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The rise of Proptech in Saudi Arabia

Proptech is transforming the sector, digitising transactions and reshaping the built environment of KSA

The rise of Proptech in Saudi Arabia

The Kingdom of Saudi Arabia (KSA) has a solid development and economic action plan and The Vision 2030 initiative will bring about significant changes in the way people live, consume, and work in the Kingdom.

Moreover, the government is also focused on developing proactive strategies and implementing bold plans to meet the housing demands of the country. The goal is to improve the lives of Saudi Arabian citizens, make housing more accessible, and offer potential investment prospects to stakeholders.

From the mobility and accessibility of NEOM to the further amplification of a vibrant tourism industry, via developments like the Red Sea projects, Saudi Arabia will be a global leader in demonstrating how tech can enrich how we use space.

Whilst much of the technology is currently sourced from global partners, the significant investment in the relatively nascent proptech sector is starting to reap dividends. Exciting advancements in technology are beginning to emerge and play vital roles in shaping the built environment of Saudi Arabia.

The changing definition

The traditional classification of real estate sectors is changing with their relevance diminishing. Recent examples such as homes being used as offices, the hotelisation of office buildings and the tentative steps into a fully digital, interactive world — illustrate the scale of this change. The definition of proptech has shifted also — and will constantly — as tech surfaces or adapts to meet the needs of these new assets.

The robust real estate market

Proptech companies in Saudi Arabia are primarily focusing on digitising transactions, mainly through marketplaces and portals. This has had a significant impact on the residential sector, which aligns with the early Vision 2030 goals. The concentration of proptech activities in this area is not surprising as it is a natural hub of activity and demand. However, we are now observing signs of growth in other sectors as well, particularly in construction and office spaces. Exciting and promising offerings are emerging in these areas, broadening the scope of proptech innovation. Additionally, there is a strong belief that the city landscape will also witness advancements, providing further opportunities for the existing players and bolstering their strength as large-scale developments reach completion.

Rapid development on the cards

Saudi Arabia is at the forefront of global construction. With $819 billion currently deployed, across 5,200 projects, construction accounts for 6% of the KSA’s GDP — with an 8.8% aim by 2030.

Touching on every facet of space use, the 13 “gigaprojects” have an estimated total value of approximately $900 billion. They are key to KSA’s economic diversification strategy.

The gigaprojects are the most prominent real estate developments of Vision 2030. These projects are spread throughout the country and cover various major sectors. The amount of technology being utilised in every step, from planning to management, is extensive.

Due to their immense scale and ambition, these projects create a significant demand for resources, supply chains, planning, and future operational expenditure management. All kinds of innovative property technology, themes, and value delivery will be incorporated into these projects, making them crucial for a successful outcome.

The ambitious commitments and timescales provides a unique opportunity to combine and leverage the leading construction technologies.

Project management will be another key aspect, leveraging technology. The use of data and visualisation techniques to monitor progress and manage risk, are two example use cases.

Technologies such as Building Information Modeling (BIM), Internet of Things (IoT) devices, and VR / AR inspection tools will combine to enable safe and accurate delivery.

An overlap of Fintech and realty

Many solutions in the real estate tech sector are similar to those in the fintech industry, with a strong emphasis on residential transactions, aggregation, and management services. Co-working spaces and the Internet of Things (IoT) are also key areas of focus. The sector has seen significant funding, leading to the creation of many new solutions, most of which are at the seed level. However, recent Series-A activity indicates that the industry is starting to mature.

The future looks promising for Proptech

The rise in proptech funding will speed up the growth and capabilities of local proptech companies. With big projects in the works and initiatives like the National Transformation Program, there will be more opportunities for investment in the Saudi proptech scene. As existing platforms expand their data and utilise advanced tools, the investment potential in this area will only increase. In addition to this, Internet of Things (IoT) products and VR/AR solutions, as well as sustainability-focused technologies, are also gaining traction. The potential for Saudi proptech companies is massive, offering a great opening for both domestic and international funds looking to invest in this market. Therefore, we anticipate the continued growth and development of the proptech market in Saudi Arabia.