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The Benefits of Upskilling Excel Modelling Skills in Real Estate, for both employees and employers

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Article posted by Tom Enefer on Jun 21, 2024

If we could pick one skill-set essential in modern Surveying, would it surprise you to hear financial modelling skills at the top of our list? Traditionally, we’ve seen modelling needed within analytical disciplines, and then within broader real estate professions, we typically saw it within roles explicitly connected to the appraisal of transactions.

But over the past five years, multiple trends have meant that real estate organisations of all forms have had to put an emphasis on their quantitative abilities to create the soundest recommendations to investors. This stretches into so many disciplines, not simply investment but also asset management, corporate real estate, development, agency, and more.

More and more often, I now hear clients asking for Excel competency in the candidates they review, and there’s no doubt that a candidate’s ability to produce sophisticated cashflows greatly help their job search. But why is this?

Why has Excel become so vital in modern Real Estate?

I’ll begin this with a caveat – there are of course companies within property who have always prized modelling ability – property private equity firms come immediately to mind. But the change I’ve witnessed stretches across a range of businesses within our sector.

The Financial Crisis in 2008 necessitated a cultural shift where a Surveyor’s intuition for a “sound deal” was no longer sufficient to investors who had witnessed dramatic drops in real estate values globally. Detailed investment proposals rooted in cold financial fact and backed up by comprehensive scenario analysis became more necessary. By extension, the need for the Surveyors in the room packaging these deals to investors to know the numbers and terminology surrounding the modelling assumptions, also became necessary. More than a decade on, property companies of all types are as much financial institutions, where debates over levered and unlevered IRR ring through boardrooms.

But the above would only explain the increase of modelling needs within transactional real estate roles – something, as I say, that has now stretched into multiple disciplines. Well, this now brings me onto our second reason.

The increase of asset repositioning, and the modernisation of Real Estate:

To me, this second reason is even more recent and has become a fixture across our team’s roles in the aftermath of COVID. Put simply, the rise of the living sector and the drive towards elevating communities through urban redevelopment, has created an environment where significant repurposing is needed with assets across the UK. The only problem? Any development or repositioning strategy entails enormous risk and likely an extensive development or cap ex period before any profit is yielded from the scheme.

As such, businesses employing these strategies need candidates with extremely strong analytical skills capable of scenario modelling…

The benefits for employers in upskilling their employees

Simply put, having enhanced modelling capabilities within your organisation will make you a better business and help secure more investment in your projects.

Models provide the backbone for decisions by investors in this new age of real estate, and if your teams have the ability to build these models and the confidence to speak about what they’re showing with investors about the viability of a project, you’re suddenly getting more out of your teams than ever before. This will improve your forecasting and decision-making capabilities, giving you more accurate results that’ll appeal to potential investors more, especially in a tight market.

How and why to upskill as an employee

As an employee, learning more about Excel modelling will make you more of an asset at your current organisation, and benefit you later in your career as the sector continues to value quantitative skills more and more. Those that have the quantitative skills and experience to model the transformation of one asset type to another of these are in great demand, as organisations want to be able to convince investors of the plausibility of such changes and when they could expect a return. In practical terms, they need a candidate who can benchmark their development, asset management or leasing work.

However, any University degrees in Real Estate, or the 2-year APC course, don’t provide the modelling skills that are actually needed by employers, something I’ll go into in greater depth in our next piece out soon.

 

If you want to talk about your real estate career, or how our network of upskilled candidates can add another dimension to your organisation’s modelling capabilities, please get in touch with me below.

Email: tenefer@cobaltrecruitment.com

Phone number: +44(0)20 7478 2512

Bayfield Training is the market leader in of CPD-accredited courses in Real Estate financial modelling, strategy, and leadership and management. Contact them as a contact of Cobalt’s and get up to 20% off their upcoming courses.