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Oxane: real estate debt market’s digital maturation will inevitably come in time

According to Oxane’s conclusions, standards and requirements are increasing across the board: from investors, clients, JV partners, regulators to competitors. The net effect is tilting the sector, albeit slowly, towards increased digitalisation.

Kanav Kalia, Director at Oxane Partners, explains:

“We expect this trajectory to continue and eventually broaden over time, driven by three intertwined forces:

  • increased technology requirements of real estate debt professionals;
  • increased transparency, itself driven by continued institutionalisation of real estate debt as an asset class; and
  • a rapidly rising opportunity cost of simply maintaining the status quo.

“We believe these forces will drive interest in more sophisticated real-time data access, analytics and investor reporting and this will require the industry to increase their confidence in cloud-based data security, driving the technology adoption upwards. Industry education related to advancements in cyber security is critical, therefore, in driving digitalisation within the real estate debt industry.”

Vishal Soni, co-founding partner at Oxane Partners, added:

“We believe the real estate debt industry is approaching an inflexion point and expect significant digital maturation over the coming 24-36 months. This will manifest through a combination of some institutions building in-house technology tools for core business processes, supported by adoption of more sophisticated tools created by third-party solutions providers, along with many institutions seeking customisable third-party technology solutions.

“It is evident from this survey, and through our own regular engagement with real estate debt institutions and lending teams, that any technology solution needs to be built with users in mind, and not to impose a restrictive closed ecosystem onto institutions.  Furthermore, technology adoption is clearly correlated to costs and transition time periods. The challenge for technology solutions providers is to build platforms which allow easy integration with existing systems and are flexible enough to host complex bespoke real estate debt transactions. Minimizing the time and effort in transition is also a critical element of success and as underscored in the survey responses as well, the provider’s understanding of the real estate debt business is a factor that ties all of the above requirements together.”

The real estate debt market still has a long way to go, says Oxane Partners, but the technology specialist believes a mixture of intellectual curiosity, external market driven triggers and institutional internal process introspection, will initiate big strides towards mainstream digitalisation.

james.wallace@realassetmedia.com