By, Ola Awodipe
Nigeria’s population of approximately 195 million people is the largest in Africa. A burgeoning middle class, along with the need to address the infrastructure deficit and real estate needs all present opportunities for transformation and growth.
The real estate sector in Nigeria is the fifth largest contributor to the GDP. Since Nigeria’s recovery from the recession last year, the sector has lagged behind general economic performance.
Currently the housing deficit in Nigeria is estimated at between 17 to 20 million housing units and an additional 900,000 houses must be built annually to keep up with demand. The World Bank Group‘s flagship report on “Doing Business in 2018” ranked Nigeria 179 out of 190 economies for ease of registering property. This in itself presents an opportunity for innovation in this space to save costs and improve efficiency.
Currently PropTech companies in Nigeria and Africa at large represent about 1% of the global market share which is estimated at over 6000 businesses. At present there is really is no way of the industry understanding what PropTech solutions they should be using. There are some great companies globally, but having visibility of what solutions are best suited to challenges faced in Nigeria, is certainly what’s missing at present. Nigeria is a peculiar environment, PropTech solutions can potentially offer access to global solutions to local problems.
The Nigerian tech ecosystem is among the fastest growing startup space on the continent. Both Google and Facebook have recently opened their own hubs and launched accelerator programmes in Nigeria. The VC’s that are investing in real estate technology solutions in Nigeria include:
EchoVC Partners a seed and early stage venture capital firm that have invested in Hotels.ng and myPadi.
Frontier Digital Ventures a Malaysia-based investor dedicated to investing in classified companies from emerging markets. Their portfolio includes PropertyPro.ng (formally ToLet.com.ng) who raised $1.2 million in funding;
Spark is an investment group, their portfolio includes ToLet.com.ng and Hotels.ng;
Ventures Platform a Pan-African early stage early-stage growth focused fund that has invested in real estate startups such as myPadi and CoBuildIt.
The real estate market is probably one of the last industries to go through a digital transformation and there is still some way to go. The first wave of PropTech were the early CRMs and business solutions.
The biggest competitor within the real estate industry in Nigeria is still probably Microsoft Excel to manage transactions, data and analytics. However, we are starting to see some talent and innovation in this space, using technology to address the specific pinpoints that are peculiar to Nigeria.
There are a new breed of startup companies with a focus on disrupting the rental market and the use of Artificial Intelligence (AI) for machine learning in search engines and Virtual Reality (VR) to better visualise a property and provide a hassle-free viewing experience.
Listing Portals - The largest tech adoption has been in the sector of property listing websites and rental payment in Nigeria. The real estate market has grown since the emergence of online real estate sites like Private Property, Nigeria Property Centre and PropertyPro.ng (which acquired Jumia House).
Co-working - To support Africa’s fastest growing population of entrepreneurs and freelancers, there has been a huge increase in co-working spaces to provide support for these start-ups. According to PropertyPro’s recent report, from the mid-2000s till date, there have been over 250 coworking spaces in Africa and 80% of these spaces were reportedly founded between 2014 and 2017.
Data and Analytics - There is need for better information to influence decisions in real estate, access to data can assist greatly in making sound investment decisions in the real estate sector. There is a lack of availability of quality information. Startups such as Estate Intel hope to address this gap by providing commercial property research and data in Sub-Saharan Africa.
Blockchain – Although the technology is yet to mature, real estate is one of the best uses for a blockchain platform. We’re seeing more startups like HouseAfrica using blockchain technology to make buying , selling and renting much easier, faster and transparent.
Crowdfunding – There are a growing number of startups pooling together investors and funds for property developments. CoBuildIt is a project management company focused on bringing people together to develop high quality housing projects at dramatically reduced costs.
PropTech is a relatively new concept, as visibility increases on the subject matter we’re certain that we’ll see more universities adding it to their curriculum. The focus at present is around Fintech and Blockchain, we’re confident that PropTech will follow suit very soon.
There is no official body to represent PropTech professionals in the region however there are a number of growing conversations happening around PropTech and we do expect this to gain some traction over the coming months. For instance, the 7th annual edition of Real Estate Unite Summit held in September. Consisted of a panel that explored the future of the real estate and PropTech as an innovative and transformative tool, to make the real estate practices more efficient. The West Africa Property Investment Summit (WAPI) holds in November with a roundtable focusing on “Is the West African market ready for RE-tech?”.
There are currently not any government initiatives that we are aware of at present. There are initiatives to drive forward more affordable housing and we believe technology will play a major role in this in the future.
As PropTech evolves and there is greater awareness of how it is being applied by global property companies, it is inevitable that government involvement to promote innovation in the industry will increase.
There is still much progress to be made in terms of embracing PropTech. These are some of the startups to watch out for committed to transforming the African real estate market with technology:
Muster.ng - A rent-share platform that connects people and organizations looking to rent properties.
Vesper - A real estate investment robo-advisor using artificial intelligence to match developers with investors.
Secure.ng - Allows investors from all over the world, buy fractions of residential property in Nigeria and earn rental returns from it.
myPadi - myPadi is a real estate startup connecting students with safe, secure and affordable off-campus accommodation.
HouseAfrica – A distributed real estate and rental ecosystem leveraging blockchain technology that allows international and local investors to access the real estate market in Africa.
Many Thanks to Ola for these insights!
Ola is the Head of Real Estate Operations at Mixta Africa in Nigeria.
You can connect with her here: https://www.linkedin.com/in/olaawodipe/
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