There’s been a lot of talk about how proptech can address the ‘pain points’ property professionals face on a daily basis. The battle to work smarter and be freed up to deliver value-added activity is one of the key reasons-to-be of proptech solutions.
However, in our experience, a lot of people in the investment business appear ready to tolerate the pain – or maybe prefer expensive pain to tech-driven change.
Investment – the process of getting money into property – is the wellspring of our sector but the predominant methods used to determine what to pay for an asset are hugely outdated.
Whether you’re in a market with a high or low volume of investment deals to evaluate, the importance of doing this accurately, quickly, economically and consistently is absolutely crucial. The speed with which you can do the numbers and proceed to the point of bidding can give you a substantial edge over your competition.
But at present, transaction opportunities – and millions of working hours – are being lost because of an inefficient and risky approach to investment modelling that confines it to spreadsheets, templates or off- the-shelf ‘black-box’ software. As a result, investors who are not using the latest tech risk inconsistent results and being left behind in the race to buy assets.
It’s a situation reminiscent of when US investment banks entered the UK market and brought a different approach to how to leverage returns from property investment. As they created a new playing field, they prospered and left many domestic investors in their wake.
With Dashflow for CRE, we’re trying to bring simplicity and transparency to the appraisal process. Since launching a year ago, it has been gratifying to see how eagerly forward thinkers – such as M&G Real Estate, Orion Capital Managers, Colliers International and Oxford Properties – have grasped the importance of enhanced precision, verifiability, speed and usability.
But it is perplexing that so many businesses remain stuck in their old ways. Transaction teams should be liberated from being bogged down in expensive training and mechanical drudgery. Instead, they should be empowered to focus on the added value their expertise creates.
I say all this as someone who spent the noughties modelling around £3bn of real estate deals – and felt the daily pain of using cumbersome spreadsheets and inflexible off-the-peg software.
The Excel route invariably meant butchering a previous appraisal to create a new ‘Frankenstein’ model, while the software route was like trying to open a tin with a baseball bat. It took hours and days to do an appraisal that I can now do in minutes.
To be fair, in the past it was not the fault of those using complex spreadsheets or software. For a long time, those were the only options. We were only able to create our AI-powered app because of the updates to the iOS operating system introduced by Apple in 2012.
Now the appraisal process has been democratised and tremendous transaction modelling power put in the hands of everyone working in the sector. Perhaps most importantly, the pain has been taken away.