The global industry of property portals
I have spent the past week running a global conference in the beautiful Spanish city of Barcelona. The conference, part of a regular series of conferences hosted around the world by Property Portal Watch, for which I am CEO; brings together a wide variety of executives of property portals from numerous countries for a 3 day conference to discuss the trends and developments in this fast growing industry.
With over 230 attendees from more than 40 countries the conference provided a unique experience for like-minded executives to network and share insight and experiences around the development and operational performance of property portals. Represented within the attendee list were executives from leading portal operates in developed countries such as Italy, Germany, Spain, France and Ireland as well as those representing more emerging markets from Eastern Europe with attendees from Estonia, Lithuania, Poland, Russia and Romania. As well as European attendees we had attendees from Australasia, India as well as Latin America and Africa.
I thought it would be interesting to share some of the headlines from the conference to provide a sense of this now well established global industry.
Whilst no accurate figures exist ( a task Property Portal Watch is currently undertaking ) there are probably over 2,500 property portals across the world employing well over 20,000 and conservatively with a market cap in excess of $25 billion. The top 3 global leaders (all of which are listed companies - REA Group (which operates the Australian portal Realestate.com.au) RightMove in the UK and Zillow in the US are collectively valued at over $14 billion. This is by no means a start-up industry, this is a significant and well established industry attracting significant investment funding and delivering significant return on investment. Rightmove in the UK delivers a EBIDTA margin of over 70% - that is to say for every dollar of sales revenue they deliver 70 cents of profit (before depreciation and amortisation).
The leading players in these developed markets of Europe and Australia especially are continuing to see growth in sale revenue through greater marketing services of premium advertising that they deliver to their agent customers who more and more ignore the print media and focus exclusively online to deliver marketing profile and buyer leads, something that seems to be a challenge for NZ agents to accept. In many European countries print media for property advertising is virtually non existent, Talking to the leading operator in Poland (far from a developed market) who stated that close to 90% of real estate marketing spend of properties for sale went online.
Whereas the revenue growth of leading operators is slowing as markets reach a degree of saturation from listings fees, those in more emerging markets continue to experience continued doubling of revenues as they spearhead the adoption of online marketing by agents. The focus of these emerging markets seems to be focussed less in Asia these days and more around Africa, the Middle East and Latin America. Africa particularly seems to be a very hot market with new entrants operating in Nigeria, Kenya, Morocco as well as Uganda and Rwanda.
A significant topic of the conference was the role of horizontal vs vertical portals in the property space, this has particular relevance to NZ as a horizontal operator is best defined by Trade Me, having as it does under the one site the categories of general classifieds, motors, jobs as well as property. This contrast with realestate.co.nz which is a specialist vertical. It focuses on just property. Many other countries experience a similar challenging environment whereby these horizontal operators attracts a significant aggregated audience across the various sectors thereby creating massive audience numbers often far ahead of the vertical property operator. There was extensive discussion around the emergence of more of these horizontal players and the consolidation of these operators by companies acquiring such operations through Europe, interestingly despite the global dominance in online classifieds E-Bay does not present itself in any market as a significant player in property marketing.
The global property portal industry is diverse not only in scale and market development but also in ownership for there are many industry owned property portals around the world some like Funda in Holland and Hemnet in Sweden completely dominate their market. The challenge for them and something I can relate to is the political issues of balancing the needs of the industry organisation to service the desire of the industry to ‘protect’ this vital marketing media matched to the desire to continually offer enhanced and innovative user services and tools to ensure continued engagement and loyalty. It seems a shame that so little of that seems to come from realestate.co.nz these days.
Overall the conference was a great success and this being the 9th such conference over the past 5 years has demonstrated the value that can be created by a facilitated collaboration and sharing of idea and experiences by industry professionals prepared to open up and get together.
The next conference our 10th for PPW will be held in New York on the 13th / 14th January - very likely to be a well attended and comprehensive insight into this fast growing industry.