06 June 2019

Modernising investment agency

Embracing modern investment marketing methods and technological change has not been easy for the real estate industry.

By Andrew Mercer, Office Sector Lead, LGIM Real Assets

Some parts of the industry are catching up, but progress is being restricted by parochial methods and vested interests, leaving the landscape littered with missed opportunities. With tech such as virtual reality, we expect to see significant structural changes in investment agency and transactional due diligence that will shape investment marketing methods in the future.

A new wave of tech-savvy investors and advisers are challenging investment agents’ reliance on the little black book of contacts. While relationships and marketing collateral will continue to play a role in investment, investors and agents have made a step change towards being paperless. There is a desire for information to be accessible on multiple devices that record and provide greater transparency on data.

This new generation of tech-hungry investors and advisers is no longer interested in just brochures and places value in substance over style.

Identifying the best marketing strategy for an investment will always call for agent skill and knowledge and will depend on factors such as market conditions, property fundamentals, location, income profile and client motivations for sale. But it is harder to justify limiting marketing to an exclusive or targeted group when the motivation for a sale is to get the best price, especially as investors now require greater transparency.

Marketing is one area where tech could play a greater role in commercial property investment. For example, we have worked with Colliers to build a website for the Bonhill Building in Shoreditch that features a virtual London flyover with an animation indicating future development potential.

Agents have used password-protected intranet sites for some time but providing an open-access marketing website is still new for the investment market. This gives overseas investors real-time access to new properties and building data.

While virtual animation hosted on a marketing website is hardly revolutionary, it shows that tech could lead to structural changes in investment agency and due diligence.

In the future, we expect virtual reality to bring building health indicators to life, enabled by building information modelling and sensors showing wellbeing and environmental conditions, leading to a ‘full-service history’ becoming available, which could influence pricing and liquidity.

“Investors and agents have made a step change towards being paperless”

Two other key developments will be the rise of fully online brokerages and auctions; and fully digital due diligence and digitally signed documentation.

The three examples above will be enhanced through the use of distributed ledger technology to provide an immutable record for evidence and transparency.

Velvety sales brochures and long lunches will become increasingly passé in a world of instant messaging and our industry needs to deliver information using the functionality decision-makers expect. The investment market will take time to adopt any new approach or product. The most innovative agents and investors will reap the earliest and greatest rewards.

Article Published by Property Week.