In doing so, we have found a short list of themes and ideas foundational to how the industry changes direction in 2025 and beyond, from respecting customers to the importance of data.

1. Respect your customers (or lose them)

In an (at-times) controversial on-stage interview with Simon Baker, CoStar Group CEO Andy Florance called out major players like Rightmove, Idealista and REA Group for "disrespectful" practices, likening market leaders to tax authorities that charge ever-higher levies on agents, just for operating in the market.

During a Q&A session—in response to the question: "Do you believe that an agent-friendly positioning is a winning strategy compared to the more aggressive approaches like Zillow's premier age, the flex program?" [sic]—Florance said:

"So, the question is: is it a good idea to treat your customer with respect and dignity? Gee, what a tough one!

"But it's a serious point. There are a number of companies operating on the premise that you can do whatever you want to the customer, and they will take it and they will be your victim, and you can just step on their face."

Florance pointed out that market leaders who consistently raise prices without added value will ultimately see their customers move towards their competitors.

2. Consolidation: does CoStar redefine real estate for good, or prove the market leaders right?

We'll stick to CoStar for a moment.

In the final session of the conference, Jonathan Turpin, Principal at AIM Group, suggested that the stakes are high for CoStar's prospective European expansion. Should the American real estate giant succeed in its attempt to take on multiple market leaders across European borders under the Homes.com brand, the world's first global real estate marketplace will be born—pressuring incumbents like Idealista, SeLoger and Rightmove to defend their position against an upstart conglomerate.

But, should CoStar fail, does it mark the end of the challenger overtaking the leader? If CoStar can't do it, no one can...

As luck would have it, CoStar announced a major expansion to its UK headquarters days before we released this blog.

3. Artifical Intelligence is still in its early stages, but image manipulation is a core competency...

As Abdelrahman Zohairy, CEO at Property Sorted, says: "Right now, AI is the enabler, not the solution ."

As one of the named themes of the conference, artificial intelligence was a topic of conversation in the majority of presentations.

From AI-powered chatbots and virtual tours to dynamic pricing models based on real-time market analysis, AI is poised to impact every facet of the portal experience.

However, the reality is that AI is in its infancy. While we saw many AI solutions presented at the conference, no singular technology has shifted any paradigms quite yet.

Nevertheless, it was telling that AI in the context of imagery stands out as a strategic priority. Several presenters highlighted how data points hidden within images—historically a static element of a property listing—will be unlocked by AI solutions moving forward.

If you're going to dip a toe into the AI ocean, image recognition and dissemination should be a starting point.

One of the best examples of this is Proptexx, one of our sponsors at Proptech and Portal Watch. CEO Stefan Gunnarsson's widget is making waves in real estate virtual staging. Watch our podcast with him below...

Returning to CoStar one final time, Andy Florance noted that Matterport, the digital twin specialist that CoStar agreed to purchase for $1.6 billion earlier this year, will be rolled out to the industry as a whole and made readily available to competitors. He also implied that Matteport technology will be combined with drones to take aerial footage and images of developments and commercial buildings.

Meanwhile, are listings being optimised for marketing and decision-makers?

Simon Bray, president at REW in Canada, suggested that AI can play a big role in the 'entertainment' and brand value segments for portals worldwide, where repeated visits generated from a gamified experience become a priceless commodity. We'll let our readers work out how to do that best...

If you want to experience for yourself what Artificial Intelligence is capable of, why not listen to our first-ever AI-powered podcast, below:

4. Natural language search, natural language search, natural language search

More and more portals are integrating natural language search into their property search options. Ticking thirty Yes/No filters and hoping for a match is beginning to look increasingly old-school - if not obsolete (quite yet).

The reality is that a shortlist of nigh-on perfect search results is ultimately more appealing to time-poor property seekers who would rather strike gold in 10 seconds with a well-worded prompt than deal with scroll and click, scroll and click tedium that characterises the vast majority of marketplace search behaviours.

The bigger question remains unanswered (or maybe even unasked): Are property seekers necessarily ready for a natural language search experience? Or, to put it in other words, would a wider availability of natural language search solutions drive a meaningful increase in its popularity as a preferred method of search? Are we reinventing a wheel that looks pretty but nobody wants?

The real answer to these questions highly depends on what natural language search results 'spit out'. Over to you, marketplaces...

5. The future of portals (and content) is data-led

Portals can't stay old school forever. Following on from AI, it is about time for portals to fully embrace their data capabilities and evolve into a distributor of unique, high-quality content that empowers users and advertisers alike.

One such example is Addland—a UK-based marketplace that is set to shift entirely into a data platform. Addland has access to a complete set of complex and hard-to-find datasets for every property in the UK, from leasehold length to the risk of erosion. Another great podcast here...

Meanwhile, as Mal Macallion from ModelProp puts it, "the promiscuity of data" will only see it become more public and more accessible over time. Not building a great user experience around it will leave you behind.

Finally, another potentially industry-shifting business model is that of DD360, where founder Jorge Combe is using data and smart solutions to provide key insights and industry-specific tools to accompany developers at all stages in Latin America.

Find out more about this fascinating model by watching our podcast with Jorge, below:

6. SEO is alive and well... but it doesn't come free (or fast)

There are 8.5 billion Google searches made every single day. Furthermore, market-leading portals like Zillow (38%), Rightmove (40%) and realestate.com.au (45%) get a hefty chunk of their traffic from organic search.

