The Corona crisis has contributed to an unintended but long-overdue leap in digitalization in real estate. 75 % of German real estate companies have turned their focus more towards this topic as a result of recent developments.

EY interviewed companies on their digitalization processes in the last months for the current ZIA Study. Along with most recent statistics the study also highlights industry experts that have already been driving digitalisation processes.

One of the interviewed experts on digitalization was our CEO Jens Müller. You can download the study here (German only).

This is the fifth annual digitalization study in a row. What are your thoughts on developments over the last five years?

There has been a real shift in mindset and that has been accelerated by the coronavirus crisis, which has sharpened the senses of many market participants.

During EXPO REAL 2019, I was asked whether it was possible to sit digitalization out, like you might sit out a round of golf. Although this question might not have been one I was asked all that often, it was certainly on many people’s minds.

Today, barely twelve months later, it is a question almost no one would ask. And this shift is about far more than the recent impact of the coronavirus outbreak.

“Technology and data are the keys to increasing transparency.”

Ten years from now, no one will be able to justify buying a property that does not achieve the gold standard for transparency. Conversely, a transparent property is intrinsically more valuable today than an opaque property.

A wide range of digital technologies have already been embraced and adopted throughout the industry. Are digitalization and its drivers, above all PropTechs, the biggest winners of the latest technological development?

It certainly looks like it right now, but the question has not yet been conclusively answered. The coronavirus crisis has encouraged companies across the industry to adopt a targeted approach to digitalization, to be more willing to adopt new approaches, and to invest. Among institutional investors, there is another key driver: ESG.

ESG is a digitalization driver

At the same time, the current crisis has also made investors think twice before greenlighting major investments. It is becoming more and more apparent that companies that emerge from the crisis comparatively unscathed will be well-positioned to take advantage of the post-crisis momentum.

For digitalizers, this also means being realistic about the impacts of the crisis and potentially reorienting their business models to reflect the more challenging environment their (potential) clients face.

One option would be to extend the timescales of digitalization projects (and costs) over a longer period of time. Moreover, it seems almost inevitable that we will see a significant increase in process consolidation – or rather process “orchestration”.

This will be true for many use cases that serve distinct niches and which, in my view, stand to benefit from the integration of horizontal business logic. No other approach would allow the added value of individual solutions to be measured and – all the way to portfolio level – benchmarked.

This is where, to a certain extent, we will see the wheat separated from the chaff, because monetisation is such a major area for the industry, and every item of expenditure on individual solutions is being scrutinized – despite the growing importance of digitalization.

Effective risk management, more agile business strategy, more sound future investment and improved sustainability are all enabled through driving digitalization.

Our most current white paper “The chance to drive transformation” explores what challenges industry leaders are preparing themselves for. You can download it here: https://buildingminds.com/whitepapers/drive-transformation-in-real-estate/