation process results from structural change, which is triggered by megatrends and various drivers of change. The changes in market environment and business models are going to be permanent, thus this process is of strategic importance for long-term decisions of all market participants in the real estate industry. Existing business models come under pressure to adapt, but at the same time changes offer a vast amount of development opportunities for all market players. Due to real estate participants reacting to this change, we speak of a transformational process.So far, no systematic research about how this transformation process is affecting the real estate industry has been done. Apparently, research has dealt with specific aspects but has failed to provide a comprehensive overview of this research domain. Therefore, our first research goal is to measure the diverse mechanisms of this transformation. Subsequently, our further research objective is to point out how business models of the various German real estate industry participants are affected and how they adapt to the pressure of structural change.Based on a systematic literature review, a theoretical framework has been developed. This framework is tested empirically by a quantitative survey of 249 decision makers in top management positions of German real estate industry. Structural equation modelling is used to show that megatrends have an indirect impact on corporate adjustments of the participants. The change processes triggered in this way, however, only translate into action through concrete drivers of structural change, that are relevant for this specific industry. Further investigations have been carried out on the market participants to figure out the relationships between the drivers of change and the adaption strategies. The results show that it is not just digitalisation that triggers the transformation. For many players, increase of efficiency in their traditional processes is their main focus, instead of evolving new business models or products and services.Only if the effects of the drivers of change and their consequential impacts on business models in the real estate industry are anticipated correctly, strategic management approaches dealing with future challenges and actively shaping the transformation processes, can be developed properly. The findings help to characterize the need for change in the real estate industry. Furthermore, the study reveals approaches for developing new and innovative business models.

The German real estate and construction industry is facing a transformation, triggered by fundamental changes in technology, the economy and society. The purpose of this paper is to explore how these changes exert pressure to adapt on existing business models, while also offering opportunities for their further development. A model that attributes the transformation of the real estate industry to megatrends, specific structural change drivers, business models and the interaction of the groups of players in the value creation system is developed. The model is tested empirically by a survey. Structural equation modelling is used to measure the impact of various determinants of transformation and the relevance of adaptation strategies to the different groups of players. As a result, the study explains three impact mechanisms of the transformation in the real estate industry. The transformation originates from the occupiers, who need more flexible space and are focusing on holistic solutions that are not provided by the real estate industry. Service providers are striving to increase the efficiency of their traditional processes, rather than evolving new business models or services. The investors recognise the increasing importance of the occupiers but they are rarely pursuing the resulting strategies. Property developers recognise these requirements: their adaptation strategies most strongly question their previous business. For practitioners, the results point out the opportunities and risks of transformation and help to illustrate the need for change. For academicians, the results indicate a way to explain and measure the transformation of a value creation system.

PurposeGerman real estate markets used to show little transparency in the past. This has changed over the last 15 years. The purpose of this study therefore is to examine the current state of transparency.Design/methodology/approachThe study investigates and discusses the concept of transparency in general, availability of private and public market data, major real estate investment products, performance measurement, changes in the regulatory environment and the emergence of organizations and publications. The findings of this study are obtained in a comparative manner: The transparency status of the 1990s in the different areas researched is compared to the current German and other international standards. The authors describe the relatively opaque German real estate market as it was at the beginning of the 1990s and show how it has improved to date.FindingsThe results show that transparency in the German real estate market has noticeably improved in all researched areas. But still, compared with the USA or the UK, the German real estate industry and real estate market still lack transparency and are characterized by information asymmetries and opaqueness.Originality/valueThe results indicate that the German real estate market and industry become more mature and bit by bit converge with their US and UK archetype.

Impacts of Digitization on Real Estate Sector Jobs: Significant Structural Change Expected

In the current real estate transformation, both the real estate value creation system and its business models are changing. For real estate developers in particular, the need to adapt their own business models is becoming apparent. Therefore, this research project examines where the strongest influences occur in the environment of real estate developers and the effects of these structural changes on real estate project developments. The purpose is to highlight the strategic influence of the changes taking place as well as the resulting need for strategic action for business model innovations.For this purpose, we use a mixed method approach. First, we use graph theory and social network analysis to determine which stakeholders have the strongest influence on real estate developers. The data basis is a quantitative survey of 249 decision-makers in the real estate industry. Based on this, we conduct 28 semi-structured interviews with relevant stakeholders in real estate development in order to describe and contextualize the changes and actions that have an impact and to derive the concrete need for action.The results show that real estate developers, as central actors in the real estate transformation, are strongly affected, while at the same time they are also the source of significant influences. Changing occupant requirements increase the demand for holistic services provided by developers. Cooperation between developers and occupiers helps to adapt existing space to the current requirements of new working environments and at the same time provides potential for developing innovative forms of space provision in the sense of space-as-a-service. In order to be able to offer holistic solutions for space provision, an integration of real estate value-added stages is emerging. For developers, digital technologies provide potentials to bundle services as a central real estate player, although uncertainties and a lack of standardization still pose hurdles.The findings help to understand the change processes of the real estate industry transformation more profoundly. For real estate developers, the results provide strategic options for adapting their business models due to changing business conditions.

