According to a report published by Dubai-based Wamda Research Lab, investment in the proptech industry in the Middle East and North Africa (MENA) fell by 32% year on year to $69 million U.S. in 2023, while data collection remains a major challenge for the industry.

The number of deals fell from 30 in 2022 to 19 last year.

Wamda noted that governments in the region were not making sufficient data available and established companies were reluctant to share what they had with startups.

Khaled Zaidan, the founder of Saudi Arabia-based venture capitalist firm Alkanz, commented: “Many founders were trying to build products that tackle different parts of the real estate value chain but were struggling to secure relevant data. They changed directions and started placing their focus on listing and search services as a result.”

The property listings marketplace model has grown in popularity, with 60% of proptech companies in the region adopting this model, Wamda noted. The leading proptech markets in MENA are Saudi Arabia, the UAE and Egypt, with Bayut, Dubizzle, Property Finder and Aqar among the leading players. 

“The problem is that founders are breaking into the space with a one-stop shop mindset — trying to do everything, to have every single property listed. It is impossible. It won’t work,” Zaidan said. Startups have also tried to find niches around the listings model, which is highly competitive, by targeting co-working spaces, commercial properties, short-term lettings and reverse listings, where properties are presented to customers based on their criteria.”

Boyot is an example of a proptech startup forced to change its business model. The Egypt-based company started as a property-listing site before becoming a facility management app. According to co-founder and CEO Mahmoud Eslabongy, “For a property listing platform to succeed, it needs huge investments. We did everything and added the necessary features, but we decided to take a step back and have resources concentrated on fintech.” Other players were forced to exit the proptech scene altogether, like Egyptian company Isqan, which is now a traditional brokerage company. 

Some companies in the region have found a lack of supportive infrastructure to be more of a challenge than the level of competition. Khareta, a Jordan-based startup is focused on providing a data driven experience. However, “In the U.S., it takes 25 days to sell a house; meanwhile, in Jordan, it takes 210 days to sell an apartment. There is so much inefficiency,” according to founder Ahmed Nawasrah.

Similar observations are made by Soran Hamawandi, founder and CEO of Homele, an Iraqi-based proptech. Real estate in Iraq is in high demand amid a growing population, but he observed: “There are a lot of gaps in the market in Iraq, which is what led us to start Homele. To search for a property, people travel from city to city and are forced to make multiple visits in a market where social media is still the main method of listings.” 

The opportunity in the region, nonetheless, is huge and the rapid regulatory transformation taking place in Saudi Arabia. “Property listing represents a small fraction of proptech. The market is still small, and there’s insufficient pipeline to cover the unmet needs,” Zaidan explained.

“In the coming three years, proptech will gain massive importance, with large-scale infrastructure development projects taking place across many countries, including Saudi Arabia, Egypt, the UAE and Qatar. We need technologies that drive efficiency on these projects, encouraged by the sheer size of the opportunity.”

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