With the coronavirus pandemic, the risk of default in the real estate sector has increased significantly. In addition, laws and regulations also impose new obligations under anti-money laundering legislation. Graydon has solutions in these areas to limit financial risks and to comply with legal obligations regarding compliance.
Overview & Challenges
B2B real estate companies under pressure
That the real estate sector is in transition is an understatement. As a result of high prices for office spaces and retail properties, companies are moving away from densely populated and hard-to-reach locations in city centers. Shopping streets groan under the vacancy. Rooms for flexible working were on the rise, until the coronavirus pandemic struck. Covid-19 has thoroughly shaken the economic landscape. For many organisations, homeworking is here to stay. The number of individual workstations (and therefore need for floorspace) in the office is also decreasing.
Real estate companies targeting consumers are benefitting, because private individuals are looking for more space to work at home and a garden or at least a large terrace to be able to go outside in times of lockdown. B2B companies are having a more difficult time, because customers who are struggling financially due to the crisis are quick to dispose of, or at least renegotiate leases. Many companies have had to draw on their reserves and are still operating thanks to government support. But there will come a point when all bills have to be paid, and that will also mean the end of an economy that is artificially sustained on life support. Real estate companies that rent out properties therefore live under much uncertainty. "Can my tenants survive the crisis?"
Compliance in Real Estate
The Sanctions and Money Laundering Act 2018 has tightened up legislation in this area. It requires institutions to conduct customer due diligence before entering into a business relationship, with specific requirements relating to individuals suspected of being involved in human rights abuses. Nevertheless, many real estate companies have not yet fully realised that they also have to meet these obligations when they rent or sell spaces to companies. Failure to comply is a criminal offence which carries up to ten years’ imprisonment.
What does Graydon bring to the real estate sector?
Vast amounts of money circulate in this sector and long-term contracts are often preferred. It is logical that a real estate company wants to know whether customers will be able to meet their financial obligations in the long term. And in order to be compliant, as well as avoid fraud, they must avoid doing business with rogue companies that hide behind a PO box. The resources available internally to protect yourself against all of this are limited.
All solutions are integrated in one central and user-friendly platform: Graydon Insights. Here you have all the tools at your fingertips to assess the financial stability of new customers, immediately perform UBO and compliance checks and then further follow up on customers. Both nationally and internationally.
Among the avid users of our solutions we find various B2B real estate agents, and commercial landlords for office space and flexible workplaces.