Altering and enhancing existing business models through business model innovation has emerged as a powerful competitive strategy that can provide advantage over extended periods of time. Business model innovation also presents a fundamental counterpart for technological, product and organisational innovations. Success stories of unconventional firms disrupting markets and sustaining financial rewards over competitors through business model innovation can be found in virtually any industry. A key success factor for long-term competitiveness lies in the implementation of multiple, rather than punctual, business model innovations over time, although achieving change through successive iterations is a challenge driven by market and technological dynamics and disruption. However, the lack of empirical investigation on the dynamics of business model change over extended periods of time limits our understanding of how established firms can mimic successful innovators and reconfigure their business models over time. This thesis responds to this gap by exploring the dynamic mechanisms enabling business model development in successful, high-performing firms. It defines and examines the distinctive properties of business model development to understand what determines success in extended business model change processes. The theoretical model and research design were developed to empirically investigate the sequences of change events in business models to find patterns characterising business model development in high-performing firms. The theoretical framework deconstructs the structure of a business model using three well-accepted dimensions of value: value creation, value delivery and value capture. It treats the business model as a dynamic open system in which a firm’s dynamic equilibrium behaviour and complementarity mechanisms are the drivers of change. Then, it employs principles from organisational theory, strategic management, innovation and entrepreneurship to explore the developmental trajectories of business models by examining: (a) the agents and nature of the actions driving business model changes; (b) the frequency of business model change events; (c) the magnitude of business model change events; and (d) the order of business model change events. The exploratory, longitudinal and quantitative research design supporting this study is process- based, where business model development is formulated as a sequence of change events unfolding over time. A set of 12 financial ratios are used to examine fluctuations in a firm’s operational, economic and product-market domains that are attributable to business model transformations for a sample of 1,651 listed firms in the IT sector worldwide. This sector was selected as the research setting because of its dynamism, global size and the pervasiveness of the technologies underpinning it. Business model change events are identified through outlier detection and analysis of coordinated changes across the value creation, delivery and capture dimensions of the business models. Data were collected from a large financial database and transformed into individual sequences of change events. A validation procedure assessed the accuracy of the identification process for business model change events through qualitative data and in-depth analysis for four firms in the larger sample. Then, the individual sequences of change events were used as inputs for data mining methods of analyses, complemented by frequency domain analysis and statistical tests, which revealed the patterns of business model development in high-performing firms. The results suggest a significant association between the timing and intensity at which firms change their business models and their average performance over time. The evidence also suggests that business model change is likely to culminate in events where the value delivery dimension is altered. In terms of the frequency and magnitude of changes, high-performing firms are more likely to develop their business models through frequent and incremental alterations over time, except for mature-large firms who, compared to young-small, young-large and mature-small firms, are more likely to implement radical, less frequent changes over time. Both environmental and internal forces influence the intensity at which high-performing firms typically alter their business models, although environmental factors are more significant than internal forces. Both unconscious and deliberated actions influence business model development in high-performing firms. Unconscious actions dictated by the firm’s particular characteristics of age, size and sub-industry membership are a more significant influence than deliberated, emergent actions. This research develops the new concept of business model development, and provides a contribution to theory by empirically examining a previously unexplored process. By adopting the process-based approach, this research contributes to new thinking and research in business model innovation centred on analysing the flow of events and patterns of business model development across multiple cases. Methodologically, this research developed a research design appropriate for large samples of firms, able to analyse multiple developmental trajectories of business models in a systematic and consistent manner. The research can assist practitioners and firms’ leaders adjust established business models by providing guidance on the intensity, order and frequency of the changes required.