SEO is massive, and important, to real estate portals worldwide. SEO continues to be a go-to strategy for a business looking to attract buying eyes, yet this is a hypercompetitive space.

In short—while organic traffic is great, success isn't guaranteed and it doesn't come free.

If you're serious about using SEO to drive traffic to your listings as a real estate portal, understanding the true cost of your strategy (and by extension, your ROI) needs to be at the very top of your analytics. Meanwhile, technical SEO (how easy your website is for a search engine like Google to navigate) is an under-represented aspect of a solid SEO strategy. This also requires time, money and patience.

Mike van der Heijden from SEO specialist Portal Ventures, said:

"Despite what you're hearing, SEO is not dead, but it is changing in the AI generation, and you will need to adapt your strategies.

"For real estate portals, you need to find ways to supplement and enrich your listing data. In a world where agents are multi-homing listings, what additional data can you add to your listings? That will allow your customers to be able to drill down deeper into their wants and needs.

"For example, if a listing for a '2 bedroom apartment in Barcelona' is shown on two different portals, the one that can add information such as travel time to the local university or other POIs, with attributes it can detect in images, agents will then be able to segment that listing into more long tail searches—and can generate more search traffic from."

7. Is the future free-to-list? And if so...How do these portals survive?

Are the days of pay-to-list portals numbered?

Two notable examples of a new generation of portals caught my eye during the conference; Jitty (UK) and Proppy (Belgium) access listings directly from real estate agents' websites/back ends, to legally (and ethically) capture vast amounts of supply in domestic markets at a lower cost.

The result: a massive listings ecosystem that bypasses traditional portals entirely while maintaining a heavy share of overall supply. As long as these new portals attract high-quality, high-quantity traffic, revenue models are likely to shift towards lead-selling models and services such as mortgages, renovations, and furnishings.

The complication for pseudo-portals like Jitty and Proppy is that a free-to-list model eliminates a key revenue stream. Can the new generation of portal businesses get by on adjacent revenue streams alone?

Graham Paterson, CEO at Jitty, predicted "the eventual rise of the digital homebuying agent". That sounds like a topic worth exploring more, and it's something we alluded to in an episode of the podcast earlier this year...

Conclusion

Real estate portals worldwide continue to be money-making machines, but the rise of AI and the inevitability of a new generation of business leaders and entrepreneurs mean the model faces more challenges than ever before.

There is a real opportunity for the industry to condense the search experience into a hyper-focused, user-centric process that directs traffic away from market-leading portals like Rightmove and Realestate.com.au and towards a Jitty, a Proppy, or something else entirely—that gives a potential buyer their perfect property without them needing to ever land on a traditional portal.

Should this happen (and one day it probably will), the advertising spaces that incumbents like your Rightmoves and REAs of the world provide (for a lot of money) will begin to make much less sense—representing a catalyst for change that, arguably, the industry has been crying out for since day one.

Real estate is an industry notorious for its glacial approach to embracing change. Perhaps it is time for that reputation to be challenged meaningfully...

So with that in mind, these are a few things I've seen that I would like to see become a bit more common on real estate portals around the world...

If you're going to do AI search, encourage people to actually use it

AI seems to be all everyone talks about when the industry gets together so we'll start there.

Whether the initial searching part of a user's interaction with a portal needs to be fixed at all is up for debate, but U.S. power buyer-turned-portal flyhomes' implementation of AI and LLMs into search is the best I've seen so far.

Two things set flyhomes' AI search apart from others.

Firstly, the call-to-action for the user to forego the traditional location+filter search is much more prominent than on other marketplace sites. Whereas other companies have built a ChatGPT plugin rather than anything for their own website (Zillow, Immobiliare), rolled out and then rolled back (Yandex Realty) or hidden the AI search away (OnTheMarket), flyhomes proudly nudges its users to start interacting with its AI interface on the homepage and above the fold.

I also like that once a user has clicked on one of the suggested prompts, they are taken to a well-thought-out interactive chat interface where the default interaction is clicking on pre-formed prompts or links rather than having to type out a question.

Whether this AI search implementation remains the best in the industry and whether it can make flyhomes a legitimate player in the increasingly competitive U.S. real estate portal space is frankly pretty doubtful. But hats off to the flyhomes team for producing a product update to be admired and copied.

Tell us what your data thinks!

Most big real estate portals around the world have an AVM (automated valuation model) these days. So that means they will have their data-backed opinion on what each of the listings on their site should cost.

Obviously, it would be great for the consumer if portals added a field estimating whether each listing was overpriced, underpriced or in the Goldilocks zone but it's just not going to happen.

Even Zillow with its 'consumers are our north star' company mantra and its agent-reviled Zestimate wouldn't dare go this far. The agent anger would be overwhelming if overnight half of the listings on the portal were marked as 'overpriced'.

There is one site in Mexico, however, that has a value for money field on its listings and even lets users filter results based on how overpriced it estimates listings to be.

Monopolio is a Mexican real estate marketplace site run by DD360, a development and home loan specialist. It doesn't monetise from agents and gets its listings in the same way that aggregators do (ie from scraping third-party sites) so it can focus on putting information in front of its users without worrying about what anyone else thinks.

According to Monopolio's CEO, Jorge Combe, his company's unique business model means that the marketplace's interests are aligned with those of the home searcher.

"Given that I'm not working for the agents and given that the agents are not paying me money, I think that I can be transparent, at least with the information around how much it [a listing] is worth.

