The evolution of PropTech and why it's here to stay
Real estate constitutes over 50% of the world's assets. In the UAE, it has represented a key driving force of the country’s economic growth over the past two decades; and in 2019, the contribution of the real estate sector to the gross domestic product (GDP) of Abu Dhabi represented around 38.4B. However, despite the importance of the sector both locally and globally, and in particular in terms of the role that it plays in economic stability, it has been a relatively slow adopter of new technology.
Aldar Properties has announced the launch of its corporate innovation program, Aldar Scale Up, in partnership with startAD and powered by its partner Tamkeen.
The virtual market access will provide a gateway to tangible growth opportunities, build strong networks, and validate global PropTech startups. It will provide the latest cutting-edge real estate technology to enter and grow in the UAE market through pilot projects with Aldar and other leading industry players in the region.
The paradox of real estate’s low adaptability is nowadays fading as the sector is shifting away from the traditional business operating model to more flexible solutions. The shift may have started a decade ago when Property Technology (PropTech) was just emerging as a concept, but with technological advancements and digitization, the quest for sustainability, and changes in consumer behaviour, it is clear that there is an undeniable need for the industry to evolve.
From digitizing documents to simplifying property management and decentralizing the real estate marketplace, PropTech is undoubtedly having a profoundly positive effect on the real estate industry. However, whilst there has certainly been progress, recent findings by KPMG about the lack of digital preparedness in the sector suggest that more can still be done. According to the report, only 58% of real estate companies globally have a digital strategy in place. Whilst entrepreneurs will be vital in demonstrating the value that PropTech solutions can bring to the sector, it’s important for the wider industry to work together to further advance real estate in the digital age.
The impact of the pandemic on people’s lives and on global economies has been enormous and the real estate sector has taken a dramatic hit mainly due to lower demand for commercial real estate, shifting residential property demands, and a decline in purchasing power. Similarly, the PropTech investment market has slowed down as investors have been extremely cautious around their portfolio investments and any new deals, following closely market updates and planning for a post-pandemic world. While some startups in the industry may have been negatively affected by the situation, others have identified a unique opportunity for the real estate sector to evolve further and move to a new era of digital transformation – a more efficient, sustainable, purposeful, and human-centric industry.
UAE as an enabler for PropTech
Now, more than ever, industry leaders and investors see the opportunities that have arisen and are leading the way for a better, safer, greener, and smarter real estate industry. Online leasing and purchasing, virtual reality-based property tours, home automation, data visibility and management, and software that facilitates and optimizes property management are only some of the applications that are driving change in real estate.
The property market in UAE may have suffered during the pandemic but we are already seeing signs of recovery. With real estate being one of the key industries driving growth for the local economy, we see a strong focus on the development of the sector further. We have also witnessed a swift enactment of policy from the leadership to support businesses and the local economy.
The economic stimulus packages that aim to minimize the impact of COVID-19 along with the country’s strategic geographic location, advanced infrastructure, in addition to easy access to energy sources have contributed to its integrated business environment. All the above factors along with the country’s push for tech innovation, its safe-haven status, business-friendly economy, and sound regulation have built the UAE’s reputation as an ideal place to set up a business. Many entrepreneurs have chosen to set up their PropTech businesses here as they are seeking to benefit from a growing market with great potential and a dynamic ecosystem; further advantages include the many mentorship and accelerator programs that are in place in the UAE, in addition to the ability to collaborate with a very knowledgeable and forward-thinking investing community.
The way forward
An initiative that supports the view that the UAE is one of the best places in the world to start a PropTech company is Scale Up. startAD, the Abu Dhabi-based global accelerator at NYU Abu Dhabi has collaborated with Aldar, Abu Dhabi’s leading real estate development and asset management company to develop Scale Up.
The virtual market access program will provide a gateway to tangible growth opportunities, build strong networks, and validate global PropTech start-ups for entry into the UAE/GCC market through pilot projects with Aldar and other leading industry players in the region. Scale Up also aims to upskill Aldar business units to build collaboration with global startups and implement innovative and sustainable technologies through pilot projects.
Drawing our key learnings from a post-pandemic era, there is only one direction PropTech will be moving towards and this is forward. Technology is disrupting how the real estate industry operates; it enhances value creation and brings a positive change to people’s lives. In the years to come, entrepreneurs, venture capitalists, private equity organizations, and other stakeholders have an opportunity to revaluate how they perceive the technological advancements and process efficiencies that PropTech brings in the sector. Most importantly, PropTech will help the industry towards the realization of a brighter future - the creation of a shared economy and smart, sustainable communities.
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