Four Types of Property Portal Markets
September 7, 2008 by Simon Baker
In a previous article I wrote about a number of different business models that there are in the property portal world (Click here to read the article). However, not all of these models can be applied to every market and to understand where to apply a business model, you must first understand the type of market you are operating in to determine the likelihood of success.
These four market types are – Maturing Markets, Emerging Markets, Early Stage Markets, and Non-Existent Markets. Each of these are discussed in turn in this article.
Maturing Markets
A maturing market is best defined as one in which the agents know and understand the power of online marketing of their listings and their brands. These markets tend have the following characteristics:
- 40%+ of agent seller and buyer leads come from the Internet in some shape or form
- Internet (and in particuliar broadband) penetration is high
- Consumer usage of the Internet is high
- Revenues for leading players are high >US$50m and growing
The markets that fit into this category are Australia, New Zealand, US, France, Germany, UK, Belgium, Netherlands, and Scandinavia.
The property portal structure in these markets is usually one dominate player and a number of aspirants.
| Country | Clear Leader | Aspirants |
| Australia | www.realestate.com.au | www.domain.com.au, www.myhome.com.au, www.realestateview.com.au |
| United Kingdom | www.rightmove.co.uk | www.findaproperty.co.uk, www.propertyfinder.com, www.primelocation.com |
| United States | www.move.com | www.trulia.com, www.zillow.com |
| New Zealand | www.trademe.co.uk | www.allrealestate.co.nz, www.realestate.co.nz |
What we see in maturing markets is that the market leader has a clear charge for advertising model (except the US where there are MLS providers) and the aspirants tend to either follow that model or try the free to list, pay to upgrade model.
The challenge for any aspirant in these markets is that the market leader is so entrenched in both the minds of the agents and the minds of consumers that they are will be almost impossible to dislodge. In fact the marketing of the aspirants drives up awareness of online in the country and it is the market leader that tends to benefit.
As an investor, unless you buy number one, you will be faced with a long, hard slog to reach market leadership status unless you adopt a truly innovative approach.
Why call it a maturing market? Well i don’t believe we have reached the natural plateau in the growth of these markets. While the overall growth in revenues and usage in these markets will be slowing, it will be in the 20 – 40% p.a. range and the business models will continue to evolve.
Emerging Markets
An emerging market is best defined as one in which the agents are starting to understand the value of online marketing of their listings. These markets have the following characteristics:
- 20% – 40% of agent seller and buyer leads come from the Internet
- Internet penetration is medium but growing
- Consumer usage of the Internet is medium but growing
- There is still a reliance on traditional print advertising
- Revenue for leading players are usually <US$50 (some times significantly)
The markets that fit into this category are Portugal, Spain, Italy, and perhaps some of South America, Japan and Korea.
The property portal structure in these markets tends to be two or three co-market leaders (well not much between them) and they are trying different models as the market structure is not fully defined.
- Italy – casa.it and immobiliare.it are fighting for first place
- Spain – fotocasa.es, idealista.es are fighting for first place while expocasa.es and globalista.es are close behind
For any player in these markets, it is important to run like mad and sign up agents. The pricing in these markets tends to be a little depressed versus the maturing markets (e.g. 80 euro per month (Italy) vs 200+ euro per month (France)) however it is all about reach scale as quickly as possible. These businesses tend to run either break even or at a loss as they chase market share.
These markets are good for investors as they provide for relatively low cost entry while the upside is pretty clear.
Early Stage Markets
An early stage market is best defined as one in which agents know of the Internet but it has relatively low usage by agents and the consumers – especially for searching for real estate. These markets have the following characteristics:
- <10% of agent buyer and seller leads come from the Internet
- Internet penetration is low but growing
- Consumer usage of the Internet (for real estate search) is low but growing
- These is a strong reliance on traditional media advertising
- Revenue for the leading players is very small – usually <US$5m
The markets that fit into this category include most of Asia, the Middle East, India and probably some of Sth America.
The property portal structure structure in these markets tends to be all over the place. There are many players and no one really knows who the market leader is. Everyone has their own statistics and they tend to make a number of dubious claims. The models they adopt are also many and varied as they try to establish a market presence. Suffice to say, no one is making any real money.
