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Key factors why Proptech Saudi is growing in stature and building momentum

Venture-backed PropTech companies in the Middle East region raised $14 bn in the first two quarters of 2019, a 309% increase on Q1+Q2 2018. Where is Saudi proptech on this map?

Saudi is investing heavily in technology and real estate development and together they make the market ripe for proptech Muqawiloon is a Saudi proptech procurement platform to solve the dilemma facing homeowners and construction managers The Saudi Real Estate Refinance Company plans to buy about $6.1 bn worth of mortgages from banks

Globally, there are now more than 6,000 proptech businesses and, last year, more than $4.6 billion of investment was plowed into their growth.

Venture-backed PropTech companies in the Middle East region raised $14 bn in the first two quarters of 2019, a 309% increase on Q1+Q2 2018.

NEOM is a $500 billion city that is being developed with the key goal of redefining the way smart cities are known today, with an IoT that is faster, more versatile, and more omnipotent than anywhere else on Earth. 

This mega-development is aiming to be entirely renewable and carbon-neutral in record time, and as such, the project is inherently a potential world leader in proptech terms.

Emerging Saudi tech in support of proptech

We’re in the thick of the Fourth Industrial Revolution – an era of automation and digital processes, powered by blockchain, artificial intelligence, and augmented reality. 

It’s only appropriate that how we lease, rent, buy, occupy, and maintain property follows suit.

Augmented reality and virtual reality tours of workspace, chatbots giving 24/7 tenant support, and biometric security tech are some of the ways proptech is already enhancing the Saudi coworking space.

Key proptech enabling technologies are smartphones and the Saudi Mobile phone use reached 99.16% in 2018, the General Authority for Statistics (GASTAT) revealed.  

Saudi is investing heavily in technology and real estate development and together they make the market ripe for proptech helped by the adoption of new technologies like the Internet of Things (IoT), 3D printing, cloud computing, virtual reality tourism, drones(UAVs),  and others.

Read: Proptech 3.0 and the UAE’s real estate sector

Saudi Proptech companies

B8ak

B8ak is a smartphone app-based home maintenance delivery Saudi company. It allows users to order home maintenance services (Electrician, Plumber, Handymen, AC Technicians, etc.) conveniently with only a few clicks in Al-Khobar city, Dammam, Riyadh, Jeddah, and nearby Gulf countries. 

FalconViz

FalconViz is a Saudi company focused on 3D surveying and mapping by Unmanned Aerial Systems (UAS) with autonomous integration of planes, copters, and 3D software solutions perfect for real estate development. 

Muqawiloon

Muqawiloon is an online tendering and procurement platform to solve the dilemma facing both homeowners and construction managers when sourcing products and services for their projects. This is done through a highly automated, well-vetted referral system.

Ajeer

Ajeer aims to develop a convenient application that will allow customers to access the right technician in an on-demand model with a wide range of solutions for all home maintenance needs. 

Ajar

Ajar, a Kuwaiti born cloud-based property management and rent collection platform, recently announced that it has closed its pre-series A round bringing its total funding to date to $7.5 million.

Image courtesy of LAFFAZThe newly raised investment will be deployed to further deepen its platform capabilities, grow the team, and expand its footprint in the MENA region including Saudi.  

Founded in 2016 by Shaheen Al Khudhari, Ajar is at the forefront of digitizing and transforming property management. 

Read: GCC real estate: Lower prices, more home loans, potential mergers, government intervention

Saudi real estate price update

According to Saudi Stats.gov, the Real Estate Price Index increased by 0.7% in Q2, 2020, compared to the same quarter last year, driven mainly by rising prices of residential real estate (+1.8%). 

Commercial real estate prices dropped by 1.7%.  

Prices of residential plots rose by 1.9%, villas by2%, apartments by 1% while prices of homes and buildings dropped 1.3% each. 

The decrease in commercial real estate prices was driven mainly by commercial plots where prices declined by 1.7%. 

Real estate prices fell a negligible 0.1% compared to the first quarter of 2020. 

More real estate supply in Saudi

Saudi’s state-owned mortgage refinancer plans to significantly boost its mortgage holdings this year in a bid to boost home-buying. 

The Saudi Real Estate Refinance Company plans to buy about $6.1 bn worth of mortgages from banks or a ten-fold increase from its current holdings.

That would open up space on lenders’ books to take on more mortgages. 

The move is part of Crown Prince Mohammed bin Salman’s economic overhaul plan with the goal of raising homeownership from 62% to 70% by 2030. The government has also eased central bank rules to open up access to mortgages.

There are 105,000 units currently under construction and another 100,000 planned.

In January, the Saudi government signed a $650 million contract with Softbank-backed U.S. homebuilder Katerra to build 8,000 homes in the kingdom. The kingdom’s Public Investment Fund (PIF) is the biggest investor ($45bn) in Softbank’s $100 bn Vision Fund.

SoftBank’s Vision Fund (PIF being a major shareholder) has put another $400 mn into US proptech company Opendoor, one of the iBuyers that gives cash for home sellers looking for quick liquidity in the US. The deal values Opendoor at more than $2 bn.  

The move shows Saudi interest and belief in real estate technology as a future driving engine in the property sector.