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PropTech Asset Management > Blog > Transparency in Real Estate

Transparency

Where is the transparency during the construction phase?

 

Do you know what has been actually constructed or which materials have been used? I believe that even architects and engineers sometimes do not know for certain all the components, which have been used during the development, e.g. where are the electrical cables, which are not visible? How would you fix a problem of the hundred-year-old building? Luckily, these people are very educated in the field. Hence, there is a very good chance that they can assume, where there might be a problem and how this can be fixed.

 

With the introduction of the Building Information Modelling BIM, I have hope that transparency in the construction process will be given in the future. Building Information Modelling BIM is a process, where a building which will be constructed, will be first created and represented digitally. The data of this digital model can be managed, extracted exchanged and shared between different stakeholders, before the construction process starts. Even after the completion of the construction project the digital model will be continuously updated, so that the newest owner of the building has the latest information of what he has bought.

Where is the transparency?

During a transaction process?

During the transaction process there are a number of stakeholders, who are communicating via phone and email. In a non-commercial real estate transaction, there is no central place where documents are saved in a digital form. Lawyers and solicitors are mainly using Word and PDF formats. Banks have their own software or sometimes also use Excel. If you are lucky to have very good real estate agent, he might be the one who is chasing up all the different stakeholders and informing you about the status of the transaction. If you’re not that lucky, then you have to do all the chasing. This entire process demands a lot of time energy and also cost a lot money and time.

So, people might think,
why is there not another solution?
Why are people still doing it in the old way?

Well, the answer is very simple. It has evolved in that way over time and is still making money for all participants. Once upon a time we did not have all the technologies we have today. Probably the most important factor is that every stakeholder is earning enough money to continue doing it in the old-fashioned way.

Where is the transparency during the asset management phase?

During the asset management period the owner of the asset is holding the property and ensures proper maintenance. There is a discrepancy between what the tenant knows and what the landlord knows and there is a conflict of interest. As the tenant is the person, who knows the property during the time of occupancy the best, he is also the one who faces all the problems first. Whereas, the landlord is the one who is seeing the problems at last. However, he is the one who has to pay for it most of the time.

So, the way the repairs have been conducted were very simple:

The tenants saw a problem, a defect or something, which had to be repaired and reported it to either the facility manager, the property manager or the caretaker of the property. The caretaker either fixed the problem by himself or if the cost of remedy was higher than a certain threshold, he reported it directly or indirectly to the landlord. The landlord then had to make a decision to fix it or to leave it.

So, this entire process from the occurrence of the problem until it reaches the landlord could have taken weeks or months. Then there is further delay in making a decision and to get the problems fixed. Lots of time and money were lost during such a process. The ideal situation would have been that the tenant is not waiting until the problem occurs, instead he’s telling the landlord in advance that there might be a problem, which can be fixed now in order to avoid higher cost. But then again the landlord might have decided not to fix the problem, because there is no problem, yet.

Nowadays, we are in a situation, where we can use technology to indicate a potential risk, which might occur in the future. So, the landlord can act accordingly and can make an objective decision by judging a photo, which the tenant took of the problem. This problem might have been even identified by a sensor in a building, which were indicating that there might be a problem. So, before this problem happens, the landlord can fix the problem and can reduce the cost of repairs and maintenance.

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