Most real estate value is created at the urban level, but some of the most expensive cities in the world are the least well-functioning. So, it does not follow that improvements in the ways cities are run will flow directly into increased real estate value, but they might.
Big data techniques are increasingly being adopted by city governments to improve the urban environment and reduce the cost of doing so. The initial results are very encouraging from an urban perspective. Whether big data mean big gains for real estate owners is less clear.
Big data has three dimensions: Volume, Velocity and Variety.
Volume: big data is large—often measured in petabytes or more.
Velocity: big data is frequently generated continuously, in or near real time. Twitter posts, cell phone location data, and information from weather and air quality sensors are examples.
Variety: big data comprises numbers, text, images, video, audio and other kinds of data. Analysis needs to be flexible enough to deal with any mix of types.
According to Glaeser, Kolko and Saiz rents in any location are a direct function of wages, jobs and amenities. Where big data can generate productivity or amenity gains in cities there will be a proportionate rise in real estate values.
Productivity Premium + Amenity Premium = Rent Premium
Urban big data is comparatively new, so the scope of initiatives pursued in different parts of the world varies widely. Below are some examples.
Impact on City & Real Estate Values
NEW YORK CITY, NY, USA:
The Health and Human Services Connect initiative allows clients to walk into different agencies without duplicating paperwork. It allows the city to save costs, provide better services and even fraud.