The real estate market in the MENA region has seen significant changes in the last few years, thanks to the wider integration of technology in various economic sectors in the region.
The emergence of proptech, a term that refers to the use of technology in the real estate industry, has had a profound impact on how people buy, sell, rent and manage properties in the region.
According to a report by MAGNiTT, $128 mn worth of funding has been channeled into the proptech industry in the MENA region in 2021.
The growth of proptech in the MENA region can be attributed to several factors. One of the main drivers is the young and tech-savvy population in the region. With more than 60% of the population under the age of 30, there is a high demand for innovative and tech-driven solutions.
Additionally, the region’s real estate market is relatively young, with many areas undergoing rapid development, making it an ideal market for proptech startups.
According to a report by Realiste, MENA’s proptech sector has great potential and areas of growth. The Middle East real estate market is expected to expand by up to 111% over the next five years, with technologies being the most significant driver behind the growth.
The report expects numerous property technologies to shape the region’s real estate market in the coming years, including virtual reality and metaverse, artificial intelligence (AI), and self-service solutions like Airbnb also have enormous potential in the region as modern consumers demand more streamlined services.
However, the report cited some challenges facing the proptech sector in the region, including a lack of reliable databases of real estate companies, transactions, and future outlooks, among others.
We can consider two examples of major markets in the region which have been witnessing a revolution in urbanization and digitalization; Egypt and Saudi Arabia.
Egypt accounted for 11% of the total proptech funding in the MENA region, which – despite leaving a lot to desire, given the volume of the Egyptian market – is an indicator of the modernization of the country’s real estate sector.
The most populous Arab country is implementing its strategic urban development plan 2052, which aims to launch massive road expansion projects and to build 14 new cities to accommodate the population increase and ease pressure on densely-populated areas.
The new cities are planned in Cairo, Giza, Dakahlia, Beheira, Port Said, Matrouh, North Sinai, Beni Suef, Minya, Assiut, Qena, Luxor, and Aswan. New cities in Cairo include the New Administrative Capital (NAC) on an area of 170,000 feddans.
Egypt’s NAC is planned to be one of the largest smart cities in the world. The mega sustainable city will be managed by a smart city operations center, which will be connected to the Internet of Things (IoT)-based applications and use algorithms and artificial intelligence to maximize efficiency and minimize waste.
The city’s roads will include sensors to monitor traffic patterns and adjust lights accordingly. The water network will use smart pipes to detect leaks and burst pipes before they cause major damage.
According to Amr Talaat, Egypt’s Telecommunications and Information Technology Minister, the country has invested EGP 50 bn in digital transformation projects and aims to increase the information and communications technology sector exports.
In July 2022, Egyptian President Abdel Fattah El-Sisi inaugurated Digital Egypt, which is a platform providing digital government services to citizens.
Saudi Arabia, the largest economy in the Arab world, aims to lead this transition, with plans to invest more than $6.4 bn in future technologies and entrepreneurship. This can secure its desired position as the MENA region’s leader in digital transformation.
The Kingdom is planning to build eight new megacities, including Neom, Qiddiya, Red Sea Project, Amaala, Al-Ula, Diriyah Gate, and others, by 2030, with funding of almost $575 bn. This will allow the development of 1.3 mn housing units.
Existing cities are also undergoing crucial changes, such as the addition of 100,000 new homes in Riyadh by the end of 2023.
With the rise of digitalization in almost all sectors in the MENA region, a variety of proptech trends emerged in the region. Let’s dive into each of them.
Proptech trends in the MENA region
Virtual Property Viewings
Virtual reality technology is increasingly being used in the real estate industry to offer virtual property viewings. This technology allows potential buyers and tenants to view properties remotely, saving time and effort. Companies such as UAE-based Property Finder are using virtual reality technology to offer 360-degree virtual property tours.
Smart Home Technology
Smart home technology is another trend that is changing the real estate market in the MENA region. With the rise of the IoT, homeowners can now remotely control and monitor their homes using their smartphones.
This technology allows homeowners to control everything from their home’s temperature to their security systems, making their homes safer and more energy-efficient.
Property Management Software
Property management software is another area where proptech is making a significant impact in the MENA region. These software solutions help landlords and property managers to manage their properties more efficiently, from tenant screening to rent collection.
Coworking spaces are another trend that is gaining popularity in the MENA region. These spaces offer flexible office spaces to entrepreneurs, freelancers, and small businesses.
Proptech startups such as Dubai-based Letswork are leveraging technology to make it easier for people to find and book coworking spaces in the region.
Summing it up
- Proptech is revolutionizing the MENA region’s real estate market.
- Major players in the region, such as Egypt and Saudi Arabia are implementing modernization and digitalization in their urban development plans.
- There are several proptech trends, including virtual property viewings, smart home technology, property management software, and coworking spaces, that are changing the real estate market in the MENA.
- Despite challenges facing the proptech sector in the region, such as a lack of reliable real estate databases, the regional real estate markets have great potential and are expected to expand significantly in the coming years, driven by technology.