This past summer, Knight Frank’s investment team made a significant stride in embracing technology by subscribing to a modern cash flow appraisal tool. This move by the world’s largest independent real estate advisory firm marks a noteworthy departure from the conventional choices of the past, such as Argus Enterprise or MRI Software, which were prevalent in the 1990s to the 2010s.
This transition is meaningful in the proptech story. Traditional British property companies, which once held sway over cash flow software, no longer wield the same influence. Until recently, many UK brokers adhered to ‘black box’ solutions like Argus simply because they catered to the preferences of a few client teams around Leadenhall and Fenchurch Street. In particular, RICS valuers can find it challenging to contemplate moving away from the arbitrary PDF report formats they’ve digested for years (however painful it may be to produce them).
However, the landscape has shifted. Modern proptech solutions now empower business owners to equip Capital Markets professionals with the most appropriate tool available, especially for running Discounted Cash Flow (DCF) models—an essential method for leading international capital from North America (e.g., Starwood, Tishman, Oxford Properties) or Asia (e.g., Mitsubishi, Fosun, Gaw Capital or National Pension Service of Korea).
Capital Markets colleagues no longer need to defer to a Valuer’s choice based solely on Argus valuation reports. Instead, they seek efficient and convenient ways to perform regular and speculative DCF scenarios—the vital “numbers” to serve their clients. If the recommendations outlined in the RICS Investment Report regarding DCFs are followed, valuers will also have to adapt to similar changes.
Returning to Knight Frank’s decision, it’s essential to recognize that their choice did not occur overnight. Knight Frank’s innovation committees took six or more years to explore new solutions. This involved active participation in major proptech conferences like FutureProp and CREtech and experimenting with alternatives such as Dashflow, which offer much-needed user-friendly transparency for the otherwise complex and manual task of cash flow modelling.
If your team has yet to explore innovative solutions, rest assured that it’s never too late to start. Reach out and we can introduce you to a new era in real estate cash flow underwriting—one that is faster, more convenient, and continually evolving. With the growing adoption of OpenAI and ChatGPT-type technologies, the pace of change is only set to accelerate.