The South African real estate sector is experiencing a transformative shift as it embraces technology as a vital tool for business growth and efficiency, according to a report released by the South African Property Owners Association (SAPOA). Recognising technology's positive impact and benefits, industry players are adopting proptech solutions to catch up with their global counterparts.

The comprehensive overview of the proptech market in South Africa was compiled in collaboration with SA REIT Association, and the Green Building Council South Africa (GBCSA) and aims to create greater awareness of how technology is reshaping the local and global property sectors.

The report highlights that while the South African proptech market has been slower in adopting emerging technologies compared to global markets, there has been a significant expansion of proptech companies offering a wide array of services across the industry. With over 150 proptech companies currently serving the South African market, the breadth of innovative products has grown substantially.

However, technology adoption in the sector has faced challenges due to tough economic conditions, unstable infrastructure, developing logistics networks, and a lagging focus on environmental, social, and governance (ESG) regulations. Consequently, traditional early-stage capital sources have been relatively underfunded in driving innovation. Nevertheless, signs of maturity are beginning to emerge in the market.

The report notes that corporate executives and key role players increasingly recognise the positive impact technology can have on their organisations. More real estate companies are investing in new product innovation to meet the evolving needs of their portfolios, either through direct investment or indirect partnerships.

Joanne Solomon, CEO of the SA REIT Association, points out that entrepreneurs within the property sector are establishing new technologies, leveraging their intimate understanding of industry challenges and solutions. Solomon further highlights the establishment of dedicated associations and industry sub-committees supporting growth, such as the SAPOA Proptech Committee, SA Proptech Association, Africa Proptech Association, and the Africa Proptech Forum, as evidence of the sector's maturation.

The report also underscores the growing interest in investment prospects within the sector, with successful fundraising rounds and exits for select South African-based proptech companies. The current technology products catering to the South African property market address efficiencies across sub-sectors and the asset life-cycle, driving increasing competition within product categories.

Joanne Solomon emphasises the potential of proptech to bring numerous efficiencies to the South African property sector. These include increased automation, improved data analysis, and enhanced communication with tenants and investors. Proptech's adoption can lead to better decision-making, reduced costs, increased building occupancy, and ultimately higher shareholder returns.

Lisa Reynolds, CEO of the Green Building Council South Africa, adds that proptech, with its innovative technologies, aligns seamlessly with the property sector's sustainability goals and will play a critical role in achieving green building objectives.

The South African property sector's enthusiastic embrace of technology as a business enabler signifies a significant shift towards a more efficient, sustainable, and digitally advanced future. With ongoing collaboration among industry stakeholders and the increasing adoption of proptech solutions, South Africa's real estate sector is poised for remarkable growth and transformation.

"We are excited to witness the growing recognition of proptech's potential. Our primary focus lies in harnessing technology to deliver tangible and positive outcomes for real estate owners, developers, managers and end users. By leveraging advanced technologies, businesses are embracing enhanced automation, data-driven insights, and seamless stakeholder communication, paving the way for increased efficiency and innovation within the South African property sector. Embracing proptech empowers informed decision-making, cost reduction, higher occupancy rates, and ultimately greater potential returns for shareholders," says Peter Clark, Managing Partner at REdimension Capital who wrote the report.