It takes a lot of work to find a place to live in Bogotá. One must be ready to walk a fair amount since most homes are listed by hanging a canvas with a phone number on it from a window. Prepare to spend time making phone calls, because prices are usually not advertised on listings. Most of all, one needs patience: the paperwork needed to buy or rent a place usually takes months to go through a complex bureaucratic process.
According to government and industry figures, Colombia’s supply of urban housing has been skyrocketing. But it has not been enough to offset demand: according to official statistics, the country’s housing stock is short by more than 1.3 million homes. To meet demand, the government has set up policies to boost and subsidize construction and housing investment. “Colombia is going through the fastest-growing construction boom in the region,” said Andrés Barreto, the founder of several VC firms with investments in a number of Colombian real estate startups.
The booming property market, combined with outdated processes, has led to a boom in Colombian real estate startups. Today, there are at least 65 such real estate companies in Colombia — most of them born in the last three years. These include proptech startups: companies that aim to use technology to streamline the process of selling, financing, and buying real estate.
A 2020 report by the Monterrey Institute of Technology in Mexico found that there are 350 proptech startups in Latin America. Brazil leads the list with 225 companies, while Mexico comes second with 55 companies — the report does not include Colombian proptechs. Seven proptech entrepreneurs from Colombia and Mexico, alongside analysts and investors, told Rest of World that Colombia has also turned into a particularly ideal and dynamic proving ground for proptech.
Two Colombian companies, in particular, stand out: La Haus, from Medellín, which obtained more than $158 million from investors, including reggaeton singer Maluma, Rappi founder Simón Borrero, and Bezos Expeditions, a VC firm owned by Amazon founder Jeff Bezos. Then, there’s Habi, a Bogotá-based firm that closed a $100 million round led by SoftBank last year.
“Habi and La Haus do lead fundraising in our market,” said Felipe Restrepo, CEO of Vecindario, a Colombian proptech selected for Y Combinator’s latest cohort. “It is crucial to keep track of what their next steps are going to be, especially regarding digitalization.”
Habi, which specializes in buying, renovating, and reselling used apartments, touts an AI-based tool that allows anyone to know the estimated price of a property. Meanwhile, La Haus, which focuses on selling brand-new homes, lets customers invest in real estate online, pitching in on a fraction of a property.
Both companies have developed international ambitions. La Haus said that its latest round will allow them to “help solve the extreme real estate inequality of Latin America,” by helping bring liquidity to real estate developers and customers. In January 2022, Habi bought Propiedades.com and Tu Cantón, two Mexican real estate companies, while La Haus has had operations in four Mexican cities since June 2019, when it set up shop in Mexico City.
Despite its size, Mexico’s real estate market is not growing as quickly as Colombia’s, and, according to a 2021 report, it still has not fully recovered to pre-pandemic levels. However, most Latin American countries have similar issues: across the region, “it is the lack of abundant, centralized, and reliable information that makes the process of buying, selling, and renting real estate be filled with friction,” says the Monterrey Institute of Technology report.
Alejandra González Misas, director of Services for Entrepreneurs in Endeavor Colombia, a global network for entrepreneurs, says that what gives La Haus and Habi the edge in Mexico’s market is that “Colombia allowed them to fine-tune their product at a relatively small scale and probably for cheaper.”
According to its co-founder and CEO, Brynne McNulty Rojas, Habi hopes that its pace of growth in Mexico will be greater than it is back at home, where it grew twenty-fivefold last year. In both countries, La Haus expects to sell 70% more homes in 2022 than it did in 2021, as per a press release. (It did not respond to requests for comment from Rest of World)
Its competitors in Mexico mostly seem to welcome the new arrivals. “This is something very positive for the Mexican proptech ecosystem,” says Juan Carlos de Urzaiz, founder of Bimo, a startup that connects property owners and renters. “It opens new options for the final user in a market that is still very much stuck in the status quo.”
The Colombian arrivals do have a few obstacles to navigate, including cultural differences. “You have to adapt the product; you have to adapt the lingo, the way in which salespeople interact with clients there,” said McNulty Rojas.
The Colombians are hoping that proving themselves in Mexico will propel them to scale even further across a region where homebuyers and sellers face the same woes. “All over Latin America, access to financial services to buy or sell a home is still an issue,” says González Misas. “Real estate is a very atomized market and a very large one, so there is a massive problem to solve.”