"That is the main reason why the portals cannot do whatever we're doing, because if I am charging an agent for an advertisement or to be listed in my portal, and then all of a sudden I'm saying that the home that you're trying to sell is extremely expensive then the agent will boycott the portal.

"We couldn't care if there's pushback from the sellers because what we want to build here is something that is buyer friendly, not seller friendly."

Mixing up the author of listing descriptions (not just agents or ChatGPT)

What if it wasn't just the agent who wrote a listing description? What if the owner or even the portal itself left their own comments?

"We've had fifteen wonderful years in this house and we're downsizing now that the kids have moved out."

"We're moving away for work. We hope you enjoy the sunsets from the terrace as much as we did these past three years!"

As all good agents know, sometimes it's the little things and personal touches that calm the nerves of wide-eyed first-time buyers making the biggest financial decision of their lives.

In China, brokerage site Ke.com (which happens to be run by the most interesting real estate company in the world) features descriptions from owners alongside those written by the agents.

Admittedly most of the ones I've seen are a bit prosaic and perhaps lost in translation but comments from the person actually giving up their home are one of the few advantages that FSBO players and horizontal general classifieds ads sites have over vertical portals.

An innovative move might even be for a portal to add its own comments and opinions, especially if it employs people to go and look at some of the houses it lists—as is the case of the Japanese real estate marketplace Cowcamo.

Above: one of the great descriptions/comments on a Cowcamo listing

Now Cowcamo isn't strictly a portal, more of a brokerage with a renovations business attached, but the comments its employees attach to listings add value and are written with a personal touch that agent-written descriptions seldom achieve.

'Turning the screen around' can only be a good thing

Zillow founder Rich Barton famously said that when he was building travel marketplace Expedia (of which he was also a founder), his vision was to turn the screen around and empower the holidaymaker with all the information the travel agent had on their computer screen.

He used that same mindset when building his real estate portal but now it's one of Zillow's rivals which is arguably driving the concept further.

CoStar-owned Homes.com has been going all out to put as much information as possible on its listings and in its neighbourhood guides.

It's not just third-party or open-source data like flood risk or school ratings the company is displaying. CoStar started out in commercial real estate and has long employed a small army of people to go to buildings and collect data in person. Now the Washington-based company has employed the same strategy in the residential sector with Homes.com sending employees around neighbourhoods to gather first-hand information.

By our count, there are currently 24 different data overlays that users of Homes.com's map can play around with as well as tools for school zones, travel time commute, detailed neighbourhood guides and all the other portal tools that U.S. users have come to expect.

CoStar thinks that information depth is an area it can win against its rivals and, in theory, the average home hunting portal user is the beneficiary from a data layer arms race in the market.

While American portals scramble to outdo one another to win consumers, on the other side of the Atlantic things aren't moving so quickly.

I had assumed that U.S. portals have far more user-facing information than the ones I'm used to browsing in the UK because data is more readily available there. As it turns out though, British portals do have a wealth of data at their disposal but perhaps lack the inclination to use it...

I recently came across Addland, a British real estate vertical specialising in land sales. The portal has a myriad of data layers for its users to see everything from valuation and market activity to coastal erosion and power lines. As CPO Hannah Parker told us on a recent episode of the PPW Pod, her team have worked very hard to procure that data and put it in front of Addland's users, however Rightmove or Zoopla could put that same data in front of their users if they really wanted to.

The issue, Parker says, is a commercial one. Put simply, if Rightmove were to start putting more data in front of users, it might mean fewer leads being sent to the agencies paying the most to appear at the top of the portal's search results.

Not everyone needs to see agricultural land classification but surely everyone buying a house does want to see if the land it's on is subject to any restrictions or likely to be flooded. And surely they'd want to do so whilst in the shopping phase (i.e. on a portal and before the deal goes to a conveyancer)?

Affordability is better than price but 'pre-qualification' is even better

Just as the distance from your new home to your office is not the same as the time it will take to get to work every day, price is not the same thing as affordability. Real estate portals are beginning to catch on.

The biggest question on the mind of serious home buyers beginning their journey on a portal is how much they can afford and the biggest resource drain for a portal's agent customers is filtering and qualifying leads. So it makes a lot of sense for a portal to generate extra revenue by telling serious users what they can truly afford and in doing so help save their agent customers some time.

Above: Rightmove's 'Mortgage in Principle' product. Source: Rightmove CMD presentation November, 2023

Simple 'mortgage calculator' tools have been around on portals for a long time. These work on just two variables, the property's listing price and the user-specified down payment amount.

The next step up in complexity is the 'affordability calculator' which asks the user for things like their age, salary and if they are paying off other loans with some also taking into account factors like the property's use and location. These tools are often linked to lead generation forms which see users give the portal their details to be sold on to third-party brokers or lenders who will no doubt send plenty of follow-ups.

Recently though some portals have gone further still by taking that big figure that their tools generate from a number on a screen into something psychologically much more important without simply farming their users out as a lead to be bombarded by third parties.

Zillow's 'BuyAbility' and Rightmove's 'Mortgage In Principle' services are examples of marketplaces taking advantage of their trusted brands to collect a lot of information from their users in exchange for actually pre-qualifying them for a mortgage.

It might not appear that different from what came before, but there are some crucial differences to this approach compared to many other portal mortgage mouse traps that came before...

