The dinosaurs never saw the asteroid coming. Commercial real estate financing faces a similar extinction event – but unlike the dinosaurs, today's incumbents have a choice.

We've witnessed 1,250+ PropTech innovators competing for market validation. The winners aren't just the startups with the shiniest tech. They're the ones solving real problems.

Most borrowers believe relationships with particular lenders give them an advantage. In reality, they're limiting themselves and risking exposure to only a fraction of the market.

Why does this happen? The commercial real estate industry remains stubbornly conservative. "That's how we've always done it" becomes a comfortable excuse for maintaining the status quo.

The global PropTech market has reached $36.55 billion in 2024 and is projected to grow to $88.37 billion by 2032. Source This isn't random – it's responding to a fundamental market need.

The Helicopter View

Most PropTech innovators focus on narrow, point solutions. They target specific problems they can solve quickly and bring to market affordably.

The truly valuable innovators take a helicopter view. They examine how various pieces fit together and rearrange them for greater efficiency.

We see this holistic approach as essential. Commercial real estate financing remains "an entirely manual, high friction, complex process that takes 3-9 months to complete." Source

Incumbents remain comfortable with embedded costs and profits. But market economics have changed dramatically.

Higher costs mean many large projects are no longer viable. Properties sit in land banks with interest accruing until companies enter voluntary administration.

The Digital Imperative

Financial institutions must embrace a completely different approach within the next 24 months.

They need to make processes simpler and easier for clients and themselves. Digital technologies can make transactions more verifiable and efficient.

Technology should enhance human relationships, not replace them. When lenders conduct due diligence on potential clients, confusion often results.

Lenders have requirements that aren't well-defined. Borrowers have no idea what lenders need. Frustration builds on both sides, and the process slows down.

Time is money, especially when you're a financier.

Five Years From Now

We predict several pain points will disappear through digital transformation:

Verification of people, corporations, and trusts will become automated. Lenders will know exactly who they're dealing with.

Documentation will be automated and verified quickly. Each participant will follow specific, transparent workflows.

Human judgment will remain crucial for credit policies and lending decisions. Experience still matters when evaluating developers.

With 82% of PropTech companies already using or planning to use AI-based technology, this transformation is accelerating rapidly. Source

The Global Marketplace

Everyone in the world understands what a property is. The core differences between markets are jurisdictional – different laws and ownership structures.

These jurisdictional issues account for only 10-15% of the overall process. Capital flows globally, always seeking the best returns.

Large organisations operate globally. If an opportunity works for them, they'll make it happen. Digital processes will facilitate these global transactions.

Successful Partnerships

When incumbents and PropTech innovators form successful partnerships, they share common goals:

The process must be simple. Both sides need to profit. End customers – borrowers and investors – must get good deals with minimal frustration.

These partnerships make life better for customers. They democratise access to capital and make projects more viable.

Borrowers will always seek the lowest costs for their projects. Lenders will seek the lowest costs to provide their services.

Efficiency, verification, and transparency create security in transactions.

The most efficient companies will win – similar to how index funds have transformed investment markets with simple, understandable models.

The Evolution Imperative

The future of commercial real estate financing belongs to those who can standardise, globalise, and simplify.

We believe the entire industry will eventually become as easy to operate in as buying stocks through online trading platforms.

The winners in this transformation won't just be the PropTech innovators. They'll be the incumbents who recognize that digital transformation isn't optional – it's existential.