From regulators to investors, the property industry appears poised for a technology-powered transformation, thanks to a range of new developments
Digital disruption is forcing innovation in nearly every single industry, and real estate is no exception. From showcasing inventory using virtual and augmented reality to deploying artificial intelligence and blockchain across portfolios and enhancing asset benchmarking and property configurations by leveraging data and analytics, innovation is driving value in many different ways across the sector.
The transformative effect on the Middle Eastern property sector is already evident. One recent example from Bahrain shows how property transactions in the country jumped 14% in the first quarter of this year following the launch of a new electronic system designed to improve processing times and accuracy at the Land Survey and Registration Authority.
Consequently, about 6,762 transactions were approved as compared to 5,920 over the previous period. The procedure has reduced waiting periods to such an extent that the transfer of ownership takes only one day if the transaction is introduced before 10am.
Significant impact
Gains of that sort have caused industry players to take cognizance of and prepare for this coming disruption. A 2018 KPMG survey shows that 60% of decision makers in the global property industry feel technology will significantly impact their business. About three-quarters see emerging property technology, or Proptech, as an opportunity, and 30% of all respondents from traditional real estate organisations say they currently invest or plan to invest in Proptech start-ups.
With levels of internet penetration in the GCC well over 60%, the region could quickly emerge as a hotbed for real estate technology as an increasing number of players look to tap the region’s lucrative real estate markets. Bahrain in particular is leading the way into this technology-driven future, having enhanced its attractiveness to corporate players by building a world-leading digital infrastructure that has been recognised in a recent KPMG report as the most liberalised and competitive ICT sector in the GCC.
From regulators to investors, then, the property industry appears poised for a technology-powered paradigm shift. Earlier this year, Estater announced its entry into the region with operations in Bahrain and Kuwait. The revolutionary concept offers a platform for listing, sharing, finding or managing a property, working as an extension to Estater’s real estate advisory offering, utilising sophisticated Geographic Information System (GIS) mapping to provide market intelligence for developers, investors and financiers.
India-founded accelerator YoStartups, a zero-equity program for aspiring entrepreneurs, held an intensive bootcamp for start-ups in Bahrain last year, and is now looking at other markets in the region. Meanwhile, the global brokerage services firm JLL announced recently that it will seek to finance promising start-ups across the EMEA region through Spark, its Proptech investment arm.
Accelerated growth
Globally, the Proptech sector has expanded considerably. Between 2012 and 2017 alone, PropTech saw funding rise by a compound annual growth rate of 63 per cent, according to Venture Scanner. Although the real estate sector is only just beginning to harness its potential, growth is now expected to accelerate as the Internet of Things is harnessed to drive demand for real-time data and analytics.
Property information and transaction records could soon be near-instantaneous as countries across the region, from the UAE to Saudi Arabia, ready to roll out 5G, which will offer internet connectivity at up to 20 times faster than current rates. Bahrain will be one of the first countries in the world to have nationwide 5G coverage this June.
If the speed at which other industries across the region have been disrupted is anything to go by, the real estate sector in the Middle East is on the cusp of a vibrant transformation.