Can digital technologies speed up real estate transactions?
Journal of Property Investment & Finance
ISSN: 1463-578X
Article publication date: 20 May 2020
Issue publication date: 16 June 2020
Abstract
Purpose
This study presents a structured investigation of the most important causes for delay in commercial real estate transactions. It assesses the potential of digital technologies such as “Blockchain”, “Property Passports” or “Automated Valuation Models” to make transactions faster and cheaper.
Design/methodology/approach
The authors conduct a focus group interview to identify the individual steps and the parties involved in real estate transactions. Subsequently, the authors discuss the prospects of digital technologies based on semi-structured interviews with real estate professionals and PropTech executives, and a comprehensive screening of technological solutions offered by PropTech firms.
Findings
The lack of an up-to-date, single pool of standardised property information turns out to be the most critical cause for delay in real estate transactions. However, the most promising technologies to mitigate this problem, in particular digital property passports summarising all relevant building information, face substantial barriers to adoption. The real estate industry has so far not been willing to more openly share data, which is a pre-requiste for the successful introduction of property passports. In addition, the principle of caveat emptor makes a lengthy due diligence process essential for buyers.
Practical implications
The authors conclude that industry-wide collaborations are necessary to help major efficiency gaining technologies to break through. Insurance products should accompany property data log books to guarantee the quality of data provided.
Originality/value
This study considers the potential impact of technologies in the wider context of the complete real estate transaction process. It identifies the major phases of that process and the associated bottlenecks. The authors gather evidence both from industry experts and PropTech executives and contrast their views regarding the potential of digital technologies to remove those bottlenecks.
Keywords
Acknowledgements
We are grateful to all participants of the transactions process mapping exercise and the interviewees. Funding: This work was supported by donors to the Oxford Future of Real Estate Initiative.
Citation
Saull, A., Baum, A. and Braesemann, F. (2020), "Can digital technologies speed up real estate transactions?", Journal of Property Investment & Finance, Vol. 38 No. 4, pp. 349-361. https://doi.org/10.1108/JPIF-09-2019-0131
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited