While many companies in the real estate industry continue to rely on traditional processes, the bill for a lack of digitalisation has long been written - and it is high. Outdated processes, manual data collection and a lack of automation not only lead to significant productivity losses and rising operating costs, but also increasingly weaken the ability to innovate, slow down decision-making processes and jeopardise long-term competitiveness.

A recent analysis based on data from the Federal Statistical Office shows that The average annual personnel costs per employee in the property sector are estimated to be around €56,000 in 2025 - with a range of €47,000 to €65,000, depending on qualifications and company size.¹

At the same time, studies show that up to 71% of everyday office tasks could be automated using artificial intelligence. This theoretically corresponds to a potential saving of 28.6 hours per week per employee.² Even a conservative analysis - taking into account realistic automation rates (e.g. 70% for structured data processing, 30% for internet research) - results in an effective saving of around 15 hours per week. This corresponds to an economic potential of around 23,000 euros per employee per year.

Extrapolated to the approximately 306,137 employees subject to social insurance contributions in the German property sector³, this results in an annual savings potential of over 7 billion euros - solely through the introduction of AI-supported process automation.

Companies that invest in digital technologies today not only secure significant cost advantages, but also create the basis for new business models, stable governance structures and sustainable working methods. Digitalisation is no longer a ‘nice-to-have’ - it is a must.

An average property transaction in Germany currently takes around 342 days.⁴ The causes are varied - but always similar: manual checking processes, a lack of digital interfaces and fragmented communication between the parties involved characterise the process. The economic consequences are considerable and affect not only time, but also capital, resources and scalability.

A key cost driver is the commitment of human resources. Specialists often accompany transactions for many months. The operational effort required for coordination, harmonisation and the manual preparation of relevant documents is high - and prevents these employees from working on other value creation activities in parallel.

In addition, there are considerable opportunity costs: delayed closings lead to lost rental income, missed investment opportunities and limited liquidity. These indirect losses are particularly noticeable in large-volume or time-critical transactions.

Direct process costs also increase significantly due to inefficient working methods. Paper-based processes, unstructured Excel lists and decentralised data storage lead to media disruptions, redundancies and a high susceptibility to errors. In addition, central decision-making bases - such as investment templates or property teasers - are often created manually in PowerPoint, frequently without standardised templates or automated data integration. This significantly increases the administrative effort per process.

The transaction duration is therefore not only an organisational problem, but also a clearly measurable economic problem. Companies that rely on clearly defined processes, structured data and digital collaboration can not only significantly reduce transaction times, but also free up resources, utilise capital more productively and sustainably increase their operational excellence.

While many traditional real estate companies continue to rely on manual processes, isolated IT systems and established structures, digital competitors - especially from the PropTech environment - have consistently transformed their processes. They work with integrated system landscapes, automated workflows and data-based decision-making models. The benefits of this digital orientation are not only measurable in operational terms, but also strategically.

One key effect is the reduction in IT costs. While up to 55% of IT budgets in traditional companies are used to maintain existing systems⁵ - for example for maintenance, system upkeep or workarounds - digital market players use their resources much more efficiently. They are making targeted investments in scalable technologies, innovation projects and platform solutions that secure competitive advantages in the long term.

There are also clear differences at the earnings level: digital business models enable more efficient processes and leaner structures, which has a direct impact on profitability. According to a study by McKinsey & Company, companies with high-performance IT organizations achieve up to 10% higher profit margins than less digitally positioned competitors - and with a comparable sales volume.⁶ Those who use technology in a targeted manner directly strengthen their economic performance.

There is also a third, often underestimated factor: market shares are increasingly shifting in favor of digital providers. Speed, transparency and data-based decision-making capabilities create trust among customers, investors and partners. Especially in volatile market phases, a digital infrastructure offers the opportunity to react flexibly, make well-founded decisions in real time - and thus capitalize on opportunities faster than the competition.

Digital transformation is therefore no longer an optional modernization step - it is a key competitive criterion. Companies that stick to analog processes for too long risk not only operational inefficiencies, but also a loss of relevance in the market. The price of technological standstill is high: lower margins, rising operating costs and a gradual loss of visibility and growth potential.

Translated with DeepL.com (free version)

Digitalisation is no longer just a means of increasing efficiency - it has become a basic prerequisite for the strategic future viability of companies. In an increasingly regulated, data-driven and dynamic market environment, analogue companies are not only losing touch with the competition, but also risk structural weaknesses in three key areas: Compliance, investor confidence and innovation capability.

Outdated IT systems, unstructured filing systems and non-transparent responsibilities significantly increase the risk of breaches of regulations. Regulatory sensitive areas such as the General Data Protection Regulation (GDPR), money laundering prevention and ESG reporting are particularly affected. Incorrect or incomplete documentation is not only associated with costs, but also with legal consequences - including reputational damage.

In today's competition for capital, professional investors expect digital transparency, standardised reporting and scalable platform models. Those who do not fulfil these requirements - whether due to manual processes, fragmented data sources or a lack of technical infrastructure - lose credibility. Institutional investors in particular are increasingly focussing on data-based investment decisions. Manual reporting based on Excel spreadsheets no longer meets the expectations of the capital market.

If the digital foundation is missing, the scope for new developments remains limited. Companies whose resources are completely tied up in operational routines are unable to develop new products, build technological partnerships or develop scalable business models. The necessary impetus for innovation fails to materialise - with the result that the company stagnates in its strategic development.

Future viability therefore doesn't start at some point - it starts now. Companies that invest in digital structures today create the conditions for resilient governance, efficient capital market communication and sustainable innovation. Digitalisation is not a promise for the future - it is the foundation for resilience, scalability and relevance in the years to come.

An international comparison clearly shows that the German property sector is lagging behind digitally. While countries such as Scandinavia, the United Kingdom and the USA have long relied on automated processes, digital transaction platforms and cloud-based infrastructure, manual processes and analogue systems continue to dominate in many places in Germany.

This lag is particularly evident in two key figures: In Germany, only around 30% of companies currently use cloud-based IT infrastructures, while the proportion in Scandinavia, the UK and the US is over 70%. The difference is even more drastic when it comes to digital transactions: In Germany, only around 20% of companies process transactions digitally, compared to more than 60% in the international comparison markets.

These figures prove it: The backlog is not just a technological deficit, but a measurable economic disadvantage. Companies that continue to rely on fragmented IT structures, Excel spreadsheets and paper-based processes are missing out on clear efficiency gains, better scalability and higher margins. While international competitors process transactions almost entirely digitally, analyse data intelligently and scale new business models efficiently, German market players are losing time, resources and, increasingly, their competitiveness.

Digitalisation is therefore no longer a ‘nice-to-have’, but a key location factor. If you want to survive on the national and international market, you have to act now. In future, catching up with global standards will not only determine internal efficiency - but increasingly also market share, investor confidence and access to capital.

The analysis clearly shows that the digital backlog in the German real estate industry is not a temporary deficit, but a structural risk - with clearly measurable effects on productivity, profitability and competitiveness.

• Over 7 billion euros in potential savings remain unutilised every year because processes are manual, fragmented and inefficient.
• Time lost per employee on a weekly basis prevents them from focussing on value-adding activities and binds skilled workers to routines.
• Transactions in Germany take almost a year on average - a serious disadvantage compared to international competitors.
• Higher margins, lower operating costs and better scalability are already a reality for digitally positioned market players.

At the same time, international benchmarks show that other markets have long since demonstrated how digitalisation can become a strategic lever - for efficiency, growth and sustainable market leadership.

Digitalisation is therefore no longer optional, but a business-critical success factor. Investing now creates the basis for resilient governance, better access to capital markets, greater innovative capacity and long-term resilience. Those who hesitate not only risk operational inefficiencies - but also the loss of talent, customers and market share.

The time to act is now. The competitiveness of tomorrow is decided today - through consistent digital transformation.

Sources:
¹Strukturerhebung im Dienstleistungsbereich - Grundstücks- und Wohnungswesen - Fachserie 9 Reihe 4.3 - 2009
²​https://ccpmre.de/wp-content/uploads/Monitor-2024_Forschungskonzept_01-1.pdf
³ https://zia-deutschland.de/wp-content/uploads/2021/05/Bedeutung-der-Immobilienwirtschaft-in-Zahlen.pdf
⁴https://drooms.com/de/real-estate-transaction-barometer-2023-report/
⁵https://kineticdata.com/blog/breaking-the-maintenance-cycle-shifting-it-budget-from-operations-to-innovation
⁶https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/how-high-performers-optimize-it-productivity-for-revenue-growth-a-leaders-guide
⁷https://kinsta.com/blog/cloud-computing-in-europe/
⁸https://www.computerweekly.com/news/252482572/Nordic-real-estate-sector-becoming-increasingly-digital