I'm really curious as to how these kinds of games are made nowadays. This is by far the best out of the new wave of PS1 retro-clones out there. Really good work!
Hello! The 3D assets are just standard, low-poly models made in Blender.
To get that low-res look ingame, just use unfiltered, pixelated images as textures and a low render scale.
The distortion effect can be replicated with custom shaders (I think there are some PSX shaders available for free for the most common engines).
Good luck!