Fintech: Proptech becomes reality

Entrepreneurs are harnessing technology to shape the future of the real estate industry.

Technology is gradually disrupting real estate and can no longer be dismissed as conceptual by the industry’s traditional players.

As proptech start-ups deliver a new generation of property technology, and major organisations adopt their products, investors and lenders are becoming obliged to keep up with innovation.

“By implementing innovative products, we are able to make our processes more efficient and reduce costs. Those who lack investment in technology will underperform,” argues Jürgen Fenk, former board member at German bank Helaba, now responsible for digitalising real estate firm Signa’s business as well as identifying proptech start-ups to invest in.

From how basic underwriting tasks are carried out to transforming how property is traded through technology such as blockchain, proptech promises to make real estate investment more efficient. Innovation also has the potential to create greater sets of data, creating the potential for investors and lenders to make informed pricing decisions.

“Better information equals less risk and less risk means lower pricing,” says Thomas Schneider, chief investment officer and founder of online real estate investment platform BrickVest.

Although momentum is gathering, the notoriously slow-moving real estate industry has been slow to adopt proptech. “Two or three years ago everyone was talking about smart buildings. The problem is there is a long window to realising return on investment,” says Richard Belgrave, global sales director at software provider Leverton. “Because there isn’t a precedent yet, investment in smart buildings has not ramped up as the market expected it would.”

While some forms of proptech remain works in progress, others are already making an impact. Online real estate investment platforms allow retail investors to make commercial real estate investments through the internet. “In our case, technology is used to streamline processes that enable smaller investors to invest in institutional club deals north of £2 million-£5 million on the same terms as big pension funds,” says Schneider.

Proptech innovations are improving the way property is managed. For instance, retail landlords have access to technology which monitors footfall, helping them identify under-utilised space. In Germany, residential property managers can co-ordinate maintenance work and distribute information among landlords and tenants through a digital customer service platform developed by start-up firm casavi.


Digital tours of properties are increasingly available. At the due diligence stage, investors and developers can undertake remote assessments of a property, while lenders and surveyors can make use of virtual reality as part of the underwriting process.

“The use of virtual reality is pretty advanced, often used to showcase office and residential space as part of the marketing process even before it is built,” says Fenk.

“People are warming to the idea of a more efficient approach to due diligence, be it through the adoption of artificial intelligence or other means,” adds Belgrave.

Companies including VTS and HighQ have made progress in this space in the last two years, improving efficiency on the leasing and transacting front through smarter visual tools and centralised processes relating to tenant information.

AI-backed data extraction has potential to shift the way data are handled because the system learns by itself. Leverton operates a system whereby software is trained to automatically read lease contracts, to quickly determine what information is relevant for lease administration, valuations or property appraisals. “We use AI to perform due diligence tasks, using algorithms to pull out key information such as rent charges, break options and overhaul clauses. This expediates and reduces the cost associated with reading 1,000 individual leases for example,” explains Belgrave.

The next step for Leverton is the application of its software to loan agreements and mortgage-backed security agreements.


Blockchain is seen by many as a technology which real estate markets could benefit from, making the transfer of ownership more efficient. By recording transactions on the online public ledger, money can be transferred with a unique digital signature as a permanent and transparent record of deals.

BrickVest filed a blockchain patent 18 months ago to make small-volume transactions in the secondary market more efficient. “Even when you do a small trade you still need notaries and custodians to ensure the transaction is legally sound. If you can skip these guys with a property being sold via blockchain you would save a lot of money,” says Schneider.

Others are sceptical as to such technology being adopted by the industry in the near future. “Anything that affects how people transact, like blockchain, will be slow to move since the industry is antiquated and people make money off asymmetric information. People are wary of things like blockchain, especially at the moment with all the bad press.

There has been no real successful commercial application of blockchain or cryptocurrency; the real estate industry is five years behind the finance industry which would imply the adoption of blockchain could be 10-15 years away,” says Belgrave.

In the next 12-18 months he expects to see “a bit of a ramp up in terms of how people leverage smarter technology AI tools, though it’s not going to happen overnight”.
However, proptech innovation marches on, putting an onus on lenders to stay on top of trends. The potential for technology to shape the real estate industry is huge, even if it will not be implemented overnight.

Appraisal by smartphone

The founders of underwriting app Dashflow – which was launched in January – argue their technology has the potential to revolutionise the appraisal process, allowing commercial property professionals to run appraisals of potential investments from their mobile phone.

“At the moment, you can talk about the broad brush of a deal but the underwriting process is laborious. Dashflow allows full institutional underwriting in minutes on an iPad or mobile phone, without being tied to a desk,” says Michael Molloy, the app’s creator.

Clients enrolled so far include M&G Real Estate, Colliers International, Hermes and Delancey. Malloy argues that the app can benefit lenders, allowing them to sift through deals quickly by looking at debt yields, interest coverage ratios and other metrics at a glance.

“Lenders do a lot of speculative work to present the broad heads of terms they are willing to offer. Depending on resources, it can take a day or two for a bank to offer terms on a multi-let building, which means it can only service so many clients a week,” says Molloy.
Also on the agenda is applying the time-saving technology to portfolio analysis.

“At this point, if you asked a major property consultancy to give you a view on, say, a 30-property portfolio deal they would probably hesitate to undertake the work unless there was a likely deal in prospect. But because Dashflow can process individual appraisals so quickly it makes crunching through a portfolio relatively straightforward,” says Molloy.