Altus CEO outlines real estate’s biggest opportunity

When Bob Courteau joined Altus Group as chief executive in 2012, tech did not trip so easily off the lips of property people as it does today. Except for Courteau. He joined the Canadian firm from software business SAP AG, where he was president of North America and global chief operating officer. Here EG talks to Courteau about how he views the role of tech and data in the real estate industry, how far he thinks the industry has come during his time in the sector and about the growth plans for Altus. When you ask Courteau whether Altus is a software company or a consultant, it is hard for him to answer. The tech, the data and the service are so intertwined that it is equally both. The use of data, software and technology is what, it says, enables it to deliver the best service to clients. “I’ve been in technology my whole career,” says Courteau, “and this is one of the last industries that hasn’t yet applied technology to really change the way business is done, both in terms of access to data to make decisions, workflow, for improvements in the way business models operate.” Growth industry Courteau says that when he joined the company five years ago, there was just $200m (£156m) invested in proptech, today that figure has ballooned to more than $3bn (£2.3bn). And the number of firms seeking to take advantage of that has followed: in 2012, there were around 1,000 software or technology companies in commercial real estate. Today there are more than 4,000. And Altus, with its Argus software, was one of those early movers in the CRE software and technology world. Courteau has his sights set on making the company the “global standard for real estate data aggregation”. “To be able to take software and data to the services business and create improvement, or take data out of a services business and aggregate it in a way where you create better insights and information, that’s what our aim is,” he says. And Altus isn’t afraid to splash the cash to achieve its aim. The company’s strategy is one of “acqu-hire”. Buy a company to hire its staff. It is a risky strategy, unless you get the people to commit to a business. “We’re trying to create a company that technology people want to go to and we’re doing this crazy crossover between taking real estate people – young real estate people – who are really smart and turning them into technologists and taking technologists and getting them into an industry that is exploding,” explains Courteau. Altus has a massive market share in North America, and its acquisitions in the UK over the past year have given it a sizeable footprint in the UK – some 600-plus staff, including more than 170 working on software development. But the firm has much greater ambitions. “We’re now starting to work closely with large European companies that want a global footprint,” says Courteau. “We expect that we will move into other markets. Our plan is to continue to invest. We want to be in Paris, we want to grow in Luxembourg. “The UK is still going to be the centre of gravity in Europe. We’ve done, on average, five acquisitions a year globally and our focus is on Europe – and obviously the UK – right now as a place where we would target our acquisitions.” We’re doing this crazy crossover between taking real estate people, young, real estate people that are really smart and turning them into technologists and taking technologists and getting them into an industry that is exploding Last November, Altus Group spent £36m buying rating specialist CVS and then in February 2018 followed it up with the purchase of specialist industrial adviser Aspect Property Consultants. More recently, it spent €20m (£18m) buying Taliance, a Paris-based provider of cloud-based alternative investment software. Having both consultancy and software means better efficiencies and better service for clients, according to Courteau. Generating cash He says that in the US alone, $650bn (£508bn) is spent on commercial real estate operating expenses and that just a 1% reduction in those operating expenses could generate more than $105bn of real estate value. “What that means,” he says, “is that for every dollar of decreased operating expense, $16 of property value is created. And what that means is that better performance out of ratings, thinking about energy, thinking about other expenses, is a pursuit that has not really been formalised in commercial real estate. Whereas in every other industry in the world there are these kinds of tools available.” What that really means, of course, is that if you can develop and deliver those tools you can save an industry a whole lot of money, drive up efficiencies and collect a healthy income yourself. “Through our services business and software, which are now being rolled out on a global basis, we are a company that is putting the basic framework in place that allows you to do that type of work,” says Courteau. “That’s our overall strategy as a company, to give customers who want to use these tools the ability to get results through information and through benchmarking.” For Courteau, this, the mass aggregation of data, is the future of real estate tech. “The ability to combine software and data is the next frontier of innovation,” he says, “and I can see that more in this industry than any other.” He adds: “Every great company you can think of has taken insight to change the way they do business and that is coming to real estate. You won’t see the shift in the risk profile of real estate as it we have in other industries but, done properly, using big data, understanding benchmarking, insight can give you an opportunity to outperform your competitors.” For the edge in real estate it is becoming increasingly difficult to not invest in, understand and utilise tech and data. And for Courteau, that’s why the sector is so exciting. “It’s an amazing opportunity,” he says. “I would tell anyone that real estate is amazing. If you have any knowledge of technology and you want to pick an industry, real estate is a good one and it will be very different from the real estate industry of before.” To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette