Investigating Digitalization in German Real Estate : A Case Study within Real Estate Financial Products

Abstract: Real estate lags behind other industrial sectors in technology adoption and digitalization of its products and services. The current qualitative study looks at the digitalization efforts in a major German real estate firm – RealT Group. The firm, through its activities in real estate, aims to promote value-added digital products and services to new and existing customers.  To facilitate this study structured study, the research proposes a key question: How can real estate organizations adapt and implement innovation diffusion to provide value, and improve the accessibility of financial products for real estate investors? Further, the study aims to identify factors that play a role in the digitalization of the sector and to better understand the underlying reasons for the lag in the adoption of digital technologies. The proposed questions are answered using three theoretical frameworks that look at the diffusion of innovation, technology adoption by users, and by relevant stakeholders in the firm. Analysis of the generated data reveals several key factors retarding digitalization. Key amongst them is the seniority in the age of employees and investors, which makes them reluctant to change the existing workflow. However, younger employees and investors are more engaged with digital change and welcome the infusion of digital technologies. Prior user experiences play a key role in the adoption of new technologies.  Top-down infusion of new technologies by senior management was accepted albeit with reservations. Technology was better accepted where solution providers engaged the employees and stakeholders from the beginning and allowed trials for some time. It was observed that when the firm facilitated these conditions, the chances of successful adoption were significantly higher. Complexity in technological solutions meant that employees and investors needed to reskill themselves; something the employees were ready to do if it improved their chances of career progression  The size and reach of the firm through its products and services and employees with prior experience in the sector point to important industry-wide findings: high-net-worth investors are older, prefer to work in secrecy through middlemen and avoid complex solutions to the investment workflow. However, reducing the barrier to entry might reveal that younger investors with better technological skills could speed up the digitalization process.