From land sourcing to valuations, from buying to renting, many segments of the real estate market have been dramatically overhauled by a new wave of tech innovation.
But nowhere is this transformation more dramatic than in real estate lending. Roxana Mohammadian-Molina, CSO at Blend Network, explains how technology bandwidth has transformed the property lending market.
Property is not known as a sector that embraces change. The nature of the asset class, which comprises large mixed assets traded in a largely private market, is a good reason for this. Homes are too important a part of a portfolio to take any risks with the process whereby it is traded, held, or valued. There may also be an agency problem: the professional advisers that dominate transactions clearly have an interest in protecting their income sources, so they might be expected to resist tech-driven innovations designed to ‘disrupt’ their work.
Nevertheless, we are witnessing a battle for market share between traditional players and a new, explosive wave of technology innovation, investment, and entrepreneurial activity in the real estate sector. Nowhere is this trend more noticeable than in the lending market, where a new wave of tech-powered, customer-driven, quality-focused regulated lenders have quickly filled the gap left by traditional lenders in a constantly evolving market.
With their sleek customer interface, efficient processes, transparent lending terms and competitive pricing, this new generation of lenders are powered by technology bandwidth hitherto unimaginable to serve borrowers practically, and with experienced lending assessment staff being able to thoroughly understand their projects.
Having spoken with many property developers, the general feeling is that most developers just want to get on with the job of building houses and don’t want to deal with the finance side of getting all the funding in place. “We just want to work with a lender who understands the property development process,” said one developer. This sums up the feeling of many developers whose deals have been delayed or frustrated by inefficiencies at non-specialist lenders.
It is no surprise that so many developers and brokers have embraced this new generation of lenders and are excited to work with lenders who are able to use their experience to understand borrowers’ financial needs.
Another developer summed-up his feelings as follows: “There is not a shortage of opportunities, yet many deals often get delayed, frustrated, or lost due to the constrained nature of most lenders. In my mind, this is caused by a limited understanding from most lenders, which choose to create a finance package that is ignorant of the true requirements in the development process. However, this was not the case with Blend Network. It was very refreshing to work with a lender that understood the process well so could recognise the available opportunities and finance accordingly.”
In summary, many players in the property market – developers, brokers, lawyers, accountants and architects – have embraced the new wave of technological innovation in the lending market as a breath of much-needed fresh air.
Roxana Mohammadian-Molina is chief strategy officer at Blend Network