1. Users are never re-directed away from the comfort blanket of the portal's own website.
2. The outcome of the form being filled in is a user becoming pre-qualified to buy a home. It's not just a number calculated on the screen or a lead generated for a third-party partner but a number that has some meaning having been approved by a financial institution. It feels significant as the first real step a user takes towards actually owning a property.
3. Users who have filled in the form are not just monetised once as a lead. Pre-qualified users are monetised (in Zillow's case through its own mortgage brokerage division and in Rightmove's via Nationwide) as mortgage leads and are also now more valuable as sales leads to the portal which can use them to justify price increases. Rightmove has said that users who have filled in its Mortgage in Principle form are 45 times richer in data than regular leads.

So while portal users are invited to fill in a form to take their first non-intimidating, semi-official step towards home ownership and find out for sure what they can afford to pay, lenders and brokerages get qualified mortgage leads, agents get qualified sales leads from the portal and the portal makes a lot of extra money.

Portal pre-qualification sounds like a rare 'win-win-win-win' and I'm sure we'll see more of it.

Real estate marketplaces didn't know whether they were a threat, an ally or both at the same time.

Fifteen years or so later and now it seems like time might be up for aggregators—their business model deemed an inessential middleman by the market and their USP eroded on one side by savvy portals and on the other by Google's relentless drive to eliminate click-throughs.

Unlike real estate verticals like Zillow or Rightmove, aggregators like Trovit and Mitula are hardly household names. So what are these businesses and what is their value proposition?

What exactly is a real estate aggregator?

Often we see the likes of Zillow and Realtor.com being referred to as 'aggregators' but the businesses we're talking about here sit one level further away from the transaction.

Whereas portals typically take listings from most of the agents in their market via the agents' CRM software, aggregators will take listings from portals via XML feeds. If they can't convince portals to build (and, importantly, maintain) an XML feed for them, they will often just scrape the listings directly from portal websites.

Once it has the listings from all the portals in a market, an aggregator will get to work building results pages that outrank the portals' pages on Google, especially for more complicated 'long-tail' search terms. The idea is that because the aggregator has more listings than any individual portal and it has set up its SEO specifically for long-tail searches, it can attract a significant volume of Google searchers to its results pages.

A user might search Google for "3 bedroom houses for rent with double garage and a garden in Bristol". In an ideal scenario for the aggregator the user would click from Google to the aggregator at the top of Google's results, then they'd click from the aggregator to the portal where they'd fill in a form to be connected with the agent listing the property.

A history of classified ad aggregators

From Google to an aggregator to a portal to an agent. You can see how the aggregator's position as a middleman was always a precarious one but they've been around for a long time and made a lot of money acting as a source of 'extra' traffic for portals.

Perhaps the first really successful aggregator was Trovit. Launched in 2007 the Barcelona-based company found success early on and within its first ten years of operation had expanded to more than 50 countries and been acquired by the Japanese firm Lifull for €80 million. It also inspired a copycat...

Madrid-based Mitula was founded in 2009 with the same business model and expansion plans. It was a bootstrapped business that would go on to acquire competitors Nestoria and Nuroa and be listed on the Australian stock exchange before also being acquired by Lifull.

By 2018 most of the real estate aggregators (Trovit, Mitula, Nestoria and Nuroa) were consolidated under the umbrella of 'Lifull Connect' and were making decent money. In 2019 Lifull's aggregation business* generated ¥ 7,680 million (almost $50 million at today's exchange rate) at a 12% net profit margin.

Source: Lifull Earnings Presentation 2019.

Tech giants were taking notes. By 2020 Bing had snuck itself into the real estate classifieds game with the unannounced launch of Bing Real Estate, a service which looked very similar to that of Mitula and Trovit.

In the news for the wrong reasons

So aggregators seemed to be doing good business before the pandemic but recently they've not been doing so well...

Rubrikk Group, a Norway-based aggregator operator, announced at the end of May that it was ceasing operations after 16 years. and a few days later Bing's real estate aggregation service in the United States was effectively wiped out as Zillow and other portals insisted the tech giant remove their listings.

As for Lifull's aggregators, they have been on a steady decline for some time with the company having started to move the strategy of its 'Overseas' business away from aggregation and towards transactions via the acquisition of portal player Lamudi Mexico and the Thai brokerage FazWaz.

Above: Acquisitions and divestments in its Overseas segment mask the decline in revenue from Lifull's aggregators over the last few years

What went wrong and is there a future for real estate aggregators?

Reading between the lines, it doesn't look great for Lifull Connect's aggregators. During the worst of the pandemic, they suffered from portals tightening their belts, but the problem is that things haven't really picked up since.

In its 2023 shareholder report, Lifull admitted that CPC revenue from aggregation was down 19% year-on-year and revealed that it had sacked the management of its Overseas division. The man now in charge of overseeing the segment (Kiyoshi Shishido) is the company's former external auditor—an appointment which suggests battening down the hatches rather than investing for growth.

Then Q1 saw "lower profit YoY due to lower revenue in aggregation sites and one-off costs" and Q2 saw aggregation traffic down 33% year-on-year. It would be fair to say that the business is in need of a tailwind, some fresh investment, a change of tack or all three.

Above: Simon Baker and Edmund Keith discuss the future of aggregators with Rubrikk CEO, Adil Osmani on The PPW Podcast

As for Bing Real Estate, it has been decimated in its home market but is still operational in Canada (where, interestingly, it still had Zillow listings as of the 10th of June) and ten other international markets.

The faceless service seems to be selling some ad space on its detail pages but doesn't necessarily have lucrative CPC agreements with portals.**

The search giant may instead be using its aggregators just for lead generation for its rental management business which invites landlords to market their listings, screen tenants and deal with payments through its platform.

That pivoting away from charging portals on a CPC basis may be the saviour of these businesses. Former Mitula Group Chairman, Simon Baker believes that there is still a future for aggregators if they can link their leads to portals or brokerages they own (as Lifull Connect has done in Thailand with the acquisition of FazWaz) or if they're smart about the markets and segments they go after.

"I think you have to be smart about the segments you go after. And for me, the segment I love most is the new development segment. Because I remove one part of the problem, which is I don't have to deal with a home seller... and you probably get a higher commission, right? You can get five percent."

As for Rubrikk's CEO, Osmani thinks that the value of real estate aggregators going forward lies in the data they collect rather than the clicks and leads they generate.

"Imagine that you have all the ads in the market, let's say for example Germany, right? Because you get the feeds from ImmoScout and Immowelt and the others. Now you can understand by looking at advertising time, what is moving in which markets and how fast and at what seasons, right? If you package that data you can actually sell it back to the portals to the agents and give them some real-time intelligence on what goods are moving right now in your market."

* In 2019 Lifull's 'Overseas' segment did not solely consist of aggregators, it also included a few minor portals.

** Both Zoopla and OnTheMarket told us that they do not have commercial agreements with Bing. Both Immobiliare in Italy and REA India told us that they pass a feed to Bing Real Estate but did not specify if the relationship was commercial in nature. We are awaiting responses from other major portals that Bing takes listings from and will update as and when we receive a response.

The upstart claimed that it saw 156 million unique visitors in Q1, but that number included the company's entire "network" of residential marketplace assets (including multifamily specialist Apartments.com and at least 10 other sites). Even with all its stablemates tallied up alongside it, for now, Homes.com's traffic still falls well short of Zillow— which regularly sees unique monthly audience figures of 230 million.

The thing is though, CoStar didn't get into the residential game for visitors. As an S&P 500 company with more than 50 consecutive quarters of double-digit revenue growth, it got into the portal game to make money.

And there's perhaps some evidence to suggest that CoStar could make more money than Zillow without having as much traffic.

Zillow has a great brand and likely more visitors than any other real estate marketplace in the world but it does a relatively poor job of monetising those visits.

Is Zillow's business model holding it back?

Where most portals around the world charge the agent selling the home to list on their websites with additional fees for increased visibility, Zillow makes most of its money by selling leads to agents representing buyers.

It's a model that has some drawbacks.

For one, Zillow sells leads to buyers' agents who may not necessarily know much about the listing they are receiving a lead for. As CoStar CEO Andy Florance has repeatedly pointed out, this doesn't necessarily make for a good user experience.

It also doesn't seem to scale that well. Only a small percentage of the total pool of US agents pays for Zillow's services and the company actually wants to further reduce that percentage by extending its 'Enhanced Markets' program across the country.

CoStar's Homes.com on the other hand works a so-called 'your listing, your lead' model. It's looking to get as many listing agents as possible to pay for their listing to rank at the top of its results pages.

In short, Zillow wants to provide a deeper level of service and take a bigger slice of commissions from a small set of top-performing agent customers while CoStar just wants to sell visibility packages to anyone that wants to pay.

Although the usual caveats about apples-to-apples comparisons apply, one of those models has seen portals around the world make obscene amounts of money and the other has seen Zillow make a $1.25 billion net loss over the last five years.

Sell to one in eight US agents—seems like an attainable goal

CoStar is good at selling. If it can sell to one-eighth of the estimated two million agents in the market every month (at current ARPA) it will have overtaken Zillow's residential revenue of $1.4 billion from 2023.

It has a very long way to go but few bet against Andy Florance.

The CoStar CEO said that Homes.com's average revenue per agent (ARPA) was between $475 and $500 per month in Q1. He put current customer numbers at around 8,000—a figure that annualises to almost $50 million in revenue.

Florance described the Homes.com membership as "easily the fastest-growing new product in company history". If the sales team can go from 8,000 customers to 250,000 agents using Homes.com, the portal will be generating $1.5 billion (that's assuming no price increases).

Homes.com doesn't have to demonstrate the value of its particular visibility packages relative to a competitor either. It just has to prove the concept of paying for increased visibility on a portal to residential agents.

Making a few hundred dollars per year from every agent in the market is not such a pipe dream. Most leading portals in developed markets around the world make much more than that—CoStar doesn't have to look further than its recently acquired British portal OnTheMarket to find an example of a challenger portal with those unit economics*.

Two companies with very different DNA

Zillow wants to reduce the total number of customers it works with and increase the average revenue it makes per customer. It also wants to increase the control it has over the lead and the agent at every point of the sale, like a brokerage.

CoStar is using a much simpler model that has been tested in the multifamily rentals space and internationally. It just wants to do what has historically worked very well in the rest of the world—sell visibility to as many agents as it can and let them get on with the rest of their job, like a portal.

Most US brokerages haven't made a profit recently, most big-name international portals have.

* OnTheMarket's unit economic numbers are based on an assumptive revenue figure of $50M for 2023 which is in line with previous growth. Also based on an agent population of 51,000 in the UK (no official figures).

I've interviewed dozens of portal bosses, collected more than 180,000 data points and published almost as many words about portals as are in the King James Bible but I still think I would be rubbish at running one of these companies.

The code they're written in might be the same all over the world but the realities they operate under are very different from one country to the next. Sometimes it seems that no matter what these businesses do, their bottom line is just a function of the market they operate in.

