Global property portal business model trends and expansion
Big property portals around the world are growing rapidly and have primarily replaced print advertising as the way for consumers to access property listings.
The majority of property portals obtain revenue from real estate real estate professionals who pay to list their inventory on the portal or who use their sellers’ money to list on the portal, as is the practice in Australia. Zillow, for instance, receives around 70 percent of its revenue from agents. Large portals are thus continually looking to build revenues by price increases and additional services while agents are looking for more exposure and leads to maximize return on investment.
Expansion of Value Chain
While some portals are happy with their business model, others are actively pursuing revenue diversification, development of their value chain and mergers and acquisitions. In most developed real estate markets outside the United States and Canada, like the United Kingdom, Australia, New Zealand, South Africa and individual countries in Europe, there’s a dominant portal and a No. 2 rival. In the U.K., Rightmove is by far the dominant portal and has not pursued much diversification while the No. 2 Zoopla has moved into offering valuation services, and into the insurance and mortgage arena with the acquisition of a company specializing in mortgage comparison services.
The REA Group, which is part of News Corp and operates the dominant portal in Australia—Realestate.com.au—diversified in 2015 with a product to estimate property values in Australia and have moved into the potentially lucrative area of home services and home repairs. Domain Group, the No. 2 portal in Australia has also moved into offering a price guide, commercial listings, insurance and have acquired a stake in Oneflare, an online marketplace for tradespeople.
The REA Group also operates in more than ten countries outside of Australia offering services in Germany, France, Singapore, Hong Kong, Thailand, and the Group acquired the iProperty portal in Malaysia in 2015, giving it a strong presence in Asia.
Trade Me is New Zealand’s dominant portal and is adding services through partnerships and acquisitions, although the marketplace they are working in is relatively small with New Zealand’s population just 4.5 million people. RealEstate.co.nz, the No. 2 portal in New Zealand, is industry-owned. In South Africa, the dominant portal is Propery24, part of the News24 Group. To date, Property24 has focused on its core business of agent listings. The No. 2 portal there is Private Property which is owned jointly by the real estate industry and a publishing house. It may have to add more to its value chain to challenge Property24.
In Europe, we’ve also seen a growth of industry-owned portals, including Wikicasa in Italy and Funda in the Netherlands amongst others. China’s Juwai.com has over 2.5 million listings. Pakistan’s Zameen, Japan’s Suumo and the classifieds giant Mitula, which operates in nearly 50 countries aggregating property listings and has more than ten portals in South East Asia as Dotproperty.com, are all showing rapid growth.
In the months to come, all portals will have to determine what their value proposition will look like, what investments and acquisitions to make, how to incorporate these acquisitions into their business and how and when to innovate and execute on these innovations.