WILL HARRIS: SA lags in the proptech game

In November 2021 just 90 people played the online word game Wordle each day. Two months on, by early January, 300,000 people were doing so. By the end of that month the numbers had hit the 2-million mark.

It’s a meteoric rise for something that is not essentially new: at its most basic, the Wordle format existed in the 1950s in the game Jotto; it featured in the 1980s TV show Lingo. It relies on the  Mastermind code-breaking game concept. And, of course, it’s not entirely dissimilar to Scrabble.

The tech that Wordle is based on isn’t novel either; it is the intelligent application of that tech to an old concept that has delivered the step change. Wordle releases a brainteaser at a predetermined time each day, with delivery throttled to one game in each 24-hour cycle. Users get immediate feedback  about their guesses, as well as simple player statistics, and can share the results on social media. And it’s all free.

In the same way that tech has allowed an existing game to be reimagined, it can be used to generate new solutions to old problems. 

Consider SA’s commercial real estate (CRE) sector. It’s valued at R1.3-trillion, and creates R183bn a year in revenue. Yet it is curiously limited when it comes to innovation. Leasing new office space, for example, is a fraught, inefficient process for tenants and, often, for CRE brokers themselves. Then there are the issues around slow turnarounds on leasing inquiries, incomplete options and unprofessional service.

Amending the terms of an existing lease or entering into a new one is a death-by-paper experience. In the worst-case scenario, a lease document is filled out by hand, then scanned and  e-mailed to the other party. There it’s printed, filled out and modified by hand. Press “repeat” until the document is eventually finalised.

To make matters worse, thereafter the lease information is normally copied manually across various systems, programs and documents. Invariably this introduces errors into these high-value leases.

It is a “hair on fire” problem when you consider the numbers, says the CEO of a major SA property management business. That company alone processes 15,000 high-value lease changes a year.

Important business decisions rely on accurate data — but this doesn’t exist in the  CRE sector at present. Ask 10 CRE professionals about something simple, like the percentage of total vacancies in a commercial property node, and you’ll likely get 10 different answers.

In search of solutions

It doesn’t have to be this way; tech can disrupt the unwieldy CRE leasing process, and do so by leveraging existing solutions.

For a start, it’s simple to spin up a tenant-friendly website that provides important information  about industry best practice and offers useful advice — like the fact that the “to-let” sign on a building means little in CRE. Unlike residential property, commercial property has no exclusive leasing mandates; all brokers have access to the same space to let, on the same terms.

This means that success hinges on finding the right CRE expert (there are about 800 in SA) — one with near complete, accurate area data and the tools to turn inquiries around fast. And one who is transparent about the baked-in conflict of interest  involved in fees.

How can existing tech help?

Ratings engines can address the problem of finding an expert (and deliver incentives for professionalism). Data analytics can provide intelligence  about average asking rentals by grade, giving all parties vital information  about nodal demand and supply. This can reduce risk and uncertainty, and can shrink lead times. Tech can deliver decision-relevant brochures with links to video and websites, which is  useful when on-site inspections aren’t possible. CRE-focused online dictionaries can untangle complicated jargon, and digitisation means leases can be signed quickly and easily.

These small solutions already exist, but for the most part they have yet to be applied properly in the CRE realm. And they certainly have yet to be brought together on one single platform.

Wordle shows that new combinations of existing tech can deliver positive change to old games and long-standing business conundrums alike. Globally, investors are alive to these opportunities — in just the first quarter of 2022, $4bn of venture capital equity funding raised worldwide went into the proptech sector.

Africa, however, remains behind: since 2019, just 0.34% of the $10.7bn raised in venture capital funding has gone to proptech, according to venture capital database The Big Deal. And not one of those 19 proptech deals have been for CRE.

It’s time for the hunt  to begin for the Wordle of African CRE.

* Harris is CEO of commercial real estate software and data company Gmaven