Real estate transactions are taking longer to conclude in the current volatile environment, data from digital data room specialist Drooms reveals.
There is a lot of anecdotal chat at this year’s Expo Real about deals drastically slowing. If anyone should have real insight into the transactions environment, it is Jan Hoffmeister, CEO and founder of Drooms, the digital data room specialist.
‘I can’t confirm that the volume of transactions is significantly slowing, but dealmakers are taking their time,’ Hoffmeister told PropertyEU at Expo Real. ‘In 2019, digital data rooms were open for an average of 165 days – illustrating the arc of time deals were taking. In 2022, that’s up to 258 days,’ he noted. ‘That means that the whole process is slowing – I can conclude that probably means that parties want to be certain before they take the plunge.’
Digital data rooms – cloud solutions for the secure storing and sharing of confidential documents – have become part of the mainstream of real estate transaction activity in recent years. According to Hoffmeister, it’s unusual to find a deal above €50 mln that doesn’t take place in a digital data room. This fact alone underlines how far the industry has come since Drooms was founded 20 years ago.
‘When we started, people said that lawyers would never give up their paper documentation,’ he added. ‘But we can see that digital data sharing via data rooms is now standard.’
Despite the success of solutions like the one offered by Drooms, it is true that interest in proptech investments is currently falling on the global stage. The tumbling MetaProp mid-year 2022 global proptech investor confidence index recently confirmed this, dropping to 5.8 out of 10 at the start of October. However, Hoffmeister distanced himself from the industry’s cooling on technology companies and falling tech stocks in general. ‘We don’t consider ourselves a proptech,’ he said. ‘We’ve been around for 20 years and we’re a part of the mainstream transactions environment. We now have offices in 10 countries and we’re on an expansion path.’
He added: ‘The Drooms solution is about improving speed and saving costs. In our case, digital solutions are much more efficient and cut lots of preparation time.
‘While we started out in Germany – and DACH countries remain 70% of our business – the 30% of international business we have is growing. We have also seen little impact on our UK business following Brexit. Dealmakers there are often involved in cross-border transactions with mainland Europe, and digital data rooms are a help, not a hindrance, when you are collecting documents across different markets. Innovations like our translation tool – which we recently introduced – now make that process easier than ever.’