So what levers can real estate portal companies pull to grow and which work the best? What can portal CEOs actually do to steer their businesses through the swells and storms of their markets?

Luckily I work with someone who has spent 25 years thinking and speaking about this stuff. I decided to ask Simon Baker some dumb questions about running a real estate portal...

Operational Expenses

Reducing costs would seem to be the place to start for any new CEO, at least to my mind. But, as Simon explained, it isn't necessarily the first thing all new portal CEOs think about. According to Simon the most effective thing any new boss can do is actually related to what's coming into the business not what's being spent...

"It Depends. If you're taking over Rightmove, you're not going to sit around thinking about cutting costs... Actually the most valuable thing to do in businesses is usually on the revenue-generating side."

So how much can executives really control the costs associated with these businesses? They're called 'overheads' for a good reason after all.

As an example, Frontier Digital Ventures is an ASX-listed company that operates real estate portals in developing markets around the world. In 2021 FDV bought two assets in Latin America (Yapo and Encuentra24) and then got to work with the scissors.

The company said in its 2022 report that it expected the cost restructuring of those businesses to save around A$3 million in FY23.

Saving three million is great but restructuring is an onerous task. It almost always involves people losing their jobs.

How demoralising must it be then to sit down with a spreadsheet, spend late nights finding ways to reduce spending only for a third of the gains you make to be wiped out on the end-of-year balance sheet by foreign exchange losses?!

While that sort of thing would keep me awake at night, Baker says portal bosses need to see these things dispassionately and that, in the case of currency fluctuations at least, some things just aren't such a big deal.

"How you think about the problem and your temperament is quite critical in being successful... If you're running a company in Chile, and you're paying your employees in local currency and you're earning local currency, the currency fluctuations are actually quite irrelevant."

Traffic

Real estate portals are at their core just giant, online shop windows. The more people looking in the window, the better the business. So traffic might well be the lever that makes the most sense for a new CEO to try and pull and not just because of the extra eyeballs. As CoStar is proving with Homes.com traffic numbers are also useful for PR.

But is traffic a bit of a vanity metric for portals? Baker's answer to my question was characteristically succinct.

"No, it's certainly not a vanity metric."

"One thing is absolutely sure, if you have zero traffic, you will have zero leads. And if you have zero leads, no one will want to actually spend any money with you advertising."

So traffic is not just a vanity metric but it certainly does serve a PR purpose for real estate portals

"A lot of those traffic metrics are all about saying, I'm the biggest, you're an advertiser, so you better advertise with me, because I've got the audience."

While the PR benefit might be very obvious, the relationship between traffic and portal profit is not always so clear. Although the shop window logic is sound, there will always be caveats and exceptions.

The chart above shows that, in Germany at least, traffic and revenue aren't necessarily correlated. 

According to Baker, there is an increasingly fine line between prioritizing the volume vs the quality of leads. High traffic and volume of leads look good on an agent's dashboard but don't necessarily sell houses. On the other hand, a portal delivering fewer, better-quality leads can have its own issues.

Any marketplace delivering better quality leads than its rivals is almost certainly taking more end-user data and is likely doing some work to qualify leads before sending them to agents, opening itself up to accusations of taking data that would have previously been in the hands of its customers.

Is that a concern for portal CEOs? Baker thinks the smart real estate agents don't harbour resentment towards portals handing them fewer, better-qualified leads.

"The smart ones are going, 'you mean I can do more sales per month and thus put more money in my pocket because you're going to do a bunch of the grunt work for me? Give me those leads all day, every day. And by the way, I'm happy to pay more for those leads because I know that I'm closing out twice as many deals from leads from you. So I'm happy to pay 50 % more.'"

Unit Economics

There are plenty of real estate agents around the world who think real estate portal boss is the easiest job in the world—just up your prices every year then sit back and bask in shareholder adulation.

I'm pretty sure it isn't as simple as that.

Price rises must be tricky to navigate for marketplace execs. They have to be justified, communicated properly and enacted at the right time. And perhaps the top-line cash you'll get from increasing your prices won't make its way to your bottom-line profit.

A few times each year a story will reach the pages of Online Marketplaces about agents complaining about portal price increases. These stories always seem to follow a pattern and they disappear quickly.

Baker has seen and dealt with enough agent complaints to have formed a robust opinion on them...

"Agents are gonna be unhappy about any price increase for eternity. Yet, they're driving around in Mercedes."

So do real estate portal CEOs tend to overthink price increases or shy away from them unnecessarily? Simon told the story of some portal founders who, needing to maximise profits for their earn-out, doubled their prices overnight and (eventually) only lost around 5% of their customers.

"Most people [portal bosses] are so worried about the noise that they then don't do the action [price increases]."

"I used to get my team to give me the average real estate agent's P&L—their revenue, number of sales, times commission, less all these expenses, because I want to know what they are really making. I wanna know what they're spending."

Diversification

Most real estate marketplaces have expanded their business sideways over time. The chart below is from our 2022 study on real estate portal companies' adjacent revenue streams. The size of each tile represents how many portals we found that were in each adjacent revenue stream.

But as the leader of one of these companies, how do you know when the time is right to move into adjacent revenue streams? According to Baker, there is no exact science here and diversifying a portal business doesn't necessarily mean moving into adjacent services.

"Business is not a scientific formula, right? And anyone who thinks that is going down the wrong approach."

