Technology and the Internet have brought about a revolution in the South African real estate sector, giving us enough to discuss for proptech in South Africa. The buzzword proptech (property technology) is not a new term for South Africa real estate and local real estate agents have promptly adopted global technologies, with increased startups in this space in the from 2016-2019.
On an average, 90% South African consumers begin their real estate journeys online. Technology and mobile apps, in particular, are increasingly becoming tools to increase efficiency and give value added services to clients by real estate agents in South Africa. There are mostly three ways in which digital technologies are changing proptech in South Africa: virtual property agents, crowdfunding as a means of investment; and information aggregation, and collaboration. We shall elaborate on each of these in the proptech in South Africa section below.
Though proptech has historically been slow to adopt new technologies, this trend is changing in the current times. To understand how proptech in South Africa is changing, it will be interesting to know more on the scope of technology startups in South Africa as well it’s current real estate trends.
The technology disruption in South Africa
The adoption of disruptive technologies is on a rise in South Africa and many startups are working to take this sector forward. There are a number of new technologies that are rising in South Africa like IoT (Internet Of Things) that works with connecting devices to the internet. It started with machine-to-machine incarnation and now has evolved as a device to organization tool.
Taking data analytics and cognitive computing to the next level is artificial intelligence (AI) that can predict, infer, and in some ways, think and learn by experience much like humans do. Virtual and augmented reality (VR and AR) helps with an online and real world integration and convergence. These are special tools in regard to proptech in South Africa.
From a construction and real estate point of view, the growth of robotics startups in South Africa is an interesting trend to note. Industrial robots are surely changing how buildings are planned and made, along with some interesting 3D printing tools being used in construction.
According to data compiled by Disrupt Africa, a total of 210 recorded — raised 32 percent more funding than ever before, securing $334.5 million in funding, according to DisruptAfrica. This, along with many other factors, makes work easier for proptech companies as integrations and concept knowledge is easier to spread.
Real Estate trends in South Africa
Research shows that the South African residential property prices have dropped in 2019 when adjusted for inflation. The FNB report also states that property price growth will continue to be stifled while there is an oversupply in the market. It further added that property prices increased by only 3.3% year-on-year, resulting in a drop of 1.2%. The ‘buyer analysis-paralysis’ is a term constantly used with this market where buyers hesitate purchases, sitting on the sidelines and waiting to see how the elections unfold.
In spite of the changes, 2019 has brought continued change to the way buyers and sellers, tenants and landlords are able to transact. This happens because 2/3rds of the population is below 34, which makes the homes lower than R1.5 million sell briskly. This sector has helped to stabilize the real estate sector to a great extent.
According to the FNB House Price Index, over 7.5% of property owners with their homes on the market are packing up and leaving SA borders – this trend is expected to continue through 2019 due to weakening sentiment in South Africa. With focus on safety and security along with comfortable dwellings, prices have and will continue to rise in 2019 — considering the added demand versus supply.
As mentioned above, there are mainly three aspects in which proptech in South Africa is being changed and revolutionized. The first is the increase of virtual property agents with the advent of new technologies and spread of the internet. Technology is connecting real estate agents and tenants and also eliminating middlemen. Virtual property agents offer a cost effective way gain information about properties and digital transactions make the process easier, using 3D modeling and VR tools for virtual viewing. There are some very interesting companies in South Africa offering this proptech solution like TheVirtualAgent.za, Gumtree.za and Steeple.
The second interesting way in which proptech in South Africa is changing is with the rise of crowdfunding as a means of investment in real estate of here. Due to the flexibility and customization it offers, crowdfunding for real estate in South Africa is becoming popular with websites like Realestatecrowdfunding.co.za, Reimag.za and RealtyAfrica.com. Though this is sometimes considered Fintech (finance tech), in South Africa these crowdfunding websites are changing how consumers react to commercial real estate and also helping new developers grow.
The third interesting way is of information aggregation and the introduction of digital channels and social media tools. It helps buyers and sellers to communicate with each other directly without middlemen, bypassing agents. Cost-effective and real-time availability of property information enabled by developments in Cloud Computing and social media is leading the space of leasing activities online. This has also helped reduce entry barriers for smaller and newer companies to enter the proptech of South Africa.
STARTUPS IN SOUTH AFRICA
The rising tech industry has also given rise to an increasing number of startups in this region. Some of them are:
Property Tube is a platform for real estate agents, agencies, etc. to create, manage and market their property videos online. Be it an experienced realtor or new to the industry, their video creation tools have been developed to make it extremely simple for you to create awesome property videos in minutes. There is no experience needed, either on-the-go with the Realtor Mobile App or via the Web with their simple Web App!
Founded in 2015 HouseME is a digital platform that connects prospective tenants to landlords with full automation of the letting agency process with fair and transparent rental pricing. All of this is possible for a fraction of the traditional fees. HouseMe also has an easy-to-use portal connects prospective tenants to properties. This allows the consumer to view, place an offer and apply effortlessly.
Domestly is a startup that is advancing the way the world cleans their homes. The concept of this startup is to utilize technology to connect cleaning professionals directly to homeowners. Doing so makes housekeeping more affordable and accessible for everyone. Also, this helps in create business and opportunities for cleaners.
DigsConnect is the largest student accommodation marketplace in South Africa. It helps hundreds of landlords with student tenants, and students with Digs mates. The idea is to create a self-sustaining community of people listing. It also helps in finding safe accommodation options close to places of learning.
This is a brainchild of E4 and WeAreMonsters and is a free proptech platform. It eliminates the traditional loan application process for property-buyers by digitizing application processes. It automates tailored submissions to major banks and lenders on a prospective property buyer’s behalf. It provides transparency and visibility for home loan applications.
Way forward to proptech for South Africa
Technology is quickly disrupting the real estate world of South Africa and the adoption of these technologies is very high. With an increased move to the online space, the transactions are becoming digital. Proptech in South Africa is continuously on a growth trajectory and is touted to become bigger. But will this space expand enough to totally outdo conventional real estate agency’ We think not, as it can be a combination of traditional efforts and manpower made efficient with digital tools.