These 6 Tech Tools Could Shake Up Real Estate Deal-Making Post-COVID
Investment deals are one of the last areas of real estate to remain relatively untouched by the impact of technology. While proptech has made major strides in other areas, like asset management, the process of originating, underwriting and executing deals is not dissimilar to how it was conducted 20 or 30 years ago.
But a new report from Clifford Chance and proptech investor Concrete VC outlines how, as with so many areas of life, the challenges of COVID-19 are set to accelerate the adoption of tech in real estate deal-making.
A survey of C-suite and senior real estate professionals found several technologies that will now be more commonly used in investment deals, which Clifford Chance and Concrete said have the potential to benefit investors by making transactions quicker and underwriting more accurate.
Here are some key areas to watch.
The ability to sign contracts digitally might seem fairly prosaic, but 100% of the C-suite execs interviewed for the survey said they thought digital signatures — forced upon the business world because people couldn’t meet in person — would be adopted from now on. The potential impact is to make transactions more streamlined and faster.
Drone Or Virtual Property Inspections
Especially during the most severe periods of lockdown, it was not possible to attend property viewings. The report states that in many cases, financial obligations for investors to view a property in person before buying it means viewings will never go fully virtual, but 90% of those surveyed thought that drone fly-throughs or virtual viewings would become a common part of the investment origination process.
Alternative Data Sets
“New data sets will give market participants a competitive advantage by allowing them to identify opportunities that others have missed,” the report said, with 70% of respondents thinking use of alternative data sets would increase. In future, taxi pickup data, people tracking and consumer payments data could play a big role in identifying what is a valuable piece of real estate.
The report made the point that in an asset class like real estate, technology would never totally take over the human elements, and in-person relationships are still seen as the most common way of finding new deals. But online listing portals, which have disrupted the residential market, are seen as likely to play a big role in future, with 70% thinking their importance would increase. That is particularly true of assets below £10M.
Underwriting the future performance of an asset you might buy at times of huge uncertainty is a difficult business. It is perhaps unsurprising then that 89% of those surveyed for the report thought scenario-planning software, which gives the ability to model a wide variety of outcomes, will increase in importance.
Real estate knows that digital twins are going to be important, but it doesn’t necessarily know what they are. Almost three quarters (73%) of C-suite executives thought the technology would gain in importance, but 21% of those surveyed overall said they couldn’t really assess its impact. For the uninitiated: “The term digital twin refers to a virtual model or replica of assets, processes, systems, and other entities,” the Designing Buildings Wiki said. “Digital twins can be used as a means of optimising the operation and maintenance of physical assets, systems and processes. By analysing the virtual model, lessons can be learned and opportunities exploited in the real physical twin.”