Saudi Arabia's Watheeq launches $26.7m PropTech fund for Mena investments

At least 50% of the start-ups chosen by the fund for investment operate in the kingdom

The Riyadh skyline. The Watheeq PropTech VC Fund is a closed-ended fund, which complies with Sharia principles of investments. Getty

Watheeq Financial Services, a Saudi Arabia-based investment management and financial advisory company, is launching a venture capital fund worth 100 million Saudi riyals ($26.7m) that will invest in property technology start-ups in the kingdom and in the region.

The Watheeq PropTech VC Fund is a closed-ended venture capital fund and is Sharia-compliant, the company said in a statement on Sunday.

The Saudi Arabia Capital Market Authority-licensed fund is expected to reach its initial close in the third quarter of this year.

“We are investing in rapidly-growing start-ups … potential market leaders who are disrupting the traditional real estate markets and stimulating eco-friendly lifestyles,” Khaled Zaidan, managing partner of the fund and head of alternative investments at Watheeq, said.

“Venture capitalists are jumping into PropTech and we are thrilled to be pioneering this transformation from Saudi Arabia to the region.”

Investors have increasingly invested in PropTech after the coronavirus pandemic forced companies, including those in the real estate sector, to digitise to ensure business continuity. Last month, Aldar Properties, Abu Dhabi's biggest property developer, said it is partnering with US venture capital firm Fifth Wall to invest in a fund focused on supporting PropTech start-ups in Europe. The Abu Dhabi company also launched an accelerator in May to support PropTech start-ups in the region.

The Watheeq PropTech VC fund will pick companies that are using technology to solve pain points in the real estate sector, while adhering to Sharia compliant investment standards. It will help bridge the gap between the Middle East and North Africa markets and the rest of the world by opening up new market opportunities.

At least 50 per cent of the portfolio companies chosen by the fund for investment operate in Saudi Arabia, the biggest Arab economy, the company said.

Smart cities, smart buildings, real estate analytics, blockchain and online viewing technology are some of the focus areas for PropTech companies that are looking to disrupt the traditional market through digital solutions for the entire real estate value chain.

In addition to the pandemic, climate concerns and a rapid rise in population have all contributed in accelerating technology adoption in the real estate and construction sectors and their related industries.

“However, real estate hasn’t met its tech-potential yet. Even though the real estate sector is the largest investment asset class in the world … it still under-utilises technology,” Mr Zaidan said.