Some years before the high-rise with the gold-and-black triangular facade in Sandton’s CBD was completed, investors were already ‘walking through’ the mixed-use development. With the help of a specially created app, they strolled through the retail mall, checking out store features that didn’t yet exist.
They were exploring, from various viewpoints, the two tall office towers (also non-existent in real life) to anticipate how this R2.6 billion precinct on Maude and Rivonia Corner (dubbed the MARC) would change the suburb’s skyline. ‘We used both augmented and virtual reality when developing the app for the developers, Eris Property Group,’ says Richard Melvin, marketing manager at BizAR Reality, a Johannesburg-based interactive software development company that specialises in augmented reality (AR) and virtual reality (VR).
Existing properties can be filmed with a 360-degree camera to create a walk-through VR experience, something that has become popular with estate agents in SA. However, because the MARC hadn’t yet been built when BizAR created the app, the firm had to rely on computer generation (based on a 3D model provided by the architects, Boogertman + Partners). ‘The Eris app is a powerful tool that brought the iconic development to life for stakeholders and the general public, long before it was actually built. Today we see that our representation was very true to life,’ says Melvin, adding that VR and AR technology is becoming progressively commercialised in the property sector.
He says that although it’s still in its infancy in SA, the relevant software and technology (including 360-degree cameras) is more widely accessible for architects, developers and estate agents to create their own basic solutions. BizAR Reality – together with VR providers Forj and PHNX Digital, which specialise in the real-estate sector – are among the ‘exciting proptech companies that are offering a distinctly new and innovative service or product to the market’, according to a study of the SA proptech ecosystem.
The document, published in 2019 by the Urban Real Estate Research Unit (URERU) at the University of Cape Town, defines proptech as ‘tech-driven innovation that is related to buildings and the real-estate industry at large. This is tech that influences real estate in terms of design, management, transactions, investment or use’.
And like all tech-related innovation, it is constantly evolving and advancing at a rapid pace, notes the report. ‘Proptech is a new term, following the example of “fintech” in the financial industry and “edtech” in education,’ says Wayne Berger, who is the MD of iShack Ventures, a venture builder that develops disruptive technologies in the property, financial and education sectors.
Local proptech companies are applying global tech trends such as machine learning, AI and big data to solve SA problems. One of iShack Ventures’ companies – Instant Property – is an online commercial property portal that uses machine learning and big data to service clients ranging from Nasdaq- and JSE-listed real-estate entities to commercial and residential brokerages.
‘Our mission is to make life easier for all players in the property ecosystem: for landlords, brokers and tenants,’ says Berger. ‘We cut out a massive chunk of admin and technology costs for the landlord and brokerage with our software-as-a-service offering, while providing the tenant with access to ready-to-rent offices, warehouses, retail shops and showrooms across South Africa in real time, and at no cost.’ He adds: ‘Instant Property has more than 10 million m2 of commercial property space available to rent and also offers a platform for residential auctions, sales and tenders that we white-label for industry players interested in having their own auction facility.’
Meanwhile, the online residential estate agency Leadhome announced in September that it was implementing AI to automate property valuations. This includes tasks such as the analysis of photos, market conditions, previous sales and input from property experts. Through the embedding of AI into its customer-relationship management system, agents will be able to predict the likelihood of a property sale.
‘Proptech is shaking up an industry that has historically been slow to adapt to change,’ says Berger, who co-founded the SA PropTech Association (launched in November 2018) and PropTech Africa (launched in October 2019) to advance the continent’s proptech community. ‘We are starting off simply,’ SA PropTech states on its website. ‘Our first aim is to connect with as many players and interested parties as possible, and start the proptech conversation in South Africa in a meaningful way, building awareness and networks.’
The association has partnered with URERU to help understand and map the country’s proptech ecosystem. Another SA PropTech founding member, Sean Godoy, director of the Johannesburg-based consultancy Divercity Property Solutions, is co-author of the URERU report.
Together with UCT researcher Luke Boyle, he describes three key areas of tech-driven innovation that are shaping the local real-estate sector. ‘Firstly, technology in property is “cutting out the middleman” by way of peer-to-peer services or products, crowdfunding and the sharing economy,’ according to the authors, citing Airbnb because it abolishes the need for rental agents by directly connecting landlords and renters. Another example is crowdfunding, which uses an online platform to finance properties through peer-to-peer investments.
