[Column] Grant Phillips: South Africa’s proptech revolution is about to begin
Despite being one of the single largest industries globally, the property and real estate sector, both locally and abroad, have remained well behind the technology curve.
Estimated to be worth some $330 trillion, the global property and real estate industry dwarfs the international oil and gas sector, and is substantially larger than the entirety of most countries stock markets. While property is arguably the world's biggest store of wealth, it has remained almost entirely untouched by the technological revolution and wholesale disruption happening around it.
In 2022 the proptech revolution is just getting started. According to a Wall Street Journal report, proptech funding soared to record heights in 2021, attracting $32 billion worth of investment last year. Technology investment into the space is likely to multiply in the months and years ahead as the opportunity create tech efficiencies in an industry reliant on legacy systems and processes presents an attractive opportunity.
In South Africa the sector is still taking its first tentative steps towards digital transformation, creating the right conditions for significant disruption. Until very recently the tried and tested business models of asset owners, large institutional landlords, and real estate companies have remained the same.
The industry is beginning an inevitable shift thanks to a convergence of factors including new regulatory pressures in the built environment, market pressures seeking greater efficiencies, as well as pressures from end customers who are demanding better data along with new apps.
Technology adoption is now a necessity which is an exciting prospect for innovative proptech companies, major property players and the many supporting and auxiliary businesses that make up the industry. More exiting still is proptech's potential to be truly groundbreaking. Just one example is the use of AI and machine learning to tackle carbon emissions in the built environment. Another example is the use of data analytics and augmented reality to create new and unique digital experiences in traditional brick and mortar retail stores. There are also enormous strides to be made for proptech in the residential segment of the market where new systems can provide tenants with apps that operate air conditioning and monitor electricity usage.
Exactly how each of these trends will play out in the South African context is open to debate. Much clearer however, is that taking a wait and see approach to proptech and digital transformation simply won't cut it.