Jul 16, 2020
The Global PropTech Spotlight is an initiative that highlights the most influential PropTech Associations and thought leaders from around the world. Read about how some of the most recognized PropTech organizations were started, some of their biggest success stories, the most cutting edge technologies in their region, and more.
Organization: PropTech Africa
WHY WERE SOUTH AFRICA PROPTECH AND PROPTECH AFRICA STARTED AND WHAT IS YOUR ULTIMATE MISSION?
Ironically, the idea to form the South African PropTech Association was initially ignited at the 2018 East African Property Investment summit in Nairobi, Kenya. This was where Sean Godoy, my Co-founder and I first met. Back in 2014, at IE (Madrid Spain) Business School , we set up Venture Network to service the fledgling South African Venture Capital sector. Venture Network would go on to host over 15 events and facilitate start-up and investor meet ups. Sean and I were confident we could create similar value for the real estate sector and we incorporated the SA PropTech Association in November 2018. Our objective was to connect industry players and proptech providers. We believed by starting the conversation with the relevant industry players, we could stimulate proptech adoption in South Africa.
We launched with excellent feedback from the industry and consequently, Mauritian national, Kevin Teeroovengadum, (the previous CEO of AttAfrica) reached out to Sean and I to see if we could establish an association for the African continent, and thus ProptechAfrica.com was born with the ethos to connect and promote the African PropTech ecosystem. We do this through the PropTech Africa website and mobile apps, which encapsulate a directory of African PropTech, showcases our and our affiliate association events, and disseminates news about activity on the continent.
WHAT TYPES OF EVENTS DOES SA PROPTECH PRODUCE?
We host quarterly networking events. These events are generally themed around a specific topic and consist of networking sessions, PropTech demos, PropTech pitches and panel discussions. In addition, we release quarterly newsletters highlighting PropTech news and events across Africa, as well as an international issue. Lastly, we collaborate on PropTech research reports throughout Africa.
HOW DID YOU FIRST GET INVOLVED IN PROPTECH AND INNOVATION?
In 2005, I founded a boutique digital consultancy called iShack Digital, offering digital transformation consulting, software engineering and online marketing services. Over the years we grew our client portfolio and organically picked up a number of businesses both in the financial and real estate sectors. We found that poor adoption rates of digital products and services or steep write-offs on failed digital projects plagued these industries. We subsequently incorporated iShack Ventures; a venture-builder engineering proptech and fintech innovative platforms offering white-label and licensing opportunities to industry participants with a goal of minimizing their upfront and on-going financial risk, time-to-market and ultimately a better ROI on their digital spend. Today we have two proptech investments in our portfolio.
WHAT ARE TWO PROPTECH STARTUPS IN AFRICA WITH CUTTING EDGE INNOVATIONS?
We are seeing some exciting innovation throughout Africa. African problems offer unique opportunities and in some cases have the potential for a leapfrog effect. I would highlight HouseMe, a residential property management company based out of Cape Town, South Africa. With a fee of 2.5%, HouseMe offers substantial savings to landlords when utilizing the platform compared to traditional management agents (8.3%-15%), while providing innovative financial products like Africa’s first tenant-opt-in deposit-free lease and a 2.0% rental guarantee for landlords.
I reached out to Sean Godoy to spotlight the second innovative PropTech:
“It has been encouraging to see an increase in formal proptech research and content in various regions of the African market. Personally, I have been fortunate enough to be involved with producing two proptech reports focused on proptech ecosystems in South Africa and East Africa (Kenya, Tanzania and Uganda). From my research I have seen many exciting PropTechs. If I had to pick one on the spot, I would highlight Instant Property, a South African PropTech offering SaaS and aggregated data services to the real estate industry. I like Instant Property because they have a robust technology stack, scalable platforms and their innovations empower both large and small companies, affording them cost effective access to complex software and data services. Instant Property’s relevance has also spiked tremendously during COVID-19 and the related lockdown in South Africa. As buyers are unable to attend auctions or view properties, the industry has seen an upsurge of brokerages and agents searching for online transaction solutions. Instant Property offers white-label opportunities for their web and mobile app auction, sales and tender technology as well as aggregated online real estate auctions for their investor community.”
CAN YOU SHARE WITH US A SUCCESS STORY RESULTING FROM SA PROPTECH’S EFFORTS?
We are proud to report that we have ignited a variety of working partnerships in our short time of incorporation:
- An AI Chatbot company working with a hospitality group
- A facilities management platform working with an established but very traditional Nigerian property fund
- A multi-national architecture firm working with a building digitisation and storage company
- A construction company who built a tendering solution partnering with a software engineering firm to further build out and support their proptech
From a strategic partnership perspective, we are fortunate to have Jonathan Yach join us as an advisor and with his help, our PropTech community has exposure to a prominent India-based PropTech incubator with the idea to identify cross-pollination opportunities between India and Africa. Secondly, we are in discussions with one of South Africa’s largest REIT’s to partner on a PropTech sandbox initiative including related support.
