The GCC market needs more scalable ideas combining real estate and technology to tap into future opportunities in proptech, said a senior executive at the Cityscape Conference in Dubai on Tuesday.

Proptech entrepreneurship is still considered an underdeveloped market in the region, according to Basem Abu Dagga, executive director of Dubai-based Tharaa Capital, a financial placement and business development agency that is part of Thaara Holding.

“There is a great affinity in regional market for replicating what has worked in North America,” he said, adding that even if the innovation is not homegrown and technology or concepts that are successful in North America are borrowed, the tailoring for the local markets in the GCC itself is a big opportunity.

It is always better to innovate locally but there is not enough capacity to develop technology locally in this region, Dagga said. However, he does not view this as a big problem as Dubai has great connectivity with markets that have ample tech innovation capabilities.

Quoting a latest KPMG survey during a presentation at the event, Dagga said that 73 per cent of the real estate industry stakeholders see tech innovation as an opportunity, while 93 per cent believe that traditional real estate organizations need to engage with proptech companies in order to adapt to market changes. 

The Dubai government is doing a fantastic job in being ahead of the game, and it’s leading the pack in terms of technology and proptech, but there are challenges in the private sector, he said.

“Many private investors continue to have a prevailing mindset of being in a business with hardcore assets rather than supporting a business that has assets backed by technology.

“As the market is evolving, there is a lot of interest in technology. Usually funding requirements for proptech startups is quite high, and the private sector is a bit reluctant to jump into blue waters of proptech, but once they see the light and the ability to replicate successes that have happened in North America, or the Careems of this region, then private investors will get super enthused,” Dagga later told Zawya.

When asked whether Tharaa Capital has come across any homegrown proptech firm that was considered ripe for investment, he said there are a few proptech startups in the region but they haven’t gone on to become as successful as propertyfinder.ae.

“Unfortunately, there haven’t been new and scalable ideas in the region that are backed by entrepreneurs. We are keeping our eyes open and interest high.”

On the future of proptech, Dagga said wide adoption of new technologies such as 5G and 3D printing would certainly boost the prospects of proptech in Dubai and in the GCC.

“There is a couple of Careems-in-the-making; some fascinating opportunities that would be even bigger than Careem,” he said, adding there is a strong appreciation for the real estate in Dubai market but people need to see the marriage of property and technology.

Proptech, which was an unknown term a few years ago, is a small part of the overall digital transformation of the real estate sector. The global propetch industry has grown from $20 million in 2008 to more than $12 billion in 2017 producing successful unicorn firms such as Airbnb and Wework.

According to Abu Dhabi-based International Real Estate and Investment Show, global real estate – an asset class worth $217 trillion – is one of the last industries to adopt technological change.

If latest figures on investments in property technology startup are any indication, the adoption of technology is gaining momentum. US-based research firm CREtech has indicated that venture investment in real estate tech startups hit $12.9 billion in the first half of 2019--more than in all of 2017, which saw a record $12.7 billion in proptech investment.

(Reporting by Atique Naqvi; Editing by Brinda Darasha)

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