- Read the article in immobilienwirtschaft (Paywall)
Very detailed and insightful article in “immobilienwirtschaft 04/2019” on the necessary transformations of real estate financiers and the digitalization of commercial real estate financing.
The magazine “Immobilienwirtschaft” finds traditional mortgage banks caught in the grip of low interest rates, a flattening economy, and digitalization.
The margin pressure resulting from low interest rates, negative ECB deposit rates, and increasing regulation is increasingly putting traditional players under pressure. This is compounded by competition – currently primarily in mezzanine, but increasingly also in senior loans – from alternative providers in the non-banking sector such as insurance companies, pension funds, and credit funds.
In this environment, digitalization presents both a challenge and an opportunity. Regarding digitalization, the traditional view still prevails that commercial real estate financing – characterized by high loan volumes and small numbers of transactions – is not very standardizable and therefore largely a “people business”. It is therefore rightly pointed out that crowdfunding/crowdinvesting platforms can at best be niche providers, as the focus here is on mezzanine capital and subordinated loans with rather smaller volumes. Compliance issues such as data protection and banking secrecy are also important aspects for banks, against which digital platforms will have to be measured. However, the potential should not be underestimated: With increasing experience of platform providers and real estate investors as users, even more complex cases could soon be handled via platforms.
Furthermore, the view is increasingly gaining traction that digitalization also offers opportunities for traditional players. They can reduce costs, monetize existing – but unstructured and non-digitalized – data assets, and tap into new revenue streams. The syndication of loans could become significantly simpler and more cost-effective. However, proprietary digitalization efforts in the traditional banking sector have so far remained fruitless. Therefore, trendsetters like BerlinHyp, without fear of FinTechs and digitalization, are focusing on collaborations and participations.
Given this starting position, credX has positioned itself excellently:
As independent platform, we are equally attractive to banks, alternative capital providers, and independent deal advisors. Unlike crowd-investment platforms, we focus on large-volume business with institutional debt providers and offer individual contracts across all common instruments (loans, promissory note loans, asset investments, and bonds). Our audit-proof processes are tailored to the high demands of major clients. As a financial investment intermediary according to KWG § 32, we are ourselves subject to the relevant regulations (KWG, WpHG, GWG, etc.).