For decades, innovation was considered a dirty word in housebuilding, a sector that was referred to by economists as ‘the backwards industry’ due to its reluctance to embrace technological innovation.
Others described the industry as ‘conservative’ – some still do. The reality is that for decades, the continuous efforts to disrupt the multi-trillion-pound industry have been consistently failing while many other sectors were embracing innovation with both hands.
But things have been changing as of late. We have witnessed a quiet yet forceful transformation spearheaded by a new generation of younger, digitally savvy and socially engaged property developers eager to leverage innovation to help improve how we build, live, invest and sustain.
This change in the profile of developers is happening at a time when we are demanding more from our housing than ever before. Not only should it provide us with shelter and comfort, but it should also embrace the latest technological innovations, contribute positively to energy efficiency, reduce our carbon footprint and support the development of sustainable community living spaces.
Not only are these emerging developers eager to adopt tech to change how the industry does business as a whole and across its different verticals, but they are also keen to introduce new concepts – from modern construction methods to low-carbon houses; from shared living models such as co-living to connected home solutions.
But the emergence of this new breed of developers also means lenders need to adapt and keep up with the pace of innovation so they do not fall behind developers’ fast-changing needs. Today’s new generation of developer is driving fresh demand for more customised financial products and services, a trend that is forcing lenders to create more tailored products.
Interestingly, on the lending side, the innovation is being driven by specialist non-bank lenders who are taking three broad steps to position their business for this shift in borrowers’ demands and needs.
First, they are aiming to solve specific yet relevant borrower pain points, either by developing the tech themselves or by creating partnerships to offer a solution-focused approach.
Second, they are creating a community-like space and bringing developers into an ecosystem by connecting them with other services and building a dynamic customer experience.
Third, they are leveraging their tech capabilities to provide developers with personalised analytical insights in order to increase their engagement and advocacy through word of mouth and social media.
In a nutshell, we are witnessing a long-overdue transition in the real estate and housebuilding sector. Development finance lenders, especially nimble and agile non-bank lenders, must support the change.
Roxana Mohammadian-Molina is chief strategy officer at specialist development finance lender Blend
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