Secondly, technology is ‘driving innovation in property use’, notes the report. ‘These factors are having a significant impact on how we use space, from virtual meetings aiding remote working, to “on-demand” office rentals [offered] by coworking providers, sometimes on an hourly-basis.’ Examples for this include coworking (such as Workshop17 and Spaces), immersive technology (such as VR & AR) and online retail (for example, Takealot.com).
The third key trend sees tech as ‘driving the efficient use of space, from providing live measurement of the usage of physical space and utilities in order to reduce wastage, to identifying space that could be temporarily leased on an “on-demand” basis’, according to the report. This includes the internet of things and receiving data from sensors, as used in smart buildings and, on a larger scale, smart cities.
Recent investments in property-focused tech companies have drawn public attention to the concept of proptech in SA. In January 2019, the online rental platform Flow announced it had raised R20 million from local and international funders. The start-up focuses on millennial residential property renters. It uses behavioural economics (as pioneered in SA by Discovery Health’s Vitality programme) to reward them for paying their rent on time and looking after their homes.
They can earn up to 20% of their rent in rewards that include airtime and electricity as well as offers from online fashion retailer Superbalist, furniture store Weylandts and cleaning company SweepSouth. ‘Compared with any other industry, the property industry – and in particular the rental market – is archaic and disconnected,’ says Flow CEO Gil Sperling. ‘Through scaling with technology and economies of scale, we can revolutionise the economics of rent, providing a more seamless experience and more value to tenants.’
In September 2018, online estate agency PropertyFox acquired Cape Town-based low-commission digital property agent Steeple. And in August 2018, Pam Golding Properties confirmed its acquisition of online digital estate agency Eazi.com for an undisclosed amount.
The investment exposes the group to the high-volume residential market of between R500 000 and R2 million. Group CEO Andrew Golding notes that the acquisition ‘is not a disintermediation or cannibalisation play but rather recognition that in specific market segments it is possible to give consumers a choice between a low-cost, fixed-fee, low-agent involvement, technology-enabled online service or a traditional agent-enabled, high touch, personal service with all its inherent advantages’.
The online ‘hybrid’ estate agency model, as practised by Eazi.com and competitors such as Leadhome, combine the convenience, efficiency and cost saving of an online agency with the personal touch of human estate agents. ‘We see technology not as a replacement for agents, but as an enabler for better, more efficient service,’ says Leadhome CEO and co-founder Marcél du Toit. ‘We try to strike a balance, using the best tools and people for each part of the process. We also know that not everyone is comfortable using online products. For this reason, we make sure that everything you can do on our online platform, you can also do by just picking up the phone and speaking to one of our friendly and informed property advisers.’
He adds that while some processes (such as booking a viewing) don’t require a human and are more efficiently done online, others need actual property agents. ‘Having local property experts, with knowledge of their area, enables us to provide pricing advice and service suitable to local conditions and the individual client. Online or call centre-based agents are not able to take these nuances into account,’ he says.
The hybrid approach obviously works for Leadhome, which reports an average sales time of 68 days (which, according to Du Toit, is 31% faster than the national average of 99 days that was recently quoted in the FNB Barometer). To make the home-buying process faster and less tedious for the buyer, Leadhome has launched a home-loan origination product.
Called Bondspark, it applies on behalf of clients to all local banks to find comparative home-loan quotes – at no cost to the client and without having to fill in any forms. ‘We’ve just launched a rental service at 0% commission, and we are always looking to expand our service through technology,’ says Du Toit. ‘We are currently looking to expand into developments and insurance offerings that support our client’s homeownership journey.’
The URERU report considers the selling and letting platforms to be one of the most active areas of proptech, particularly within the residential sector. Prominent local players also include PropertyFox and HouseMe.
Yet there is much more to the proptech ecosystem, such as data and analytics (with companies including Lightstone Property, Vizibiliti and Listio) and digital innovation through blockchain technology that could revolutionise the way deeds are registered on the continent (with companies such as Seso Global). ‘We have a lot of good tech in South Africa – the quality is there in many cases but the property sector is far too slow to adapt,’ says Berger, adding that innovation is particularly crucial in economically tough times.
‘We’ve observed that local property funds, brokerages and landlords that have started to adopt an authentic innovation culture and thus proptech, are enjoying more efficient and seamless business processes and have a better understanding of their business through relevant data.’ Ultimately, proptech could be the differentiator for companies operating in this competitive sector.