With science and technology driving innovation across all spheres of human endeavour at a sprinter’s pace, EDIDIONG IKPOTO takes a look at how property technology companies are rescaling the real estate market
Over the years, Nigeria’s real estate sector has witnessed its fair share of evolution and paradigm shift that has come with the unyielding quest by man to find solutions and better alternatives to human problems.
One major means through which man has discovered this panacea is via technology.
With the advent of civilisation and new trends in science and technology, there was a growing need for real estate professionals and their clients to do business in a much more seamless fashion that eliminated the barriers that previously constituted roadblocks to effectiveness and efficiency.
As a result, property technology firms, commonly referred to as proptechs, began to emerge. Experts believe proptechs had already begun to spring in the US by the early 1980s, even though the nomenclature used today was yet to be coined at the time. In Nigeria, it is believed that the first proptech firm did not emerge until 2018.
Another breed of analysts opines that proptechs came into being in the late 1990’s during “dot-com boom.” However, today, it is present in 64 countries worldwide, with a soaring number of innovation-driven property technology companies estimated at 8,000, according to PropTech Global Trends 2020.
As the name implies, proptechs are real estate outfits that use technology and software to assist in today’s property needs. For the office sector specifically, this could mean everything from digitally facilitating unique workplace experiences and offering advanced data and analytics capabilities for real-time feedback to even helping property teams purchase, sell, and manage their assets.
Globally, the US holds the lion’s share of property technology companies accounting for 59.7 per cent of the market worldwide. Continental Europe (27.2 per cent) comes next with proptech UK as the largest market outside of the USA. Asian proptech real estate industry (3.5 per cent) is dominated by China.
Traditionally, firms in this category provide services such as property search platforms (listing and marketplaces, real estate agent tools, etc.), property sale tools, financing tools (digital lenders & brokers, alternative financing, etc.), mortgage lender software (loan application and management), real estate closing tools (insurance, transaction management tools), property management tools (IoT-powered tools), loan management systems (loan securitisation, etc.).
According to Ascendix, a real estate research group, proptech encapsulates all the tech tools used by real estate experts to optimise the way people buy, sell, research, market, and manage properties. These innovative technologies are sometimes called real estate tech, retech, or realtech; and they mean the robust alignment between real estate and tech.
The ultimate goal is to make everything about owning, leasing, or working in buildings unique, easier, and more efficient.
This also means that it’s not just for those who own and manage real estate, but the people who lease and work inside the buildings. For the office employee, having an app for their building is becoming more of a necessity every day, allowing them to conduct arrays of functions — from mobile key cards to ordering food, to visitor registration and beyond. Instead of needing several different apps to make life more efficient, the goal is to integrate everything into one central building app on tenants’ smartphones. This creates a customer-facing “remote control” for buildings.
The first point analysts have identified as proptechs’ unique feature is the better analytics it provides. Real estate professionals can paint more vivid pictures of properties’ future risks and opportunities based on geography and other variables. Proptech Big Data Analytics allows for unprecedented granularity of the research, which otherwise may have been not available.
There is also the element of precise property evaluations. Property technology startups already can forecast property prices in x-year time based on large data sets. To illustrate, a similar approach combining a large database of traditional and nontraditional data was used to predict the 3-year rent per square foot for multifamily buildings in Seattle. The accuracy of the forecast was above 90 per cent, according to McKinsey.
Improved home prospecting, marketing, and sales are other advantages provided by proptechs. Proptech Big Data can also improve how properties are marketed. Proptech realtors can benefit from big data analytics tools to refine their audience and target buyers and come up with better offers.
Proptechs also drive data-driven property development. Applying big data to residential development is another example of how technology has changed the real estate industry. Granular data analysis helps tech-minded real estate developers to predict where it is best to build a new building and what amenities would fit the potential residents.
Proptech big data can also become the key standpoint of creating clear predictive analyses of the risks of investing in certain buildings and projects.
Also, with big data analysis in place, proptech realtors and other professionals are assured that all the data are structured in clear data sets, and nothing falls through the cracks. In addition, property technology startups don’t spend time and costs on manual effort anymore.
In Nigeria today, the real estate industry has not been alien to the digital technology revolution, and there are now several proptechs startups offering tech-driven solutions for its teeming clientele. Whether they are online property markets or companies furnishing customers with real estate data analytics, these establishments are rescaling the real estate industry and ushering in a future that will be replete with a vast array of possibilities.
Some of the most popular proptechs in Nigeria are: Rent Small Small, PropertyPro, Hutbay, Property Deal Zone, Estate Intel, Fibre, and Coreum.
According to one Olamide, a verified realtor on PropertyPro, the rise of proptechs had been as a result of its ability to create a virtual platform that allowed real estate practitioners and their customers to conduct transactions free from the barriers that previously made transactions cumbersome and lethargic.
Olamide’s assertion was tailored to the words of erstwhile journalist, Marshall McLuhan, who used the term “global village” in 1964 to describe the phenomenon of the world’s culture shrinking and expanding at the same time due to the pervasive technological advances that allow for instantaneous sharing of culture.
According to the expert, while Nigeria had witnessed successes in this area in recent years, much more work still needed to be done to reach the levels attained by the US and other advanced civilisations.
Olamide said, “My work has become a lot easier because of the options provided by my platform. When I started this job about 11 years ago, it wasn’t easy communicating certain things with clients. I had to do many things manually. I remember many times, whenever I travelled, some clients would call me for inspection and I would have to cut my trip short just to attend to them. Nowadays, most of our inspections can be done remote, except on special occasions.
“The clients also find the platform very useful. As you know, in Lagos here, real estate agents charge inspection fees for every physical inspection. Now, all they need to do is access the platform and check the available offerings. If it is not good for them, they don’t have to spend money for physical inspection.”
Another licensed realtor on one of Nigeria’s biggest proptechs, Samuel, described the proptech subsector as a game changer in the real estate industry. According to him, the subsector had paved the way for practitioners to offer services that were not provided in the past.
He said, “The possibilities now are almost limitless. Take a look at Airbnb, for instance. In places like Lagos we all know the hospitality industry is already choked, and as professionals, we also noticed that not everyone fancies the idea of booking a hotel. As you can see now, the Airbnb offers something different. Imagine now, you can event short-let your house and make a lot of money in the process. I know a guy who has almost turned it into a money-making mill. The possibilities are endless really.
“ I have some clients now. When they came into Lagos, they did not have enough money to rent an apartment. Luckily for them, we had just started a package that allows our clients pay for short-let apartments on a monthly basis. It works perfectly for people who do not intend to stay for long or those who do not have enough money to pay a full year’s rent. All they did was to access our platform online, put a call across to us and then negotiate a plan that was convenient for them.”
An Enugu-based trader, Chukwu Kingsley, who regularly patronises proptechs, lauded the initiative. According to him, a wide range of functionalities, particularly the option which allows him to communicate with chatbots, helps to break the barrier of accessing services with better ease and convenience.
“It has made everything so easy. When I came to Lagos for the first time in 2020, I needed accommodation where I could stay for about three months. I was basically stranded until someone referred me to a particular online platform.”