Like the rest of the world, the PropTech industry in South Africa is undergoing a huge boom and evolution. We’re seeing a number of new PropTech businesses popping up in the property management space locally: online estate agencies like PropertyFox and Leadhome are threatening to disrupt the local residential sales market, while there are also some sizeable acquisitions – such as global giant MRI acquiring MDA, a local property software company. There have also been expansions, such as automated rental payment company PayProp extending their footprint into the UK.
With this in mind, we’ve chosen South Africa as our initial launch location for Flow, our mobile tenant rewards app. Flow is a tenant engagement and retention platform that aims to make renters’ lives easier – and reward them for being good tenants by giving them up to 20% of their rent back in rewards.
The South African property industry
While the South African rental market may be relatively small from a global perspective (which makes it easier to test in), it’s still worth over $10 billion – which means the results should offer significant learnings when it’s launched globally. South Africa is also on a par with the international proptech industry in terms of innovation, similar to how the banking and fintech industries here have always been on the cutting edge.
Then there’s the fact that South Africa’s consumer rewards culture is very strong. Medical aid scheme Discovery’s Vitality Rewards programme, for example, is one of the most successful consumer rewards programmes in the world. South Africans are highly receptive to the concept of consumer rewards, which is a concept that Flow ties into.
Rental challenges are global
On the whole, rental trends tend to be global rather than local, as it’s a basic human need wherever you are in the world. As a result, the challenges we see with South African renters are present elsewhere too. One prime example is gentrification: people are increasingly wanting to live in cities, which means that rentals are higher – and are outstripping wage inflation – as a result of increased demand. In short, the middle class are increasingly unable to afford their rents in the cities anymore, so they’re moving to areas further from their places of work. But this then increases their transport costs, commuting time, and therefore affects their general quality of life.
Gentrification has the biggest impact on “Generation Rent”, as we refer to this group of people. This is the fast-growing younger segment of the population who are increasingly renting rather than buying, due to the unaffordability of owning their home, but also because they want to be more flexible. But with rental prices being driven up, they’re being hit hardest. With this in mind, our idea for Flow was to subsidise people’s increasingly expensive rental costs with rewards, in exchange for them being great tenants.
Lots of PropTech businesses focus on the landlord. We take a different approach. We believe in placing the tenant at the centre of things, trying to reward them for being good renters – rather than punishing them for being bad ones (as has been the case up to now). Through the app’s tenant marketplace, we’re using their rental as leverage as a way to make their lifestyle more affordable.
Because we’re rolling this out on a global platform, we want to get to the point where customers can use Flow anywhere in the world, as a kind of “global rental passport.” With this view, credit checks would be rendered completely obsolete, because any landlord would be able to access that person’s rental data from the last five years. This would be particularly useful for Generation Rent who want to work and travel internationally, particularly in foreign countries where securing a lease can be exceptionally hard without a credit history.
From Africa to the world
By taking a shared value approach to the rental market, we’re aiming to democratise the relationship between landlords, agents and tenants, which up until now has been heavily slanted towards the landlord. We want to reduce people’s cost of living by making their rental payments work for them and also make their lives easier: both in terms of being renters, and for moving and living around the world; starting in Africa, and expanding into the rest of the world.