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Property investors are encouraged as proptech gets traction in Nigeria.

August 9, 2022, 9:05 pm News Seen: 5645
Property investors are encouraged as proptech gets traction in Nigeria.
Property technology Proptech is gaining pace in the real estate sector and along its many value chains, and property investors in Nigeria have expressed their excitement and optimism about this development.

The investors highlighted that the disruptive role technology is playing in the real estate sector will not only promote growth but also alleviate some of the difficulties the sector is facing during a two-day conference recently held in Lagos by the Nigerian Property Technology NIPROPTECH Association.

The infrastructure, which, according to Jide Odusolu, CEO of Octo5 Real Estate, accounts for around 25% of any developer's building costs, presents a significant challenge to the sector. He continued by saying that the finance issue is its cost, not its availability and that the interest rate on loans ranges from 18 to 25%, depending on the risk profile of the borrower.

Christy Amida, executive director and COO of Lekki Gardens, agreed and said that to provide access to their estates located throughout the two cities, seven roads had to be built in Abuja and four in Lagos.

Amida also brought up the problems of a talent gap and an overabundance of governmental entities putting expectations on developers. Odunayo Ojo, CEO of UAC Property Development Presence UPDC, who was present at the ceremony in the company of a representative, also expressed similar thoughts.

These investors believed that proptech, which applies platform economics and information technology to real estate markets, would help them overcome some of their problems and make housing more accessible and affordable.

However, the investors recommended the proptech community to move quickly and step up their game in terms of product offering and the creation of pertinent apps to be relevant and fulfil market expectations.

By examining the numerous real estate value chains, Proptech has a lot of work to do. Before settling in, the proptech community shouldn't hold off until the full system is up and running. Femi Yusuff, Head of Mortar, Innovation and New Products at Lafarge Africa, said that they should be able to create an app that directs them to where the money is.

Assuring that the market will witness the scale-up of many African proptech firms in the next two to five years once the startups were able to pilot, Roland Igbinoba, the chairman of NIPROPTECH, had earlier observed that proptech was gaining traction globally.

He claims that "Proptech is growing rapidly in market size and is making a compelling case for the transformation of real estate across the globe; the global real estate technology market size was estimated to be $11.7 billion in 2022 and is projected to grow at a compound annual growth rate of 12.5% to reach $23.79 billion by 2027."

He continued, "Over the next 20 years, the value of investments in the global proptech industry is predicted to increase by an average of 5.2% to approach $85 trillion" 2022-2050. There are currently more than 6,000 proptech startups worldwide. According to statistics, global investments in proptech rose from $2 billion in 2013 to $18 billion in 2018.

The number of proptech transactions increased by 33% from 187 in 2017 to 250 in 2019, he continued, with startups raising $18.7 billion across 598 acquisitions between 2017 and 2019.

Igbinoba also mentioned that $1 billion was invested in proptech in the first quarter of 2022, a 41 per cent increase from the fourth quarter of 2021.

He noted that these proptech businesses are all based in Nigeria and that Spleet and Estate Intel joined the MetaProp Accelerator Program in September 2021 in New York, Small Technology joined Techstars Toronto, and RedSwan CRE joined the Aldar Program in 2022 in Dubai.

But there are difficulties. Igbinoba listed the very fragmented and localized real estate market as one of these difficulties. "A symbiotic collaboration between the startups and the real estate market is needed for proptech firms to grow into scale-ups," he said.
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