WHAT ARE SOME INTERESTING FACTS ABOUT THE AFRICAN MARKET?
I stand to be corrected but did you know that PropTech Africa is the only PropTech association in the world with a dedicated iOS and Android community app? Since the formation of PropTech Africa, PropTech Kenya, PropTech Uganda and PropTech Nigeria have been formed. From an acquisition perspective, MRI bought MDA property management and accounting software company in 2017, which boasts that 70 percent of South Africa's listed real estate investment trusts (REITs) use the company's software. From a real estate perspective, did you know that South Africa has one of the largest mall spaces per capita in the world?
WHAT ARE SOME TRENDS YOU EXPECT TO SEE IN YOUR REGION POST-COVID-19?
From my understanding, COVID-19 has a 2 year life-cycle. If that is the case then I expect once lockdowns are over, COVID related precautions will be in place but normality will return over time to most sectors of the economy. Few major impacts will remain:
- A leapfrog in technology adoption by mainstream society. For example, six months ago, it would have sounded absurd to suggest doing a Zoom meeting with a client of ours and now they have a full fledged webinar series
- Privacy concerns around geolocation tracking will be topical when people consider the benefit of an alert system around a COVID-19 infected environment
- People will live and work in a more agile manner and for the time being, focus efforts on shedding wasteful expenditure
- The South African economy has experienced a triple blow in succession; first we had state capture by the Jacob Zuma presidency, then we were downgraded by the rating agencies to ‘Junk Status’ and now the strict Government Lockdown in place has left an already fragile economy shattered. This will lead to many liquidations, forced sales and ultimately a downward correction of the South African real estate sector. I see this as an opportunity for operators and platforms with transactional capabilities or real estate operators with capital on hand and a sound plan for their post-COVID-19 investment strategy
IN THE NEXT 10 YEARS, WHICH AREA OF THE REAL ESTATE INDUSTRY WILL CHANGE THE MOST DRAMATICALLY, WHY?
Difficult times and the need to innovate will ensure that all segments of commercial real estate will continue to evolve rapidly. I believe the following trends will be present in South Africa and most likely many other countries around the world:
- Creative short-term and micro short-term rental offerings in all commercial sectors
- New flexiwork norms will change office layouts and the facilities required
- Physical retail space will shift towards experiential and entertainment, with most shopping being done online
- Warehousing will shift towards logistics
- Creative financing models born out of crowdfunding
- Renewable energy will be an integral part of all building plans and real estate investment models
- Consumers will adopt contactless access & payments
- Parking space requirements will continue to decline
- Shopping in immersive digital malls built on gaming engines will become a thing
FROM YOUR PERSPECTIVE, WHAT IS THE MOST PERTINENT PROBLEM AND THUS OPPORTUNITY ON THE CONTINENT FOR THE REAL ESTATE SECTOR?
I would say the lack of organized and up-to-date industry data. In addition, vast clean data sets are the gateway to effective machine learning and Africa can greatly benefit from the efficiencies AI and automation can bring. However, for example, although South Africa has an organized deeds registry, this is the exception and not the norm in Africa. Factors vary greatly by territory. For this reason I reached out to Jonathan Yach for his perspective on South Africa due to his extensive exposure and experience in the South African retail sector. I also asked Kevin Teeroovengadum for his perspective on Africa as he has his finger on the continent's pulse:
Jonathan Yach: “In RSA and in respect to the listed (REIT) real estate funds, most REIT managers lack the basic understanding that data is far more important than the gadgets being used to collect the data. There is thus a substantial opportunity to grow data-centric systems and technologies through South African property management platforms. We see substantial benefit in encouraging proptech startups to enter this industry and to disrupt its traditional staid ways. In encouraging proptech, we are encouraging the unlocking of hidden value - the value in talent and the value in real estate assets.”
Kevin Teeroovengadum: “In the rest of Africa, we are already seeing how data is becoming more relevant day by day. We have seen how FinTech has allowed the financial services industry to grow even in the most remote areas of the continent. Today we are also seeing how EdTech and HealthTech are having a profound impact which a couple of years ago was unthinkable. Real estate has been lagging compared to other sectors but we are seeing a change since last year and we will see bigger changes coming out of this COVID-19 crisis. If you are on the ground you can clearly observe the African youth spearheading these changes and well needed positive disruption in the real estate sector via tech.”