Funsho Awoniyi, founder of recently-launched property crowdfunding platform Coreum, is extremely optimistic about the potential of prop-tech in Africa.
“People, investors included, are beginning to understand the potential real estate holds and now perceive real estate as the soon to be “new oil”,” said Awoniyi, of the Lagos-based Coreum, which allows individuals to co-invest in property and earn returns.
The “new oil” may be overstating the case somewhat, but there are certainly signs that companies in the prop-tech space are starting to see investor interest.
Companies as diverse as MeQasa, Fibre, HouseME and Flow, spread across the continent, have raised funding in the last few years, and there is a real feeling investors are awakening to the potential of the sector. We have even seen an acquisition in the space, with South Africa’s Eazi.com acquired by Pam Golding.
“Every sector is attractive to investors if returns can be shown. We continue to believe that the use of technology will create massive efficiencies at scale, and for that reason prop-tech will grow into more and more of a startup focus,” said Ben Shaw, chief executive officer (CEO) of HouseME.
Gil Sperling, co-founder and CEO of Flow, said part of this increase in funding is accounted for by a specific mandate from large global property institutions to invest in tech.
“This is seen as there are dedicated venture capital firms popping up who represent these large institutions, investing at faster rates than ever,” he said.
Real estate, real potential
Another reason for the growth of tech-enabled real estate as an investment destination is its real potential. Tech entrepreneurs in Africa have long complained about the preference of local investors to put their cash into land and property, but prop-tech startups can pull off the feat of marrying the two.
It is also clear that prop-tech platforms could reach sizeable customer bases and generate real returns if properly executed. Africa is seeing increasing urbanisation, people have increasing amounts of capital available have to buy, rent or invest in property, and the tech platforms have the ability to make all related processes more accessible and affordable. Real estate itself has long been a popular sector for investors, so why not tech platforms for real estate?
Awoniyi says Coreum, through its co-investment platform, is breaking barriers by making real estate assets affordable and accessible for all regardless of income level, age or location. Platforms that do this, she said, will prove very valuable.
“Assets like real estate have long been a cornerstone for wealth generation and preservation. Real estate, like the stock market, is seen as a major store of value and our model allows a broader range of individuals to aggregate their funds towards the purchase or development of strategic real estate assets,” he said.
Another impactful prop-tech solution that has secured funding in Nigeria is monthly home rental subscription platform Spleet, which allows homeowners to rent out rooms to vetted individuals, while also helping people easily find places to stay. Chief operations officer (COO) Akintola Adesanmi says increasing the level of flexibility in the space and creating demand had made Spleet investable.
“Our software platform has increased the demand for quality shared and entire spaces that people would have originally not been able to afford within the rigid, traditional model that exists,” he said.
This level of disruption means investors are increasingly interested in African prop-tech, but is is only the beginning of the story in this regard.
“I would say it is still under-disrupted. The traditional model where people pay huge bulk sums for rent is still the norm and there are two or three players attacking the problem from different perspectives, but the demand for our solutions is still very high,” said Adesanmi.