The Nigeria Proptech Association has said that the country’s proptech industry’s market size has reached an all time high of $11.7bn and is expected to hit approximately $23.7bn by the year 2027.
President of the association, Roland Igbinoba, stated this during the just concluded NIPROPTECH 22 conference in Lagos.
NIPROPTECH is a conference that connects different generations of real estate practitioners to collaborate and share insight in developing the Nigerian real estate market. It provides customer experience for users through the use of technology across all aspects of the real estate value chain.
In his opening remarks at the conference, Igbinoba said the value of investments in the global PropTech industry was expected to grow by an average of 5.2 per cent to exceed $85tn over the next 20 years (2022-2050).
He said, “Property technology is the intersection of technology across the real estate value chain. 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 $11.7bn in 2022 and is projected to grow at a compound annual growth rate of 12.5 per cent to reach $23.79bn by 2027.”
He added, “Globally there are now more than 6,000 PropTech startups and statistics reported that global PropTech investment increased from $2bn in 2013 to $18bn in 2018.
“PropTech startups raised $18.7bn across 598 deals between 2017 and 2019, with the numbers of PropTech transactions increasing by 33 per cent from 187 in 2017 to 250 in 2019. In Q1 2022 VCs recorded $1bn invested in PropTech which is a 41 percent jump from Q4, 2021.”
According to Igbinoba, Fintech was the most active sector on the African continent, followed closely by PropTech.
He said Africa’s PropTech sector was catching up with the rest of the world and that in the last few years, interest about the African PropTech industry had grown both from investors and entrepreneurs’ perspectives.
He said, “Major PropTech accelerators have participated in the African PropTech sector the previous year alone. In September 2021, Spleet and Estate Intel got into MetaProp Accelerator Program in New York.
“Small Small Technology got into Techstars Toronto and in 2022, RedSwan CRE got into Aldar Program in Dubai. These PropTech startups are all based in Nigeria. ARM Labs Techstars Accelerator program was recently launched in Lagos with the intention of investing in early-stage PropTech and Fintech startups in Africa. Up to 12 startups will be selected on an annual basis.”
According to Crunchbase, the global ratio of PropTech to total venture capital (VC) funding average was about five percent. This means for every $1m in Venture Capital funding globally, $50,000 goes to PropTech.
Since 2019, Africa PropTech ratio has hovered between 0.3 and 0.6 percent of total VC funding, significantly less than the global five percent benchmark.
With $4.3bn VC fundraise in 2021 for Africa startups, only $13.8m or 0.3 per cent of the total, flowed to PropTech. According to Unissu, the Africa PropTech sector raised $18m in 2019.
Nigeria Proptech startups are also seeing some growth in the market. As of 2021, startups in the space have secured over $2m in investments. There are over 70 active Proptech startups in Nigeria alone according to an August 2021 PropTech Nigeria survey.
According to Igbinoba, using an approximate Africa commercial real estate value of over $600bn as a guide, and leaning on global ratio, one would expect $1,056bn of VC funding to have flowed into Africa over the past 3 years, “instead we have seen just $29.9m.”
He projected that by 2050, none of the world’s biggest cities will be in China, Japan or the United States. He said Africa’s population growth would triple by 2050 and the biggest cities would emerge from the continent.
He explained that PropTech would not increase the supply of housing, but would increase housing accessibility by optimizing the existing housing stocks.
Igbinoba said, “Africa’s Proptech startups are now looking beyond low-tech property search. There are bigger opportunities, definitely Proptech tackling property verification, construction optimization and costs, rent financing, co-living, property and facility management, tenant experience, blockchain, 3D printing are tools that can solve our housing problems at scale.
“Proptech is gaining traction globally, and we are going to see the scale-up of many Africa Proptech startups in the next two to five once these startups are able to pilot.