The new era of capital markets and investors on the cloud
Robert Campkin, Head of Corporate Capital Solutions, and Global Real Estate Advisor, Colliers International
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This is only the first stage in a real estate transaction, and at present it is a process that takes longer than it should. This situation is compounded when you are not only managing one investor, but rather a host of investors who are considering the same opportunity and have questions that need to be answered. After this, there are many other manual steps that can, and should, be, gradually digitalized.
“Gradually” is the key word. In a traditional industry such as real estate where technological innovations are difficult to absorb, change has to be gradual and led by early adopters with the capacity to drive others to embrace digitalization. Today, through answering the questions “Why?” “How?” and “When?” we’ll try to dive deeper into the reasons why the early adopters have decided to take a step forward and begin digitizing their processes. In other words, why they, as capital markets professionals and investors, have decided now is the right time to move to the cloud.
Investors in real estate have been working for decades, even almost centuries in a more or less similar way, with in person meetings, handshakes, and paper. Spreadsheets have probably been as the biggest advancement in the last three decades. So why is now the right time to do 180 degrees shift and transition to working on the cloud?
The challenge the industry is facing today is unlike anything we have seen in previous decades. Technology is not only shaping the way we behave and interact with other people and the world, but also how we interact with real estate. We are seeing the rise of flexible office space, new ways for fractional investment, the challenges that the use of Blockchain and smart contracts pose on litigation, smart payments, public registries, and many others. But what about the transactional space? We could argue that most of the innovations described above are meant for the mass market and that those don’t take into account the specificity of the deals carried out in capital markets. But the reality is that there are many processes within a capital markets deal that can be automated and scaled. It is only when the manual work is automated that advisors can provide the most value, focusing on what really matters for their clients, helping them make more money and better decisions. More time means more analysis of scenarios, more informed decisions and added value for investors.
Also, Covid has presented challenges that are already changing the way people do business in the industry. Now, inperson meetings are no longer required and people can close deals after having followed a whole process through digital means.
This approach not only provides corporate internal efficiencies. It also improves the experience of investors. As digital services keep on improving, more investors feel that the interactions between them and their advisors need to be more fluid. Investors demand easier access to their information, reports and opportunities without having to pick up the phone to call or send an email every time a doubt arises.
What if I told you now that, as mentioned in the beginning, you could forget about manually reviewing and signing NDAs and could streamline all your interactions with the 50+ potential investors interested in a deal? What if you no longer had to spend time creating presentations, and that there is a software that can automate that for you and share it with your desired investors?
What is clear is that it makes your life easier. What is less clear is how this technology implementation happens. The early adopters regard the progressiveness of the implementation as a natural step while the most traditional people, less familiar with technology, fear that the implementation can temporarily disrupt the way they do business.
"Technology is not only shaping the way we behave and interact with other people and the world, but also how we interact with real estate."
The “How?” then, is simple. Investors and advisors have to think about technology as an enabler, as a tool that helps to progressively simplify processes.
Another important part of the “How?” is that as technology in the real estate industry evolves rapidly very fast, companies have to choose flexible solutions that can adapt to future changes and integrate with other services. One of the key problems seen today in the industry are the dependencies generated by technologies that today appear to be not flexible enough.
For most people in the industry, “When?” is clear. Either they start embracing innovation this year or it probably will be too late. As in every technological revolution, the ones exposing themselves earlier to change are also the ones benefiting from it the most in the long term. What differs in the technology implementation schedule between early adopters and traditional players in the industry in this case is how they manage the risk. The early adopters are the ones ready to make the initial investment, test, implement, be the first in the market and stay ahead of the curve. The other players prefer to adapt to already existing, mature technologies with proven competitive advantage.
Automatic opportunity prospecting, investor-opportunity matchmaking, intelligent data storage and reporting, interconnections between active and passive management, automatic reading of contracts… Even if all these sound like science fiction in an industry like real estate, they are going to be the standard of the industry in the medium term. Therefore, the answers to the questions “Why?”, “How?” and “When?” all indicate that those taking the first steps in embracing technological advancement and transitioning to working on the cloud will also be those enjoying a competitive advantage in the future, both from advisor and investor perspectives.
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