Embracing technology

Lisa Urquhart visits the survivors of cyberspace

At the height of the dotcom mania it was assumed that pretty much anything could be sold online, from trainers to tanks. So it was unsuprising that some predicted that the internet would do to agebts what the CD did to vinyl.

Several years on, the initial excitment has died and the majority of failures have come from dotcom companies that rushed into cyberspace with only the flimsiest of plans to protect them.

However, among the few survivors on the property scene are Propex, the UK online marketing and introductory service and Fprop, the online property fund and transaction group.

Started in May 2000, Propex has more than 150 members, including Savills and Deutsche Asset Management. It is widely becoming the standard system that large institutional clients insist that agents use when introducting property to them.

The high take-up of Propex has been helped by the desire for standardised information. James Tanner, sales director, says that agents have been forced to adopt the system in spite of their reservations because of pressure from investors.

"There was initial resistance. The agents felt that it would upset them receiving hefty fees for introducing buildings to clients. But it has not stopped that relationship, it has made it more efficient and standardised the way information is used." He argues that rather than being a threat Propex can actually help agents to target buildings according to investors' requirements, cutting down incorrect or inappropriate pitches.

Peter best, head to investment operations at Prudential Property Investment Managers, says more than 60% of the groups' introductions now come through Propex. "It shows how significant it is for us."

He too believes that is has not and will not spell the death of traditional agents. "It has not radically affected the market because the agents are not cut out of the system. We have always said that their value is appraising assets and that is what we are prepared to pay for."

Clive Bull, head of London investment for Cushman & Wakefield Healey & Baker, also argues that while the internet has changed the process of selling a property it will take a while before commercial property can be traded over the internet.

"There is still the need for face-to-face meeting," he says. "Property is not a perfect entity and part of any property deal is negotiation. If you are trying to agree a purchase agreement then often the easiest thing is to sit down and discuss it."

Both Mr Best and Mr Tanner believe that more parts of the purchasing process, such as legal documentation, will eventually be transferred online. Mr Tanner says: "It exists for auction rooms so why not large commercial transactions?"

Where full transactions do exist is at the smaller end of the commercial property market. Fprop, the Aim-listed property group, has been carrying out successful commercial transactions for the last two years through the groups' online bidding service.

Founder Ben Habib says it has taken a long time for the market to warm to the system, in spite of what he initially saw as the obvious advantages of using the internet to market property to the widest audience possible with as much information as possible.

Technology was also a problem in the early days. "When we set up in 2000 a lot of people in commercial property did not have email, yet alone broadband, so communicating detailed information was difficult," he says.

Suprisingly, even with its relatively small number of online commercial property enterprises, the UK is still leading the US, where suspicion among agents has stalled the sharing of infomration or creation of data standards.

Mr Habib, a former property developer, believes the internet is ideal for property worth up to £5m. On Fprop, vendors have information provided similar to home buyer packs, including legal documentation and searches, which mean transactions can theoretically be completed in one day.

Unlike Propex, which relies on charging subscribers annual fees and does not cut out agents, Fprop allows vendors and buyers to save money, charging smaller fees than agents.

Sums are small. In the year to March 2004 the group sold £17m of commercial property, making £60,000 on the transactions. But Fprop is planning on beefing up this side of the business.

Mr Habib agrees that agents need not lose sleep yet. "I don't think we are a threat. We are just another source clients can use."

Chris Powell, chief executive of Churston Heard, however believes it is time that agents dragged themselves into the 21st century. "If you look at other industries it has happened to them, so it is about time we started to embrace technology."