"The super core business is getting agents or developers to put their listings onto a website. The next level of diversification is saying, well, I'll tell you what, you can spend more money and go to the top of the search. You can also put your advertisements around the outside, you can do all that sort of stuff and get smart about how you put that all together and how you price it."

Most real estate portals do eventually diversify their way out of their home turf though and most go into mortgage. It might be the most popular and obvious choice of adjacent revenue stream for real estate portals but, as Simon told me, most organically grown portal mortgage ventures fail.

"They fail because the people who are building in the inside think they can build the next level. An expensive lessons you learn is if you're really good at one thing, keep doing that one thing until you've sucked every ounce of life out.

It's just a different cup of tea. You just don't know how to do it. You think you know how to do it because you've got someone sat down and did a nice little PowerPoint presentation and that sort of sounds like nice and easy with some diagrams, but execution is really hard."

He's speaking from hard-lived experience. As CEO of Australian market-leading portal operator REA Group, Simon tried to steer the company into the mortgage lane in 2005 only to pull out 18 months later. REA Group is now on its third attempt to get into mortgages having bought brokerage Mortgage Choice in 2021, an approach Baker thinks is the way to go.

"If you are going to go into those areas, acquire, spend the money, buy the expertise, buy the knowledge, buy the customer base, buy the learning, the experience, and make sure you then get out of the way and just provide as much rocket fuel to make it work."

Market Dynamics

How many agents (potential customers) are there? How much commission do they make? How many home sales are there and what is the average sale price?

All of these things affect your business as a marketplace but according to Baker, they are impossible to influence as a portal and not worth wasting time on.

"Talk to Zameen [Pakistan], talk to ShweProperty in Myanmar. The answer is you cannot change the macro environment. You've either got government coups, you've got a whole range of stuff that is just literally out of your control and you have to operate in that environment. So don't push against it, ride the wave and maximize the output."

But can you change the way you get paid? Could you maybe start doing for-sale-by-owner listings? Can you charge for seller leads? Or could your business even reach the promised land and introduce vendor-paid advertising like Irish market leader Daft.ie is currently trying to do?

Here the odds are still stacked against real estate portals looking to change things as they're working against "decades of ingraining".

"Changing those market dynamics is very, very hard. And one that I would not try to do. I would try to actually ride the wave and ride the wave better than my competitor."

Ultimately it's all about focus

There are plenty of pitfalls and shiny objects to avoid for real estate marketplace CEOs and plenty of ways to go about leading a business. When asked for his opinion on the most important factor for portal bosses, Baker didn't need more than a second to respond...

"Absolute clarity on what you're going to do."

"I remember very vividly back in the day sitting there as we're building REA. We were getting traction with Realestate.com.au, getting agents to sign up and of course, people in the team came up with these wonderful ideas why don't we do this why don't we do that. The next bright, shiny bauble that's over there.

And I remember thinking, that's interesting. And then I'd have to catch myself and say, no, we're going to do what we did yesterday. We're going to do it again today. We're going to do it tomorrow. We're going do it for the next year."

When I asked him what he was looking for from Europe acquisition targets, Florance told me it was about bringing in the right people and the right tech.

Two months later CoStar snapped up UK Challenger OnTheMarket for $100M, marking the Group's first serious foray into Europe.

But here's where I got it wrong. When Florance referred to tech, I foolishly assumed he meant European tech; actually, he said no such thing.

Rather than invest in European tech, CoStar has kept things closer to home with the to-be-confirmed $1.6 billion acquisition of 'digital twin' tech specialist Matterport, one of the biggest names in US real estate tech.

Has Andy Florance's CoStar Group taken the lead in the so-called Portal Wars?

Here are some thoughts...

Matterport, CoStar and Zillow in (financial) context

Matterport, for all its industry-leading technology, isn't profitable. Despite strong revenue growth in Q4 2023, the firm still recorded a $98.5 million loss for the quarter, more than three times its Q3 loss. For the year, it lost almost $200 million.

Meanwhile, Q1 filings released in the same week as the acquisition announcement revealed that CoStar boosted revenues by 12% to an impressive $656 million from January-March 2024, while its residential portal Homes.com has been quick out of the blocks since its monetization in February.

In short, CoStar has more than enough money to handle Matterport's continuing losses for the foreseeable future. Nevertheless, there will be financial pressures on Matterport to significantly trim losses to avoid becoming an unwelcome headache further down the line.

The question is... have they overpaid? Simon Baker seems to think so...

Meanwhile, Zillow continues to struggle to turn a profit, with Q1 2024's financial results highlighting widening net losses of $23 million, a slight increase on the same period in 2023 ($22 million).

Nevertheless, revenues went up 13% year-on-year, so let's not write off Zillow as anything other than an institutional powerhouse that isn't going anywhere.

Since the publication of this article, Matterport has released financial results highlighting how the firm trimmed losses by 33% in Q1 2024 compared to 2023, while also surpassing one million paid subscriptions for the first time.
 

Andy Florance says: Zillow and Realtor.com will be "Stressed" by NAR Settlement

In a double whammy for CoStar, last week also saw a federal judge provisionally approve a $418 million settlement offer by the National Association of Realtors (NAR) that will eliminate buyer-broker commissions as soon as July 2024 and cause havoc for CoStar's rivals.

In last week's earnings call after CoStar's Q1 results were published, Andy Florance was quick to highlight that the outcome will significantly dampen revenue per listing for rivals Zillow and Realtor.com:

"With recent seismic legal settlements in the real estate industry, we believe the portals that rely on the lead diversion models could become stressed.