With the development of modern society, the competition in the real estate industry becomes more and more fierce. In this competitive environment, real estate companies need to have excellent marketing capabilities to stand out and achieve sustainable development. Therefore, it is a key issue to determine the evaluation index of real estate marketing ability and choose the appropriate evaluation method. As one of the important pillars of economic and social development, the real estate industry is facing fierce competition. First of all, the market supply and demand relationship is constantly changing, the demand structure is diversified, and consumers are more rational and picky, putting forward higher requirements for the quality and service of real estate products. Secondly, there are many market participants, and the competition among real estate enterprises for customers and market share is becoming increasingly fierce. Innovation ability, market development ability, brand image, etc. have become the key factors for enterprises to win. Finally, changes in the policy environment and fluctuations in the macroeconomic situation also affect the development of the real estate market. Therefore, real estate enterprises need to comprehensively enhance their marketing capabilities to meet the challenges and opportunities of the market. This paper mainly discusses the evaluation index and method of the marketing ability of real estate enterprises. The article first introduces the fierce competition in the real estate industry, enterprises need to have excellent marketing ability to stand out and achieve sustainable development. Therefore, determining the evaluation index of real estate marketing ability and selecting the appropriate evaluation method become the key issues. The article then introduces the determination of marketing capability evaluation indicators need to consider many factors, such as corporate strategic objectives, business models, market environment, etc., and puts forward some evaluation methods, such as performance evaluation, research, SWOT analysis, wordof-mouth brand evaluation and internal evaluation. Finally, the paper suggests that enterprises should formulate evaluation plans according to the actual situation and objectives, and formulate corresponding improvement and promotion measures according to the evaluation results, so as to meet the needs of market changes and enterprise development.

Construction and Real Estate NETwork (CORENET) is the flagship information technology (IT) project undertaken collaboratively by various government agencies of Singapore to improve the productivity and performance of the construction and real estate sectors. It is a comprehensive network system consisting of a series of IT systems and services that allows seamless and expedient exchange of information between relevant government agencies and parties involved in the construction and real estate industry. Provides an overview of the concept and services offered by CORENET, and then evaluates how this system could bring about changes to the real estate and construction industry in Singapore. Three areas of IT‐induced revolutions can be expected in the real estate and construction processes, if the CORENET system can be successfully implemented and accepted by users. First, compression of time and process is one of the possible outcomes that can be facilitated via the integrated platform of CORENET. Second, knowledge contents would receive growing attention from the prospective CORENET users. Third, reconfiguration of business concept and scope may take place, which may, as a result, lead to the emergence of a new business model and the creation of ample business opportunities for the CORENET users that possess the first‐mover advantage.

The integration of the metaverse into the real estate and construction industry reveals various potentials, but also challenges. The increasing digitization in the architecture, engineering, construction, and operation (AECO) sector requires a critical examination of aspects such as the metaverse. This paper is dedicated to examining the impact of the metaverse on the real estate and construction industry. The following specialist article is primarily aimed at the target group of the AECO sector, with the aim of gaining an initial overview of the opinions within this sector. The methodology used includes an in-depth literature review and a representative survey. Respondents from different age groups and areas of activity within the construction and real estate industry took part in this survey. The research questions of this paper are aimed at identifying the range of metaverse applications in the AECO industry, assessing their potential impact on business potential and challenges. The aim is to develop initial definitions and use cases and to create an overview of opinions in the industry. In this context, potential opportunities and risks will be examined to derive recommendations for an effective integration of the metaverse into the AECO industry. The results of this paper conducted indicate that there is still considerable uncertainty in the construction and real estate industry. It appears that the term “metaverse” and the associated potential through targeted use cases are not yet widespread in this industry. The survey participants recognize a potential for 3D visualizations in the metaverse that extends over the entire life cycle of buildings. An exemplary scenario for this is the use of 3D visualizations both during the planning phase and in marketing. The challenges identified shed light on uncertainties relating to data protection, privacy, and the influence of the internet. The results of the study reveal a high level of uncertainty and ignorance within the industry when it comes to understanding the metaverse. Based on the results, further studies are needed to establish the understanding and real potential of the metaverse in the industry. Conducting workshops specifically aimed at the AECO sector can help to deepen understanding of the potential of possible use cases.

According to the survey done by IBM business consulting services in 2006, global CEOs stated that business model innovation will have a greater impact on operating margin growth, than product or service innovation. We also noticed that some enterprises in China's real estate industry have improved their business models for sustainable competitive advantage and surplus profit in recently years. Based on the case studies of Shenzhen Vanke, as well as literature review, a framework for business model innovation has been developed. The framework provides an integrated means of making sense of new business model. These include critical dimensions of new customer value propositions, technological innovation, collaboration of the business infrastructure and the economic feasibility of a new business model.

