Digitalization as a Parameter in Credit Assessments for Commercial Real Estate Companies on the Swedish Office Market : Existing Challenges and Future Opportunities for Credit Institutes and Real Estate Valuers

Sammanfattning: The digital development in today's society is taking place at an impressive speed wheredigital solutions are implemented in all segments to make the world a smarter place tolive in. The real estate industry, has from a historical point of view, been consideredconservative and viscous for changes; however, the industry is facing major changestoday as digital technology is implemented in buildings with the purpose of makingthem smarter. This is also known as PropTech. The digital transformation entailseffects that actors on the market have begun to identify and adapt to. The question isto what extent they are considering these effects and whether they have begun toadapt their models after this. If not, there is a risk that the credit institutes' models willhave a bigger uncertainty, which could affect both the credit institutes as well as CREcompanies negatively from a financial perspective. The purpose of this thesis istherefore to increase knowledge of how digitalization is considered in creditassessments for commercial real estate companies in the Swedish real estate market. Three areas in which digitization theoretically affects credit assessments were selectedfor this degree project through a pre-study, namely sustainability, customer satisfactionand operational efficiency. A theoretical chain is presented in a conceptual frameworkbased on previous research showing how digitalization can affect the repayment abilitythrough profitability of commercial real estate companies and the market value ofcommercial real estate properties, which are two important factors in a creditassessment. Furthermore, collection of empirical data has been gathered throughsemi-structured interviews with experts in credit assessment towards real estatecompanies as well as real estate valuers. The conceptual framework showed a clearlink between digitalization and its theoretical impact on profitability and market value,with regard to sustainability, customer satisfaction and operational efficiency. Theempirical evidence also indicated that creditors and property valuers are aware of thedigital change to a certain extent, but there exists a number of barriers, hindering theconsideration of digitalization in credit assessments. The respondents expressed abelief that digitalization will increasingly impact the CRE industry and it will become animportant aspect to examine in the future.