We are delighted to share with you our first newsletter of 2023.
As a business focused on innovative technology to address productivity, efficiency and sustainability within the built environment, our newsletter aims to provide insights into key sector trends, new innovations and transactional activity in the South African and global markets.
Should you have any comments or feedback on any of the content of this newsletter or otherwise, please don’t hesitate to contact the REdimension team on info@REdimensionCapital.com.
Sincerely,
The REdimension Capital Partners
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Looking back to move forward
Africa on its own pathway
The era of abundance in global funding for both direct real estate and real estate technology appears to be over. Preliminary data points to a significant drop in capital allocated to both physical property and property technology in 2022 vis-a-vis 2021. A combination of multi-decade highs in global inflation, resultant monetary policy changes and recessionary fears, has left developed markets in a period of significant uncertainty, both in the investment and occupier markets.
The story was different in Africa in 2022. Investment into African start-ups grew by 35% year-on-year (the only continent to recognise start-up funding growth). While the primary beneficiaries of this capital continue to be fintech and pharma focused entities, there is broad recognition of the growth opportunities across early-stage businesses.
Proptech’s accelerated growth journey
Over the last decade, proptech funding in developed markets has seen exponential growth as the use cases have been proven to the end-users. In 2012, global proptech investment was less than $1bn but scaled significantly to a high of $32bn by 2021, growing by a compounded rate of 47% per year. According to the Center for Real Estate Technology and Innovation, $19.8bn of funding was raised globally for proptech funds in 2022, representing 4.4% of total venture capital fundraising, (still a relatively low figure considering real estate is the single largest global asset class). The African proptech opportunity, whilst nuanced by the unique underlying property market dynamics, is showing signs of significant growth ahead, and is set to follow the same trends which have been witnessed in the developed markets over the last decade.
As the only dedicated proptech investment platform in Africa, REdimension Capital has engaged extensively with property owners, managers and proptech innovators from across the continent – actively understanding and connecting problems with solutions. We are continually encouraged by the ever-growing groundswell of interest in product development, adoption, and investment. We maintain our strong conviction that the accelerated growth of this burgeoning sector is fast approaching.
Outlook for 2023 | Power production and energy efficiency
Picking up from where we left off in 2022, small scale renewable energy solutions will continue to be a major theme of investment for South Africans across sectors, as will optimising energy efficiencies, particularly in energy intense sectors such as real estate. As the scale of the energy deficiency is becoming increasingly evident, it is clear that any business operation will need to take ownership of the problem, through investment, to remain sustainable. While diesel powered generators have been the predominant solution to keep the lights on, these solutions were never expected to carry such a heavy load, and have become increasingly expensive to operate. Hand-in-hand with renewable solutions, are the technology-based tools buildings can increasingly adopt to monitor and optimise production and consumption. We anticipate these will be increasingly attractive products for numerous categories of energy consumers. Solutions range from software to support real-time load management, issue detection and preventative maintenance scheduling to AI-enabled facility automation and optimisation.
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Landmark transactional activity locally and abroad
- Flow – the South African property marketing platform raised a $4.5 million pre-Series A funding round led by Futuregrowth Asset Management
- Spleet – the Nigerian residential-focused proptech raised $2.6 million of seed capital led by MaC Venture Capital to scale its product offering
- Fifth Wall – the global proptech investor closed its maiden Climate Fund with $500 million of commitments, making it the largest investment vehicle aimed exclusively at decarbonising global real estate
- PropTech1 Ventures – the Berlin-based proptech investor has completed the first closing of its second fund with €44 million of commitments. Real estate owner-investors included amongst others, Commerz Real and Supernova Group
- Goodlord – the UK-based proptech acquired Halo, a tenant engagement and management platform. The acquisition follows previous consolidation by the company, having recently acquired referencing software vendor Vouch and bill-splitting app Acadia
- Skillit – a US-based recruitment platform for full-time construction labour raised $5.1 million of seed funding
- Landeed – raised $8.3 million to continue developing the most comprehensive property title search engine in India and simplify the process of property due diligence
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What we are reading
- Five leading trends in the proptech industry for 2023
- Net Zero, Focus on Niche Specific Sectors and Technology Innovation are the key trends affecting African Real Estate
- State of Venture 2022 – Report
- Sustainability in proptech: Building for the future
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About
Founded in 2021, REdimension Capital was established to focus on property technology and sustainability investments in South Africa and globally. Its founding partners boast a diverse but property-centric blend of skills and experience as well as deep and extensive networks within the property and technology sectors.
Since its establishment, REdimension Capital has developed the most extensive property technology and sustainability company database in South Africa. Through market research and ongoing industry screening process, REdimension Capital continues to be a leader in understanding the attractive landscape of investment opportunities in new innovations and technology relating to the built environment.
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