How DAO PropTech selects a real estate project using data

Every successful organization has a secret that can be attributed to its success. KFC and Coca-Cola have their secret recipes, and Apple has a total of 72,054 unique patents. Similarly, one of our unique selling points is our project onboarding mechanism.

This piece explains how we uniquely use data to empower us towards an institutionalized decision-making process – unlike any other in the industry.

The need for data

While most industries have started embracing the power of data to make better-informed decisions and calculate trends, there is a severe lack of factual data for real estate in Pakistan. We identified the need for data because

  • It eliminates inefficiencies

  • It helps us identify current problems and provide future solutions.

  • It allows us to avoid uncertainty and helps us make informed streamlined decisions.

  • It enables us to better predict future growth based on past trends and current needs.

Some key findings

So we started by conducting extensive research studies throughout the industry, and we came across some astonishing figures.

Had real estate in Pakistan been built using these data points, use cases, and future growth in mind, Pakistan wouldn't have so many empty commercial buildings on one side and a housing shortage of over 10 million units on the other. These issues arise when the market decides to follow a profit maximization trend instead of taking a data-backed approach that makes sure every project conforms to the current or future needs of the population.

How do we go about it, then

Once we had access to an ample amount of data, we focused on analyzing the various characteristics of the local real estate market and different geographical and demographical attributes.

This empowered us to pivot towards a more use-case-based business model where projects are built on current or future needs instead of typical real estate development trends.

This is where our proprietary project onboarding mechanism does its magic.

The Project Selection Matrix

For the first time in Pakistan, DAO PropTech brought together real estate developers, experts, and academically acclaimed behavioral experts from around the globe to develop this cutting-edge process.

What is the Project Selection Matrix?

The Project Selection Matrix is a decision mechanism that helps us identify if a project is worth onboarding on our platform.

The process comprises a series of questions that thoroughly vet a project from a multivariate view, including:

  • Business potential

  • Area characteristics

  • Legal factors

  • Financial factors

  • Project pricing

  • Developer's credibility

There are seven different categories, and each serves a specific purpose. For example, the business perspective section determines whether a project has a suitable use case and would actually be of use to its intended audience. This, in turn, would determine what kind of rental returns the project would yield.

Each section is assigned a weight based on the impact it would have on the final decision.

Based on the results from these questions, the usability of a project is judged. The Project Selection Matrix then gives out the DAO Score, which is scored out of 1000 points; the higher the score, the higher the chances of the project being selected.

It is essential to know that one of the core themes around the Project Selection Matrix is the risk vs. return approach. The higher the score a project has, the less risky an investment it tends to be. However, that would mean lower returns. Similarly, a lower-scored project may not be all that bad as it could yield higher returns.

All of the projects currently on our platform have been transparently assigned their respective scores to help customers make an informed investment decision and lower their barriers to entry. It also allows investors to choose the project of their liking with respect to their risk appetite.

Why was it necessary?

Starting a real estate project is a strategic decision. Typically, gut feelings, intuition, emotions, and a bandwagoning effect affect the decision-making process in Pakistan.

We believe that having an institutionalized and data-backed system was necessary to have a rigorous evidence-based process where subjectivity and bias are minimized. This is a fundamental decision, and taking that decision without a systematic method that computes onboarding is more than essential.

The goal here is to automate, systemize, and remove the human element throughout the decision-making process, resulting in coherent and accurate decisions.

Conclusion

One thing is clear – the need for a standardized decision-making process.

The Project Selection Matrix enables people from all walks of life to make informed decisions based on their investment purpose and risk appetite. DAO PropTech is a platform that provides such information transparently, in line with our values. Against market norms, the requirement of such a practice can be judged by the fact that there exists an enormous supply and demand gap within the Pakistani real estate sphere.

The industry's progression via PropTech allows for real estate to be governed by such innovations that should be mandatory for a developing economy like Pakistan, where enablement and inclusion are already scarce.

Esa Imran

Marketing Communications Associate