The UK real estate sector, like many others, has not escaped the impacts of challenging economic times. Analysts at HSBC have indicated that real estate firms face a “precarious” situation in the near-to-medium term, with falling asset prices, rising levels of inflation and looming refinancing risk.

In addition to facing macroeconomic risks, the commercial property sector is adapting to the changing nature of demand following the pandemic, adding to the wider challenges of operating in the industry today, alongside siloed sets of information and a lack of integration between technology and processes. 

But can those in the sector best react and continue to be successful during challenging times? This is where PropTech – property technology – can help developers to unlock the power of data, and in turn, better manage risk. 

A time of challenge

Traditionally, managing property projects was time-consuming, often complex and highly reliant on manual input. The pandemic certainly ignited efforts in the real estate industry to digitally transform but there is still much work to be done. When it comes to risk, funds, owners, developers and consultants are missing valuable opportunities to identify volatilities through the use of data. The traditional way of managing property developments falls short – particularly when it comes to mitigating risk. 

Anticipating new dangers is as important as identifying changes when it comes to existing threats. In any case, both are difficult to achieve with the siloed processing of data. Effective risk management also depends on being able to view data in real-time and in a period of uncertainty, it could not be more crucial for the success of projects. 

Key stakeholders in property projects are often time-poor and need to be able to check on a project status quickly in order to make key decisions and communicate with those around them in an informed way. 

Reducing risk through the power of data

Data can play a key role in reducing risk today in the property development market. Cloud-based platforms can both revolutionise processes and reduce risk through improved visibility. The aggregation of data inputs from a variety of sources brings information together and delivers a single source of truth so that all those involved in a project can have end-to-end visibility of project data. 

The current economic conditions are affecting the financial viability of developments, so developers are fighting to constantly adapt in order to remain successful. This is achieved by keeping a close eye on costs at all stages of a project and flagging concerns immediately.

Another area of risk lies in human error and manual data entry issues can be minimised through the integration of PropTech solutions with financial and accounting systems. The added benefits of integration include time savings, as well as fewer data discrepancies. Consolidating data leads to improved financial analysis, reporting and decision-making, which is vital from both an operational and regulatory point of view. While other aspects of property development involve risk, financial risk will always be a ‘make or break’ moment for any project. From an investment perspective, the performance of projects can be racked against targets. Those insights can then help to provide evidence of an organisation or project’s future trajectory to potential investors. 

fu3e. – The real estate software platform.

Leveraging the right PropTech solution

In 2019, KPMG found that a significant portion of decision-making made by developers, investors and advisors in the property sector is not data led. While that gap will have reduced in the past few years, there is still a lot of work that needs to be done in the sector to enable more data-informed decisions to be taken. For too long now, the real estate sector has been slow to implement PropTech solutions to help organisations operate their businesses more efficiently. Slow adoption is preventing sector growth at a time of economic uncertainty, so now is the time for the prevailing winds to change and to look to technology as a viable industry solution to managing risk.

Property funds, owners, developers and consultants need to look for the PropTech solution that fits their needs with the right tools to help them transform the management of project developments. Furthermore, PropTech solutions enable property investors to better manage ESG risk and embed ESG principles into every stage of the development process. In the UK, laws were passed in 2019 to achieve net zero and this will require every sector to play their part and decarbonise, so PropTech solutions need to be an enabler for meeting ESG goals. 

The future of the real estate sector

The real estate sector is at the cusp of a PropTech revolution fuelled by data. During this period of economic uncertainty, it couldn’t be more important that those in the sector look to technology as a means to become more efficient and successful, to remain one step ahead of the competition.

Gavin Gleave is CEO of fu3e., star of our PropTech 50 ranking

PropTech 50 – UK’s most innovative property technology creators for 2022