The property sector is adopting new technologies, including property technologies (proptech) and AI systems, to reduce administrative costs and achieve profits in an industry in which many costs are rising.

Bricks were not getting cheaper, rental income growth could exceed the growth of people's incomes, yet the industry must still make a profit, noted venture capital firm REdimension Capital partner and co-founder Matt Marshall on September 10.

Speaking during affordable housing private equity firm International Housing Solutions (IHS) Investment's eighteenth investment conference, in Houghton, Johannesburg, he said there was a need to make housing more affordable to expand the sector and drive profits for investors, and technology played a significant role in achieving this.

Making housing more affordable would also provide significant benefits to South Africa, as there were more than three-million households registered for housing assistance and a national backlog of more than two-million residential units, said financial services firm Nedbank Corporate and Investment Banking property finance divisional executive Vanessa Murray.

Demand continued to outstrip supply. Affordable housing was an important asset class that presented strong investment fundamentals and the recognition and understanding of this asset class was also leading to meaningful social impact.

Property developers have demonstrated the scale of the opportunity, which has led to progress and a maturing of the sector, such that developers, financiers, investors and institutional investors were investing in the sector.

“The aim in the sector is to accelerate practical, sustainable and scalable solutions. We are starting to see the scale expand. Our Gauteng property finance team sees daily that the challenge is not a lack of demand, ambition or opportunities, but rather how to convert these opportunities into projects that are viable, scalable and able to deliver lasting, quality impact,” she said.

These residences must not only be affordable, but must provide quality, dignified accommodation that is close to places of work and services to ensure people can access services and education while lowering transport costs.

There would be no economic progress in South Africa, if there was no social progress, and housing created the opportunity to strengthen communities and create a more inclusive economy, said Murray.

Affordable housing was important to enable sustainable growth and development. Continuing progress and scaling up the asset class required collaboration across the housing value chains, supportive policy frameworks and dealing with blockages, she said.

Technology was necessary to effectively manage residential portfolios. Managing a building with 1 000 tenants meant that proptech was becoming the only way of managing growing portfolios, said IHS Investments Group MD Rob Wesselo.

At a time when infrastructure and administered costs are going up, technology is one of the ways to reduce the impact of such increases.

“Institutional investors were not in this room five years ago, but are today. Money is coming into this market, which is unusual, and it is important to make the developments work by ensuring that what we build is more affordable,” he said.

Technology has made breakthroughs easier in the property sector, with more operational processes managed in a digital environment. The most significant benefits realised were in leasing and student accommodation, owing to the quantity of leases involved and AI can enable rapid automation, said real estate developer Eris Property Group property management executive head Peter Stainton.

Managing the income side of properties was important to get right, but now that technology in the sector was more mature, the expenses side was the next aspect to address in the operating cost model, he added.

About 70% of the costs of property development were linked to the debt and construction stages of projects. Builders know how to build, and the aim was to leverage technology to save work hours each day, said residential property developer Foce Property Investments MD Nic Foce.

Foce Property used voice-recognition software on site to record decisions made while inspecting the site and then disseminated them across all the relevant teams, he said.

“Small steps with AI can move large levers. Automation is key, and automating processes to be reliable and predictable should be on every property developer's agenda. Things that are best done by computers should be done by them, and we are using AI to free up our people to deal with people.

“Property managers also have to provide five utility services to residents, but only focus on rent. We are already installing electricity, solar panels, water tanks and smart meters. It makes sense to add these into the management layer to consolidate information and improve margins,” he said.

Commercial property finance firm TUHF Capital had deployed AI agents, called agentic AI, to fulfil about 56 roles in the organisation, said TUHF Capital IT executive Nico Papanicolau.

All TUHF Capital data was sent to the agentic stack, which synthesises about 50 TB of data and then serves this information to relevant people in a way that was not possible before. Administration could take up to 60% or 70% of a skilled individual's time, which TUHF Capital aimed to reduce, he said.

Data in affordable housing had been a problem. Data on internal records represented only about 20% of an organisation's data, with about 80% residing with employees and in emails. Leveraging this data was important for an organisation, he said.

“Companies should start by digitising their processes to determine where AI can be used, and to build up dashboards and specialised systems to address problem areas. Through automation and efficiency, we can figure out what strategic decisions we need to make.

“Abstracting the data and making it available to users who interact with AI agents means they do not need to understand how the system works. Micro-decisions, where it makes sense, can be made by the agentic stack,” said Papanicolau.

However, the company relies on best-practice AI architecture to ensure its systems remain safe, including data and decisions that are verified as they are passed to higher system layers and by putting agentic AI guardrails in place.

TUHF Capital also implements data processing guardrails, which determine what data the systems can use to train, and that the company's data are not shared and used for training other models.

Its AI agents were also deterministic, which meant that their output was predictable and expected, and they operated under a least-privilege model, which meant that they were provided with the least necessary permissions to fulfil their role, he added.

The company adheres to the International Organisation for Standardisation's ISO 27001 information security management system standards and practises.

“There are reliable multi-dimensional frameworks for deploying AI that companies can use, and we have followed these meticulously and built our stack according to these best practices from the ground up,” he said.

Meanwhile, proptech company SA Proptech co-founder Wayne Berger pointed out that the property sector was often risk-averse, but companies also understood that they needed to roll out digital systems to keep pace with competition.

This has led to companies investing in large-scale solutions every five years, which sees more funds sunk into the solutions when they do not meet expectations.

“Our aim is to reduce time, costs and risks of digital transformation for our clients. If a system is failing, learn the lessons and move on. We have found that companies are often scared to make decisions on technology in the sector, but this is part of the process.”

Whether Big Data, machine learning or AI, the crucial first step was to digitise processes. AI made mistakes, but people must be empowered to use AI so that a company could see how productive its employees could become, he noted.

“AI will, eventually, help the world move into abundance, but, before that, we need to address the skills gap. We need to give our people access to these tools and agents to overcome this,” said Berger.