Data-Driven Management in the Real Estate Business Must Take a Long-Term View
Source: Äri-IT Sügis 2025 (Business IT Autumn 2025)
Author: Gerli Ramler
It’s not just about the financially measurable benefit, but also end-user satisfaction.
The changes in the real estate sector over the past few years haven’t been the most favorable. The geopolitical situation, inflationary pressure, and the general economic slowdown have all affected the Baltic commercial real estate market. However, challenging times call for smart strategies, and the region’s leading commercial real estate company, Kapitel, has stood out in this regard. Company Business Controller Anne Junolainen discusses how well-thought-out IT investments have helped maintain stability.
“It’s important for us to keep the focus on a long-term strategy—to build and manage properties whose value grows over time and that ensure tenant satisfaction, even in difficult market conditions,” says Anne Junolainen. In addition to Estonia, Kapitel operates in Latvia, Lithuania, the Czech Republic, and the Netherlands. The group consists of 36 companies, as is typical in the real estate sector where each development project or completed property in the portfolio is its own legal entity. This ensures both the company and the banks have a clear overview of the revenues and costs of each property.
The last few years have brought a significant cooling to the entire Baltic commercial real estate market, primarily due to geopolitical instability and a weak economic environment.
Anne Junolainen explains that the declining and very quiet Baltic commercial real estate market also presents challenges for their company, but when comparing the Baltic states, Estonia’s situation is somewhat better. The total volume of commercial real estate transactions grew from €150 million in 2023 to €483 million in 2024. A large portion of this increase was due to the change of ownership for Viru Keskus and Kristiine Keskus shopping centers. “We ourselves increased our stake in Viru Keskus. This was a strategic decision. We believe in the development of retail and have focused on retail-leading trends when renovating our portfolio centers: key themes are changing consumer behavior and purchasing power, combining shopping with leisure opportunities, and offering essential services—especially health and beauty services—in the shopping centers.”
The Tallinn office space market is highly competitive. In the last year, demand has decreased and vacancy rates have increased across all office building segments. “Consequently, there is pressure on rental prices. While the work-from-home trend continues in some areas, many companies are returning to in-office work because of the added value it provides. Tenants need flexibility in rental relationships and prefer office buildings that offer a high-quality work environment and as many additional services as possible to ensure comfort and save time. This is precisely why, in recent years, we’ve installed car washes, gyms, massage rooms, parcel lockers, bicycle storage, and other services in our office buildings. Energy efficiency and reasonable utility costs also remain important.”
Kapitel adheres to a long-term strategy, and during difficult times, it hasn’t waited for better days but has instead invested intentionally. They invested €196 million in 2024 and €103 million in 2023. Major projects included the acquisition of a stake in Viru Keskus and the development of the Arteri Quarter in Tallinn and the Elemental Business Centre office building in Riga.
“Today, both the Arteri and Elemental buildings are fully leased, which shows that a well-conceived and attractive development can find a tenant even in tough times,” says Anne Junolainen. In addition to commercial and office buildings, Kapitel has recently developed the Solina spice factory and renovated several shopping centers, with the renovation of Spice Home in Riga currently underway. Kapitel’s projects haven’t only been construction-related; a portion of the investments has been linked to developing IT solutions and data-driven management.
IT Investments Must Not Be Random or Local
“To ensure all companies can perform their daily work on consistent foundations and with uniform management and financial accounting principles, a unified enterprise resource planning (ERP) system is essential. IT investments and their management are handled centrally at the group level—including financing, analysis, and ordering of solutions. It’s vital that every new piece fits the existing solution and works for all companies. Every puzzle piece must fit into the existing overall picture, not operate in isolation,” Anne Junolainen explains.
Since 2015, the entire group has been transitioned to a unified ERP system, starting with the implementation of Microsoft Dynamics NAV, later renamed Dynamics 365 Business Central. The first units transitioned in 2016, and the entire group followed in 2020. All subsidiaries currently operate on the same platform. The last major project was in 2024 when Kapitel acquired a majority stake in Viru Keskus. This involved integrating the company’s financial accounting into the existing Business Central software within the group, and the Moderan lease management software was also integrated. Data was then transferred to the BI4Dynamics data warehouse.
“This gives us a consistent data structure, better data quality, and the ability to compare companies with each other, regardless of their location or business line,” notes Anne Junolainen. They also use Soft4RealEstate, a specialized solution for the real estate sector that is fully integrated with Business Central. This means employees have a single point for data entry and generation, resulting in detailed data sets built on consistent foundations. No matter how beautiful a report is, comparing incomparable things is useless. Data quality is the first and most crucial factor.
