Property investors in Nigeria have said they are as excited as they are optimistic with the traction that property technology (Proptech) is gaining in the property market and across its various value chain.
The investors, who spoke at a two-day conference organized in Lagos recently by the Nigerian Property Technology (NIPROPTECH) Association, noted that the disruptive role technology is playing in the real estate sector will not only engender growth but also address some of the challenges the sector is facing.
According to Jide Odusolu, CEO, of Octo5 Real Estate, a major challenge facing the sector is an infrastructure which, he said, constitutes about 25 percent of any developer’s construction cost. He added that the problem is not with finance but its cost, explaining that the interest rate on lending is between 18 and 25 percent, depending on the borrower’s risk level.
This view was shared by Christy Amida, executive director and COO, of Lekki Gardens, who disclosed that they have had to construct seven roads in Abuja and four in Lagos in order to create access to their estates in various locations across the two cities.
Amida also pointed out issues of talent gap and too many government bodies making demands on developers. These views were also shared by Odunayo Ojo, CEO, UAC Property Development Company (UPDC) who was represented at the even by an official of the company.
These investors were hopeful that with proptech, which is an application of information technology and platform economics to real estate markets, would address some of their challenges, leading to housing affordability and increased home access.
However, to be relevant and meet industry expectations, the investors advised that the proptech community should move fast and up their game in terms of products offering and development of relevant apps.
“Proptech has a lot of work to do by looking at the various real estate value chain. The proptech community should not wait until the entire system is built up before moving in. Importantly, they should be able to develop an app that leads to where money is,” Femi Yusuff, Head, Mortar, Innovation and New Products at Lafarge Africa, advised.
Earlier in his opening remarks, Roland Igbinoba, NIPROPTECH chairman, had noted that proptech was gaining traction globally, assuring that the market was going to see the scale-up of many Africa proptech startups in the next two to five years once the startups were able to pilot.
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According to him, “Proptech is growing rapidly in market size and it is making a compelling case for the transformation of real estate across the globe; the global real estate technology market size was estimated at $11.7 billion in 2022, and is projected to grow at a compound annual growth rate of 12.5 percent to reach $23.79 billion by 2027.”
Continuing, he said, “the value of investments in the global proptech industry is expected to grow by an average of 5.2 percent to exceed $85 trillion over the next 20 years (2022-2050). Globally, there are now more than 6,000 proptech startups. Statistics reported that global proptech investment increased from $2 billion in 2013 to $18 billion in 2018.”
He added that proptech startups raised $18.7 billion across 598 deals between 2017 and 2019, with the number of proptech transactions increasing by 33 percent from 187 in 2017 to 250 in 2019.
Igbinoba also noted that in Q1 2022, venture capitals record $1 billion investment in proptech which is a 41=percent jump from Q4, 2021.
The good news, he said, was that in September 2021, Spleet and Estate Intel got into MetaProp Accelerator Programme in New York while Small Technology got into Techstars Toronto and in 2022, RedSwan CRE got into Aldar Programme in Dubai, pointing out that these proptech startups are all based in Nigeria.
There are challenges, though. One of such challenges, Igbinoba said, is the heavily fragmented and localized real estate market. “One thing that is certainly needed for proptech startups to grow into scale-ups is a symbiotic collaboration between the startups and the real estate industry,” he said.
