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Can digital technologies speed up real estate transactions?

Author

Listed:
  • Andrew Saull
  • Andrew Baum
  • Fabian Braesemann

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 ofcaveat emptormakes 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.

Suggested Citation

  • Andrew Saull & Andrew Baum & Fabian Braesemann, 2020. "Can digital technologies speed up real estate transactions?," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 38(4), pages 349-361, May.
    • Handle: RePEc:eme:jpifpp:jpif-09-2019-0131
    DOI: 10.1108/JPIF-09-2019-0131
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    Citations

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    Cited by:

    1. Zarqa Shaheen Ali & Jiachen Song, 2022. "Digital Platforms and Real Estate Industry during COVID-19," International Real Estate Review, Global Social Science Institute, vol. 25(4), pages 499-523.
    2. Patel, Ritesh & Migliavacca, Milena & Oriani, Marco E., 2022. "Blockchain in banking and finance: A bibliometric review," Research in International Business and Finance, Elsevier, vol. 62(C).

    More about this item

    Keywords

    Commercial real estate; Real Estate transactions; PropTech; Property passport; Blockchain; Automated valuation models; K25; L85; O33; R33;
    All these keywords.

    JEL classification:

    • K25 - Law and Economics - - Regulation and Business Law - - - Real Estate Law
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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