‘Proptech’ Gives LatAm’s Middle Class a Foot on the Property Ladder, Habi’s CEO Says

People invest in apartments, not the stock exchange, according to Habi cofounder Sebastián Noguera

Habi's cofounder sees proptech as the tool to solve what he sees as one of the biggest challenges to Latin America's middle classes: the lack of long-term liquidity.
January 30, 2022 | 05:00 AM

Mexico City — For Sebastián Noguera, the cofounder of Colombian ‘proptech’ Habi, technology and information are key to unlocking the value of real estate assets and injecting liquidity into Latin American economies.

After establishing e-commerce and financial technology startups, more and more Latin American serial entrepreneurs are seeing a new niche in proptech, a fast-growing sector that takes its moniker from ‘property’ and ‘technology’.

Noguera, after co-founding online supermarket Merqueo and spearheading Banco de Bogotá’s digitization efforts, sees the proptech segment as a tool to solve what he considers one of the biggest challenges for the Latin American middle class: the lack of long-term liquidity.

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He differentiates the local market from countries such as the United States, where people are more likely, and more able, to take out a mortgage in order to have resources to invest in a business, or pay for their children’s education.

But in countries such as Mexico or Colombia, he says, the middle classes with capital are more likely to invest in real estate than investing in the stock market, but real estate investments remain frozen in bricks and mortar, and people are not able to take advantage of their full potential, Noguera tells Bloomberg Línea.

“That capital is frozen for the rest of time, and If capital is not available, there is no investment, and if there is no investment, there is no growth,” Noguera says.

The Colombian-born entrepreneur and his business partner, Brynne McNulty, set themselves the task of understanding the reasons why banks in Latin America do not lend more, taking into account this type of asset.

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In their diagnosis, they identified problems such as a lack of information regarding the value of assets, as well as informality and security challenges.

They founded Habi in 2019, and whose technology platform carries out a valuation of properties and makes the information transparent to the rest of the market, an activity that, according to Noguera, occupies 80% of the company’s resources.

The business model also creates a space where users can sell or buy properties, as well as obtain a mortgage.

Not As Asset-Heavy As People Think

Since its foundation, Habi has raised $115 million in venture capital, with a $100 million Series B taking place in June 2021, led by SoftBank’s Latin America Fund.

Driven by that investment, the company landed in Mexico in 2021 with its first acquisition.

And in January, Habi announced the purchase of the Mexican realty portals Propiedades.com and Tu Cantón, with which it seeks to become the largest online real estate operator in Mexico.

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However, Noguera does not foresee any more acquisitions for Habi in the short term, although that depends on the opportunities that arise, he says. Neither is the company seeking more capital than is necessary.

Instead, Habi will be focused on execution, Noguera says.

While Habi’s business model considers buying real estate, and is the largest homebuyer in Colombia, Noguera says the company uses little of the capital gleaned from investment rounds for that purpose.

“We are very responsible about how we invest. We don’t end up being as asset-heavy as people make us out to be.”

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Real estate acquisitions are made with support from the banks with which Habi has struck up a relationship, he says.

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Alliance with the Traditional RE Sector

One of the pillars of Habi’s business model is its relationship with traditional real estate companies, which can sell their apartments to Habi and increase their supply portfolio with proptech real estate, and Habi seeks to build trust with those players so as to be seen more as an ally than a competitor.

“That is not the type of company we are looking to replace. We are not experts in selling homes. That’s why we work hand-in-hand with real estate agents,” Noguera says.

This article was corrected on January 31 to clarify that Sebastián Noguera spearheaded Banco de Bogotá's digitization efforts, and not those of Bancolombia, as previously stated.

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