Anne Junolainen states that it’s very important to start with the actual business need: What problem needs to be solved? Does the solution save employee time? Does it provide new information and supplement existing data? Is it a legal obligation? It’s also crucial to know if the costs of the solution are reasonable and proportionate to the benefits gained. In this regard, it’s not just about the financially measurable benefit, but also end-user satisfaction. For example, if an end-user has to make ten unnecessary extra clicks that irritate them, removing those clicks is an extra cost and may not significantly save work time, but it will significantly increase employee satisfaction.
Data-Driven Management Allows for Timely Reaction
At Kapitel, data-driven management has become a central tool for operational control. Data is collected through solutions like the ERP, the BI data warehouse, tenant portals, point-of-sale systems, shopping center visitor counters, and energy consumption meters. The goal is to use data to spot trends as early as possible. For example, if occupancy drops and vacancy increases in a property, or if utility costs grow disproportionately, it’s possible to react before the situation escalates into a problem.
Key Performance Indicators (KPIs) used for decision-making are also essential. Alongside financial metrics, segment-specific KPIs are monitored: visitor count and store turnover in shopping centers, occupancy in hotels, area utilization rate in logistics centers, etc. Buildings have very different purposes, and shopping centers, office buildings, logistics centers, hotels, and production facilities each have their specific data. It’s important that this data is accessible in the right format and in the right context.
Anne Junolainen adds that they are currently focused on supplementing existing analysis and BI solutions and conducting an audit to map the data flow and find ways to make it all work together. “A peculiarity of Business Central is that reports must be configured separately for each company. When we have many companies, not all reports may be set up exactly the same way, which creates confusion in aggregated information. Data harmonization is an eternal process and an art of compromise,” admits Kapitel Group Business Controller. “It’s impossible to completely harmonize all data one-to-one. Different countries have different practices, contracts can have various nuances, and people’s logical frameworks are different. Here, again, common sense is key: how many dimensions are reasonable to distinguish? For example, 500 dimensions is very detailed, but then the overview is lost, and too much work is added for the data entry staff.”
People at the Center of the Data
Kapitel has a total of 53 employees, and they all have the opportunity to use Business Central. Access to the data warehouse is granted according to job position and role. The goal is to share data directly from the source, without anyone having to manually intermediate the data in between. For example, employees dealing with tenancy relationships see all their contracts in the ERP, where they can track deadlines, service prices, and space status directly from the system. The same applies to sales reports: shopping center employees see the number of customers and purchases, and store turnover. The more data is shared, the better people can do their jobs—dependence on information intermediaries decreases, and the workflow speeds up.
The role of partners is important in implementing IT solutions, but the Business Controller also stresses the client’s own responsibility: “We ourselves must know what we need. Naturally, we expect the partner to provide knowledge and solutions that we don’t know or are unfamiliar with, but as the client, we must be able to define our problem and the desired end goal. Unfortunately, the force of habit is strong, and as an end-user, one wants things to be familiar. At the same time, there may be much more advanced tools that would allow things to be done from a completely different and much more sensible angle. This is where we would expect the partner’s contribution.”
Kapitel’s future outlook is clearly focused on automation and reducing technical grunt work. “Currently, too much time is spent compiling numbers instead of focusing on the causes and substantive analysis. Our goal is to change that proportion. We want to leave as little room for interpretation as possible, because people’s logic is different, plus potential language issues, which can lead to seemingly similar transactions being recorded differently. This can result in adding up the wrong things, and the result and the decision based on it becoming skewed.”
Anne Junolainen states that the real estate sector is a forward-looking, long-term business that, at the same time, only has access to past data. “Unfortunately, you can’t predict the future from past data. Very experienced specialists develop a gut feeling that guides them towards supplementary analysis and the right decisions. Of course, decision-making can be partially based on previous data, such as the dynamics of water, gas, or electricity consumption over time. But when starting a development, the view must be set only on the future. There is no point in comparing construction and rental prices with those from 20 years ago. The future is what matters.”
Kapitel is a good example of how a long-term vision, intentional IT investments, and data-driven management can provide stability and value, even in challenging times. The company isn’t looking for quick wins but a strong foundation. A systematic approach and smart data usage are their way of building more valuable real estate and a better business.