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Daily bite-sized proptech and property news in partnership with Estate Agent Networking.
Will WeWork ever work?
It’s easy to say “told you so” but everyone in my circle was amazed that the WeWork circus rolled on as long as it did, especially with its dizzying financials. Its very public IPO failure and financial scandals are well documented, but where are we now with this commercial real estate unicorn turned lame duck?
Though the financials have been dialled down and there has been much manoeuvring to try to get a more realistic alignment of the company’s true value, the over $3 billion loss last year does not augur well for any new deal.
True, expenditure has been slashed in the interim and, of course, the enfant terrible had a golden parachute to exit the building; if not quite like Elvis, certainly with a lot of noise. Understandably numerous stakeholders have been left in the lurch.
What was and still is corporate greed means that a legion of suits are trying to make a case that if working from home is just a blip, and occupancy rates in commercial real estate are set to recover to 85% occupancy, then the WeWork dream will be back on track in no time.
As an analyst, my real problem with the whole concept was and still is commercial as an asset. Real estate is a very traditional marketplace built on trust and known ratios and returns. However great a magician you are – the ex-founder certainly was – the financials can not be escaped. Occupancy rates, revenue, and long-term tenant commitments underpin the commercial real estate market.
A more transitory and, dare I say it, hybrid model, might be the future, but to push it out at such a huge scale backed by huge funding always seemed to me like a big leap into the dark from a very high cliff.
In the next three months, we might very well see a new iteration of WeWork. If so, I hope it does well for everyone’s sake. Watch this space.
Consolidation in the lettings space as Propoly exits to LegalforLandlords
At the start of the year, we forecasted that there would be a lot of consolidation in the proptech sector and specifically in the lettings vertical.
The recent acquisition of Propoly, whose strapline is “An Integrated lettings platform that reduces admin, maximises revenue and provides transparency to all parties involved”, will definitely fit alongside the LegalforLandlords operation that has absorbed them.
In their press release, Sim Sekhon, founder of LegalforLandlords, is strident about the need to change the analogue nature of lettings with its multi-layered regulations and red tape. He fully embraces the need for everything that exists in the lettings world but sees extra revenue and profit through efficiencies driven by proptech and SaaS.
Of the sale, Sekhon says: “We need to automate processes to save time and money, but we also need to recognise that agencies need to grow and develop new income streams. Propoly meets these needs now and will do so even more in the future.”
As Gary Barker, CTO of Connells recently alluded to, tech is brilliant when there are known processes and outcomes. The timeframes for outcomes in lettings, such as onboarding, have come down dramatically due to the implantation of automated systems.
Under the sale, one of the two original founders will stay on in the form of Ray Kyrson. The other, Edward Gazelle, will move on to other projects.
The speed at which Propoly moved from start-up to exit shows that the proptech and fintech marketplace is moving at an ever-increasing rate, with a generally accepted timeline of 36 to 48-months to exit or IPO becoming more and more common.
The pandemic mortgage holiday is over
The last day of July signalled the end to the mortgage holiday strategy, whereby those with mortgages could, under a government initiative, give their lender notice that they would suspend paying their mortgage for a set period.
Mortgage borrowers could avail themselves for up to six months when the strategy was extended from its original cut off date last year. Apart from what may be the effect of some homeowners now not being able to pay their mortgage, the unknown aftermath may be the creditworthiness of those who used the scheme.
Although all the major credit reference agencies, Experian included, have stated that those who took a holiday from paying their mortgage would not get a black mark on their credit history, it is not yet seen how lenders will react when new mortgages or re-mortgages are requested.
Lenders and underwriters will have their own policy and algorithms to judge the risk element of those looking to have a mortgage, and it remains to be seen if the lending industry will outright refuse to lend or lend at a premium to the one in six people who took up the mortgage holiday offer.