Reports, Business

Mapping the Future: The Rise of Proptech in MENA Real Estate Market

Proptech in MENA is growing as much as people searching for safer investments.

The Middle East and North Africa region (MENA) is witnessing a dynamic shift in the real estate sector with the emergence of property technology, or proptech. Startups are leading this charge, aiming to revolutionize traditional practices and bring the industry into the digital age.

Challenges and Opportunities for Proptech Startups

Despite the vast market potential, proptech startups encounter unique challenges that hinder their growth and innovation. Acquiring funds, particularly in the early stages of development, proves to be a daunting task. Additionally, limited access to data poses a significant barrier, as established players are often hesitant to share valuable information with emerging competitors. This lack of collaboration between startups and corporations further complicates the landscape.

Recognizing the need to pivot, many founders have shifted their focus towards property listing and search services.

Investment Trends and Market Dynamics

Investments in proptech soared in 2022, reaching $101 million across 30 deals in the MENA region. However, the following year witnessed a downturn, with funding dropping by nearly 32% to $69 million. Saudi Arabia, the UAE, and Egypt emerge as the top destinations for venture capital-funded proptech startups. Listing and search services dominate investment portfolios, followed by property management, vacation rentals, and real estate financing.

Disruption in Property Listing

Property listing platforms constitute the most disrupted segment within proptech. Approximately 60% of active proptech startups in the region operate in this space. However, the challenge lies in sustaining these platforms, as they require continuous funding to amass vast amounts of data.

Major players like Bayut, Dubizzle, and Property Finder have established dominance in the property-listing space, leveraging extensive funding and regional presence. Yet, recent years have seen the emergence of niche-focused proptechs, catering to vacation rentals, co-working spaces, and commercial units.

Navigating Uneven Playing Fields

Startups entering the property-listing arena face uneven playing fields, particularly in markets like Egypt. Boyot, initially a property-listing platform, transitioned into a facility management app due to funding constraints. Founder Mahmoud Elsabongy highlights the challenges of sustaining a cash-heavy business model in the listing space, prompting the startup’s strategic shift.

Meeting the Demand for Listing Services

Addressing the growing demand for data visibility in real estate, startups like Khareta in Jordan and Homele in Iraq are filling critical gaps in property listing services. Khareta enables buyers and sellers to make informed decisions, inspired by US-based multi-listing service providers. In Iraq, Homele offers a comprehensive platform connecting users to property listings and home services providers, bridging gaps in the real estate market.

Future Outlook and Opportunities

As the proptech landscape evolves, founders and investors are exploring targeted business models to address industry pain points. Specialized solutions such as property and portfolio management SaaS platforms are gaining traction, fueled by regulatory changes and increased operational efficiency demands. Construction technology (contech) emerges as a promising segment, poised to revolutionize infrastructure development projects across the region.

Despite challenges, the MENA region presents immense opportunities for proptech innovation. With continued investment and strategic focus, proptech startups are poised to transform the real estate landscape, driving efficiency and accessibility in the digital era.

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