For players in these markets, it is important that they run like mad and sign up as many customers as possible. They need to make sure that they have adequate funding and resources to reach their goals. Many of them will not succeed and they should be looking at mergers to gain some sort of scale in the market. In addition, they need to focus on education of the market as the market doesn’t fully understand the value from online advertising of properties.
For investors, this is all about option plays. You need to take a presence in a number of these markets and watch what happens over time. By having a presence in a market, you will be exposed to significant information and therefore be able to make better decisions about where the market is heading and what other plays you may need to take in that market to reach scale.
Early stage markets are all about patience.
Non-Existent Markets
These markets are pretty clear – there is just not a market for a property portal site. These include Africa and some of the more troubled spots around the world.
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I will not discuss if Spain should be considered an emerging market or not. However, it is important to bear in mind that Spanish domains are noted by .es
So, “Spain – fotocasa.sp, idealista.sp are fighting for first place while expocasa.sp and globalista.sp are close behind ” should say: fotocasa.es, idealista.es, expocasa.es, globaliza.es (not globalista).
Very informative post there, but what about the non-existent markets? At least the maturing markets were once non-existent, so I would love to see a review of what the non-existent markets can do to get to at least the early stage markets.
Because the web presence in this part of the world is increasing.
Thank you
Great post, but what happened to the non existent markets, at least the maturing markets were once non-existent,I would like to know what strategy can the non-existent markets take to become an early stage market. Thank you.
Thank you for great informations!
Just correct spanish portals extension – it is .es, not .sp.
fotocasa.es, idealista.es
I’m a co-founder of a new property portal in Nigeria, the site is currently under construction. Your comment about the African market is very correct and truly there is no market yet. But i will like to give you an insight about the recent developments in Nigeria that might give way to the emergence of a viable property portal market. Recent reforms in the Banking industry have given rise to profitable mergers which in turn gave birth to very strong financial institutions compared to what is obtainable in the past. These Banks due to the volume of shareholders funds at their disposal are making massive investments in the various sectors of the economy one of which is the Real estate aspect. The awareness about the gold mine buried in the Real estate business is growing by the day. Various Mortgage institutions most of them baby companies of theses banks are rolling out various packages to entice the populace. Now the problem that i see in my line of sight is that of the level internet usage in the country.
1 Most people would rather not conduct any business online due to to fraudulent cases.
2 The no of internet users in Nigeria is still relatively low
3 Most people are not yet well educated about Mortgage practices and the importance of the real estate sector .But despite theses problems i think there should be a property portal in this country. You said there is no market well, we’re just gonna go ahead and create one.The recent investments in the Telecommunication in the country has boosted the figure of internet users overnight. I believe what we have to do is a series of educative and sensitization process in the country about the importance of online real estate marketing. The boom being experienced in our real estate market is too profitable that it will be a shame if there is no property portal site to back it up. I am open to comments and advice on how to go about this .
[...] Read the rest of this great post here [...]
Just curious but where do you see the free or near free players like Craigslist and Gumtree playing into this? By many metrics they are bigger than the big guys, and dominate certain geographies and segments (rentals, flatshares).
In response to your inclusion of Trulia and Zillow as aspirants in the emerging market category, I wanted to point you to a WAV Group study on the accuracy of real estate search sites. You can find more details on the study at http://www.roost.com, but the basic finding was that aggregator sites like Trulia and Zillow deliver for sale listing accuracy rates as low as 8 percent. Their business model is to gather information on homes for sale from various and possibly random sources, causing homeseekers to waste time sifting through inaccurate data. Roost gets its info directly from local MLSs, and consistently delivers accuracy rates of 96-98 percent.
Femi
Thanks for your question regarding non-existent markets. I do take on board you comments regarding these markets and the emergence of the internet in them. However, the gap between the emergence of the internet and the ongoing use by real estate agents to advertise property will probably be a large one.
Therefore in the non-existent markets, any portal site will take a long time to make progress however the good news is that you have a chance to define how the market is likely to work. I would start with a pay for use model (like a subscription model) and then invest time into creating awareness of the market with both agents (to build content) and consumers.
This will be a game of patience but in the long term may be worth it.
Thanks
Simon Baker
Publisher
Property Portal Watch
[...] and foremost, we need to look at market itself. In the maturing markets (See previous article), consumers already have established a habit in which they will search for real estate – the PC. [...]
[...] (e.g. the traffic to the Australian site) or where the market structure was early stage. (See Analysis – Four Types of Property Portal Markets on our sister site – [...]