In recent years, digital marketing communication has emerged as a powerful tool for influencing consumer behavior across various industries, including the real estate sector. This study aims to investigate the effects of digital marketing communication on consumer buyer behavior within the context of the real estate industry. The research employs a mixed-methods approach, combining quantitative surveys and qualitative interviews to gather data from real estate consumers and industry professionals. The quantitative phase involves administering structured questionnaires to a sample of real estate consumers to assess their perceptions, attitudes, and behaviors toward digital marketing communication channels, such as social media, websites, email marketing, and online advertising. The qualitative phase involves conducting in-depth interviews with real estate industry professionals to gain insights into their strategies, challenges, and best practices in leveraging digital marketing communication to influence consumer buyer behavior. The findings of this study are expected to provide valuable insights into the impact of digital marketing communication on various stages of the real estate buying process, including information search, decision-making, and post-purchase evaluation. Additionally, the study aims to identify key factors that influence consumer engagement with digital marketing content and channels, as well as the role of trust, credibility, and authenticity in shaping consumer perceptions and preferences in the real estate sector. Ultimately, the research aims to contribute to the existing body of knowledge on digital marketing communication and consumer behavior in the real estate industry, informing practitioners and policymakers about effective strategies for leveraging digital channels to attract, engage, and convert prospective buyers in an increasingly competitive marketplace. These are the findings of the study. The study realised that the factors that contribute to consumer engagement with digital marketing content and channels were social media (Facebook and Instagram). Secondly, the study shows that social media has a positive and significant relationship with consumer buying behavior. Lastly, the study revealed that consumers perceive digital marketing-related content as high when it is trustworthy.

This paper employs machine learning models to examine the bidirectional predictive ability of tail risks between the real estate industry and other industries. We find that the real estate industry (most industries) can significantly reduce the prediction errors of most industries (the real estate industry), indicating a bidirectional predictive relationship. This paper proposes a new predictive perspective to discuss the association between the real estate industry and other industries’ tail risks, overcoming the limitations of traditional econometric models that can only analyse historical correlations and risk levels without offering predictive capabilities.

Since the reform and opening up, China’s economy has been booming, especially the real estate industry and the automobile industry, which have become the first and second pillar industries of China’s economy in recent years. Different scholars have studied the impact of the real estate, residential and automotive sectors on other consumption and have different attitudes. However, few studies have analyzed the relationship between the two, and it is impossible to know the specific relationship between them. Therefore, this paper first puts forward a new theoretical hypothesis for the interaction between the two, then uses Eviews7.2 as the main data processing tool, and uses the cointegration test and the Granger causality test to conduct an empirical analysis of the annual number of new registered civil vehicles and the annual real estate and residential development investment amount in China from 2002 to 2022. The results show a long-term and stable equilibrium relationship between civil automobile consumption and the real estate and residential industry and that civil automobile consumption is a one-way Granger reason for the development of the real estate and residential industry, which is in line with one of the hypotheses. Finally, based on the conclusion, this paper proposes policy suggestions to promote real estate development through automobile consumption.

This research analyzes the fluctuations on market risk for the listed firms in the Vietnam real estate, construction and construction material industries as it becomes necessary, esp. after the financial crisis 2007-2011. It also provides us with a model to identify key causes of these above risk fluctuations. Firstly, by using quantitative and analytical methods to estimate asset and equity beta of the total 205 listed companies in Vietnam’s real estate, construction and construction material industry with a proper traditional model, we found that in the viewpoint of asset beta used as market risk measurement, the construction industry has the lowest risk, next is the construction material industry and real estate one has the highest risk. Secondly, we recognized that in the real estate, construction and construction material industry, the main factors affecting market risk are GDP growth, lending rate, and inflation. Thirdly, by using a proper quantitative analysis method, the study realized that in the viewpoint of asset beta, construction industry has the lowest market risk because of GDP growth decreasing, inflation increasing and average income increasing. On the contrary, real estate industry has the highest market risk because GDP growth decreases and lending rate increases. Finally, this paper provides some outcomes that could provide companies and government with more evidence in establishing their policies in governance and in monitoring these industries.

We use the MGARCH-BEKK / DCC model to study the volatility spillover effects and dynamic correlations between industry indexes. We selected indexes for four industries: real estate, raw materials, manufacturing, and banking. The research results show that the real estate industry will be greatly affected by the manufacturing industry, raw materials industry, and banks, and there are two-way fluctuation spillover effects between them. The raw material industry is mainly affected by the manufacturing industry, and it is also affected by real estate and banks, but the impact is relatively small. Banks have influence on the other three industries, especially on the real estate and manufacturing industries. Manufacturing mainly affects the real estate and raw materials industries, but it has less impact on banks. In addition, the DCC coefficient between stock indexes is positive for most of the time period. The dynamic correlation between the real estate index and ICBC stocks, and the dynamic correlation between the raw material index and ICBC stocks have significant asymmetry, and to some extent, their fluctuation characteristics are similar.