Review 71st Swiss Real Estate Talk: "Revolution in real estate financing?"

Presenter Dr. Christian Kraft from the Lucerne University of Applied Sciences and Arts began by outlining the status quo: "Real estate financing is in a state of upheaval, and banks, as traditional mortgage financiers, are under increasing pressure." However, it is not only stricter financing rules (keywords Basel III and Basel IV) that are causing problems for financial institutions; new players are also increasingly appearing, such as insurance companies and pension funds. In addition, there are online platforms and intermediaries on the Internet, which on the one hand make the offer for real estate loans larger and more transparent, but also create additional pressure in competition. Moreover, with crowdlending, crowdfunding and crowdinvesting, the topic of real estate financing has now also arrived in the peer-to-peer sector. Kraft's summary: "The traditional financiers are in a multi-front war."

"Heterogeneous landscape of lenders"

Sebastian Angst, Partner and CEO of Pro Ressource AG, put this view into perspective in his presentation, explaining: "It is probably more of an evolution than a revolution that is currently taking place in the still bank-dominated industry." He added that the banks had meanwhile adapted to the new rules of the game and reacted accordingly with increased credit margins and more restrictive financing. Insurance companies and pension funds have cleverly exploited gaps that have opened up. Together with new financing servicers, such as Finovo or Avobis, there is now a "heterogeneous landscape of lenders" in this country, he said. "There is definitely a change, and with it many opportunities are opening up for all players," said business economist Sebastian Angst at the end of his presentation.

Prof. Dr. Andreas Dietrich from the Institute for Financial Services Zug (IFZ) then brought impressive figures: Last year, the current market for mortgages concluded online was already slightly more than four billion francs. However, this figure is still comparatively low if one looks at the market potential for lending to private individuals alone, which amounted to a good 730 billion in 2017. This market is growing every year by around 19 billion, or a good 2.6 percent, Dietrich said. The new online players could therefore take a somewhat larger slice of the pie. In the area of real estate crowdfunding, the 100 million mark was exceeded last year, Dietrich revealed in anticipation of his institute's new annual study to be published at the beginning of May. The digital banking expert expects crowdlending to continue to spread across Europe, especially in the business-to-business sector, and referred here to the example of Loanboox, the money and capital market platform founded in Switzerland in 2016 for public-sector borrowers and institutional investors.

"Practical examples of blockchain solutions are still lacking"

Finally, Prof. Dr. Thomas Ankenbrand, finance lecturer at the Lucerne University of Applied Sciences and Arts and Chairman of the Board of Soranus AG, presented the possible areas of application of blockchain solutions in the real estate industry to the 90 or so participants at the 71st Swiss Real Estate Talk. According to Ankenbrand, the spectrum here ranges from land registry entries and smart contracts to transaction processes and real estate deals using cryptocurrencies. However, he also admitted, "Market participants are not yet craving solutions of this kind." Here, he said, there is often still a lack of confidence in the new technologies. But Ankenbrand was confident: "Technology confidence comes with experience." Moderator Christian Kraft agreed, saying that what was still lacking above all were practical examples ("use cases") - and that the digital players and pioneers were thus facing a Herculean task.

Here you can take a look at the presentations of our three speakers:

• Sebastian Angst - Pro Ressource AG
• Prof. Dr. Thomas Ankenbrand - Lucerne University of Applied Sciences and Arts
• Prof. Dr. Andreas Dietrich - IFZ Institute of Financial Services Zug