Can digital technologies speed up real estate transactions?

Pages349-361
DOIhttps://doi.org/10.1108/JPIF-09-2019-0131
Date19 May 2020
Publication Date19 May 2020
AuthorAndrew Saull,Andrew Baum,Fabian Braesemann
SubjectProperty management & built environment,Real estate & property,Property valuation & finance
Can digital technologies speed up
real estate transactions?
Andrew Saull, Andrew Baum and Fabian Braesemann
Saıd Business School, University of Oxford, Oxford, UK
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 Passportsor Automated Valuation Modelsto 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 anup-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 of caveat
emptor makes 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.
Keywords Commercial real estate, Real Estate transactions, PropTech, Property passport, Blockchain,
Automated valuation models
Paper type Research paper
1. Introduction
Land shelters us, feeds us and provides us with space for recreation, shopping and work.
With total global real assets valued at more than $ 238 trillion (Savills, 2017), land as an
investment is a significant component of the global economy. At the same time, transacting
real estate is a costly and time-intensive process. For example, the registration of a property in
the United Kingdom (UK) takes, on average, 22 days, and costs up to 5% of the total property
value (WorldBank, 2018).
In this paper, we investigate the most important causes for delay in commercial real estate
transactions in the UK, and we discuss how digital technologies could make this process
faster and cheaper.
For this purpose, we conduct a focus group interview with commercial real estate experts,
who were asked to construct a process map of the steps required for a hypothetical
transaction. More than 150 individual steps and seven major causes for delay were identified.
In the second step, we assessed the potential of digital technologies to overcome these
blockages, based on desk research and interviews with executives from established real
estate firms and PropTech start-up firms.
Digital
technologies
and real estate
transactions
349
JEL Classification K25, L85, O33, R33
We are grateful to all participants of the transactions process mapping exercise and the interviewees.
Funding: This work was supported by donors to the Oxford Future of Real Estate Initiative.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1463-578X.htm
Received 30 September 2019
Revised 4 December 2019
10 December 2019
Accepted 10 December 2019
Journal of Property Investment &
Finance
Vol. 38 No. 4, 2020
pp. 349-361
© Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-09-2019-0131

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