We are delighted to share REdimension Capital’s first newsletter with you.
As a business focused on innovation technology 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.
We trust you will find this interesting and informative. However, should you wish to unsubscribe from the letter, please click “unsubscribe” below and you will be removed from our communications database and receive no further correspondence of this nature.
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 Capital team on info@REdimensionCapital.com.
Sincerely,
The REdimension Capital Partners
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Proptech: A leading growth market globally
2021 witnessed another record year of venture capital investment into global property technology companies. In total, $32billion of new capital flowed into the sector according to The Centre for Real Estate Technology Innovation, equating to a 28% increase on total investment in 2020 and slightly ahead of 2019 investment levels. This figure is truly staggering when it compares to total global investment of only $20 million in 2008.
These levels of investment demonstrate that technology adoption in the sector is now a well-established principal globally, notwithstanding the relative head start the developed markets have made on their emerging market peers.
Africa is still disproportionately underrepresented in the global market for property technology; it currently accounts for less than 1% of global market share. However, the continent’s technology ecosystem is among the fastest growing in the world according to Knight Frank. It is interesting to note that Africa proptech companies raised in excess of $15.2 million reflecting growth of 55% from 2020 levels.
Similarly, we anticipate significant growth in funding and opportunities in South African proptech sector over the coming years.
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Successful year of attracting capital for proptech venture capital funds
The property technology sector has increasingly been characterised by a substantial amount of capital being aggregated via independent venture funds from the incumbent direct asset owners and sector service providers. Notable funds similar to that proposed by REdimension Capital for the South African market, have seen substantial support through 2021 including:
• Fifth Wall (US) – the dedicated property technology investment manager raised in excess of $1.1bn of new capital across its funds in 2021 which includes a dedicated real estate sustainability fund (currently funded to $300 million but targeting a final close of $500 million). The funding was sourced from both new and existing investors including APG, BNP Paribas Real Estate, Knight Frank, PGIM, British Land, CBRE, Cushman & Wakefield, Ivanhoé Cambridge, MERLIN Properties and SEGRO amongst others. Fifth Wall now boasts 90 strategic Limited Partners across its funds.
• Meta Prop (US) – another of the US’s dedicated property technology investment managers, raised its third fund closing at $100 million. This fund targets investment in early-stage property technology companies. The oversubscribed fundraise included commitments from investors that own and manage more than 1.8 billion square meters of real estate including PGIM, CBRE, Cushman & Wakefield, JLL Spark, DAMAC (UAE), Development Bank of Japan and Sumitomo Mitsui Trust Bank (Japan) amongst others.
• Pi Labs (UK) – the UK based property technology investor has also been raising its third fund targeting $75 million. The fund recently received backing from Gaedeke (US), Europi (Sweden), the FTSE-listed office developer, Helical Plc as well as Moorfield and Elkstone Partners, Great Portland Estates, Patrizia, Revcap and Assura. It is anticipated that the third fund will receive investment in excess of 100% of the combined investment quantum in Funds I and II from existing investors in those funds.
• Gruhas Proptech (India) – backed by Zerodha and the Puzzolana Group, Gruhas Proptech has announced plans to launch a $150 million property technology focussed fund in the first quarter of 2022. The fund will focus on the Indian, Middle-Eastern and African markets and on companies developing technologies that optimises and decarbonises the real estate sector.
• Gaw Capital (Hong Kong) – as a new fund within the extensive management business of GAW Capital Partners, $332 million has been raised to invest in Asia-focused property technology and real estate-related operating companies. Investors in the proptech fund include sovereign wealth funds, endowments and other institutional investors.
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Landmark transactional activity locally and abroad
• OneCart: Massmart agreed to acquire a controlling 87.5% position in OneCart, one of the sellers being Growthpoint Properties. OneCart is an online shopping and delivery platform, whose partners include Woolworths, Pick n Pay, Dischem and Clicks.
• WizzPass: US based digital workplace provider FM:Systems acquired WizzPass, a rapidly growing company in the visitor management system and workplace management market, founded in South Africa in 2015.
• Castle One: Hall and Sons invested in Castle One, a proptech venture building company focused on innovation in the residential market. This already includes Prop Data and reOS.
• Seso Global: A Nigerian proptech start-up raised pre-seed capital. It aims to challenge Salesforce with a CRM portal that enables asset owners and agents to manage their properties, documentation and transactions on a secure blockchain database.
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What we are reading
• Proptech trends expected to dominate in South Africa in 2022
• British land makes strategic investment into Fifth Walls Climate Fund
• How Proptech Startups Plan to Spend Their VC Money in 2022
• Proptech Shatters Investment Record With $32B VC Haul In 2021
• 2021 Real Estate Technology VC report
• PropTech solution sets a new benchmark in the real-estate industry