Proptech seizes Middle East moment amid real estate boom
Total value of real estate projects planned or under construction is $1.68 trillion, according to commercial property firm CBRE
An aerial view shows skyscrapers and Dubai city from the top of Burj Khalifa. (Photo: Getty Images)
Proptech is having a moment in the Middle East. A flurry of deals among some of the biggest property technology players in the region amid a glut of real estate development projects in the Gulf has prompted capital data platform Magnitt to ponder: Is this a proptech bubble?
Saudi Arabia and the UAE in particular are driving the action. The total value of real estate projects currently planned or under construction stands at an estimated $1.68 trillion, up from $1.38 trillion a year earlier, according to commercial real estate firm CBRE.
Saudi Arabia accounts for 63.1% of the total or some $1.06 trillion, followed by the UAE, which at $409 billion, accounts for 24.4% of the total.
This week Dubai-based property marketplace startup Huspy announced a new funding round led by London VC firm Balderton Capital – with participation from Fifth Wall at a higher valuation than its Series A in 2022 – bucking a broader trend of downward value corrections.
Huspy, which has offices in Madrid, is planning a European expansion and a mobile app with more features. Property Finder, another Dubai-based property portal, closed a $90 million buyback deal with Francisco Partners earlier this month, allowing original backer BECO Capital to exit with the Dubai property portal valued at more than $1 billion, according to Founder Michael Lahyani.
Proptech up-and-comers have also closed deals: UAE-based rent-now-pay-later platform Keyper raised $4 million in a pre-Series A round and received $30 million in sukuk financing.
And Egypt’s Birdnest, a startup that develops technology for real estate investors, announced the close of a pre-Series A funding round led by Beltone Venture Capital and CI Venture Capital.
Still, startups take off from a low base of funding deals and smaller check sizes amid the global downturn in venture capital activity.
Real estate venture funding in the Middle East, Pakistan and Turkey dropped 78% year-on-year in 2023, according to Magnitt.
“There’s definitely energy in the region for proptech investments, but whether the VC space will reflect the broader industry growth remains to be seen,” Magnitt CEO Philip Bahoshy wrote in a note today.