How Real Estate Lawyers Can Leverage Technology to Address the Sustainability Trend

Sustainability has become a major trend in investment, even in the real estate sector. How can real estate lawyers best position themselves to manage ESG principles?

Market intelligence is invaluable to lawyers. They must understand the key trends in the industries they serve if they are to capitalise on the opportunities they offer. For those lawyers in European real estate, what current trends are impacting them that they should know about?

To understand such trends, as well as needs and challenges in European real estate, Drooms conducted research1 among professionals in the industry.

Sustainability is now a major trend

The findings of the study reveal that sustainability is currently the biggest area of development for the sector in Europe, with more than a third (36%) of our respondents identifying sustainably managed assets as the most likely significant future trend. Other key trends identified by respondents included digitisation (26%) and Artificial Intelligence (21%).

Sustainability appears to have climbed the agenda rapidly: a similar survey we conducted last September found that ‘more remote working’ was the biggest theme, also cited by 36%.

‘Sustainable’ investing, which integrates environmental and social goals, has been gathering momentum in the asset management industry for some years. But the growing worldwide consciousness of climate change and social issues accelerated during the pandemic in 2020.

‘Sustainable’ investing, which integrates environmental and social goals, has been gathering momentum in the asset management industry for some years.

In real estate asset management, sustainability is gaining prominence, not least because of the substantial impact buildings have on our environment and society. ESG factors are increasingly seen as an essential element of real estate corporate processes, including legal and tax decision-making.

Lack of technology hinders ESG integration

Full integration of ESG requirements is still some way off being achieved in the real estate industry, however. If it is to be achieved, having the right data management tools will be crucial. Data and its evaluation are the basis for successful ESG management and digitisation is key to implementing it (the use of paperless processes helps the environment too).

Unfortunately, the real estate industry has lagged behind in implementing technology. According to our survey respondents, a lack of knowledge about existing technology (48%) and not understanding the true benefits of it (45%) are identified as the most common reasons for a delay in digitising the real estate industry.

Technology budgets are to be increased

However, the industry is clearly changing: 87% of our respondents say they are very likely in the next two years to raise their technology budget.

In terms of key hurdles, though, nearly all (97%) of our respondents recognise some degree of challenge posed to the workflows of real estate firms by searching, locating, and managing asset-related documentation. Only 3% see it as no challenge at all.

VDRs optimise workflows

Virtual data rooms (VDRs) go a long way towards meeting the technological needs of the real estate sector. They were launched around 20 years ago as online versions of the physical spaces in which confidential or sensitive information could be reviewed by authorised parties in a transaction. Today, they offer many new functionalities and provide secure online platforms for accessing confidential documents and managing business processes. They bring efficiency to real estate transactions and even enable management of assets throughout their life cycles.

According to our respondents, VDRs significantly optimise workflows: 16% see an extremely positive impact, 48% a positive impact and 32% a moderately positive one. Real estate professionals can combine all stages of the entire lifecycle asset management process onto a single platform and transparently using Drooms PORTFOLIO. It requires no additional technologies, which makes it a sustainable and highly efficient solution.

Technology is crucial to capitalise on opportunities

There is a pressing need for the real estate industry to digitise its processes further. This will certainly enhance the integration and management of ESG principles, but there are other areas highlighted by our research in which it will be crucial, such as AI, dealing with ‘big data’ and connecting systems and information, such as via application programming interfaces (APIs).

There is a pressing need for the real estate industry to digitise its processes further.

These issues cannot be addressed overnight, but real estate professionals – including lawyers – should take comfort in knowing that important first steps can be made by applying technologies that already exist, such as VDRs, which facilitate the immediate exchange of data and thus efficient workflows – no matter how large a portfolio is and how many thousands of users are involved.

Such tools will be invaluable going forwards to capitalise on all the real estate opportunities that become available, including both asset ownership and debt vehicles.

(1)Source: Survey conducted in March 2021 by Drooms. The panel of 225 real estate professionals covers both fund managers and investors across Europe.


Rosanna Woods, Managing Director UK

Drooms GmbH

Address: 11-12 Tokenhouse Yard, London, EC2R 7AS

Tel: (+44) 207 118 1100



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