"Legacy portals rely on MLS data feeds that provide them with information on offers of compensation to buyer brokers so these portals can take a significant portion of the buyer-broker commission from the diverted leads.

"Under the terms of the settlement, those feeds can no longer include buyer-broker compensation fields.

"We believe that the lead diversion model is very unpopular with homesellers, agents, buyers and brokers, which may be why it has not been very profitable.

"We are increasingly confident in our ability to build out the number one residential marketplace in terms of traffic, revenue and profitability in the years ahead."

In short, while CoStar will be relatively unaffected by the upcoming changes, Zillow's and Realtor.com's respective executive teams are likely scratching their heads right now: If we can't take a slice of a buyer commission that no longer exists, what can we take a slice of instead?

How will CoStar use Matterport to challenge Zillow and ShowingTime+?

CoStar's public war against Zillow is taking place on two distinct battlefields—the marketing department, and now the tech/data offering. To prove his seriousness, Florance has committed $2.6 billion to winning those battles so far.

After Homes.com launched its Superbowl ad, CoStar asserted that it would spend $1Bn on marketing itself as the portal of choice, while a further $1.6bn has already been earmarked for Matterport.

This is cash Zillow doesn't have to hand—its cash reserves sit closer to the $2 billion mark and the firm can't realistically stump up such a large portion of its money on acquisitions—but the good news for Zillow is that it already has the industry-leading AI-powered listing experience. ShowingTime has proved to be a valuable acquisition—Zillow shelled out $500 million for it in February 2021 and it appears to have delivered value.

The latest iteration of the product, ShowingTime+, provides users with an immersive, AI-powered experience available only through its app.

According to Zillow research, listings on Zillow that include an interactive floor plan receive 79% more 'saves' (for return visits) than homes without, and are 10% more likely to go 'pending' within 30 days.

As added context, Vacasa (a partner of the soon-to-be-CoStar-owned Matterport) said it boosted bookings on its vacation rentals marketplace by 12% powered by Matterport.

If Homes.com can replicate that success by successfully integrating Matterport tech onto its platform, the race for technologically superior home buying experience in the US will get real feisty, real quick.

But the reality for CoStar is that achieving this integration isn't as simple as giving every home seller in America a free Matterport camera. They're expensive, bulky as hell, and aren't necessarily value for money if you're listing a one-bedroom apartment in Louisiana for rent.

But if CoStar can effectively use Matterport tech via a user-friendly mobile experience, that's where I would be putting my R&D resources. It already has a well-established functionality on the iPhone launched in 2020—I expect a laser-focused project on making some version of Matterport available to every Homes.com user in the next 12 months. Expect some ad spend, too.

Finally, the vast database of property information tucked away in Matterport's servers will be of significant interest to CoStar, which is adamant that it will offer the most technologically savvy experience for buyers and sellers. As a data-first company, Matterport gives CoStar unprecedented access to valuable knowledge about real estate across all segments of the market: residential, commercial, hospitality, and more.

As Malcolm Myers suggested in a recent episode of the PPW podcast, CoStar has done an excellent job in packing huge amounts of information into listings on Homes.com. Matterport integration increases Homes.com's capacity to squeeze even more value out of data-driven listings.

Will Matterport land in the UK? Does Rightmove care? What about Zoopla?

The Matterport acquisition isn't a done deal yet, so OnTheMarket users in the UK won't be able to take a Matterport-powered home tour anytime soon. However, when it comes (and it probably will), Rightmove will have a rival with a technologically superior offering that (as of today) can't be matched. And that's when things get interesting.

Make no mistake, Rightmove is no slouch when it comes to investing. It committed £8 Million to buy rental reviews platform Homeviews in February and took an undisclosed stake in Coadjute—a proptech company that connects people and data to reduce transaction times—in April.

But do these investments move the needle enough for Rightmove given how its noisy neighbour has closed two deals worth a combined 1.7 billion dollars in the past four months alone? I'm not so sure.

Matterport is trusted by agents and users alike. Its tech slashes transaction times by letting buyers tour properties virtually, an offering that is nowhere near as utilised in the UK, where virtual tours are a novelty.

The bigger question is, does the prospect of the integration of Matterport technology into a rival portal leave Rightmove shareholders crying themselves to sleep at night? Again—not so sure.

Meanwhile, the name Zoopla keeps popping up as a potential acquisition target for CoStar. It makes sense for three reasons.

The first is the simplest one—unite the number two and number three portals, and you have a bigger chance of catching up to number one. OnTheMarket is done, why not take Zoopla as well, especially given it's probably available at a cut-price deal after enduring some difficult years.

Secondly—and this only became apparent after the Matterport acquisition announcement—we now know that CoStar is comfortable acquiring a loss-making business. Matterport lost nearly $200M in 2023, which dwarves Zoopla's net losses of £6.2 Million in 2022 (the most recent numbers we have). If any of us presumed that CoStar wouldn't touch a business making heavy losses (and would therefore avoid Zoopla), that theory is now obsolete.

The third reason is that Zoopla prides itself (rightly) on offering a wide range of datasets, products and services to ease the home-moving experience. It even has its own PropTech investment arm to snap up the best, emerging technologies from the UK's real estate industry. If CoStar is serious about having a tech-savvy portal, Zoopla is nicely aligned in much the same way Matterport is.

Where next for CoStar?

I was starting to get worried that Andy Florance wasn't being as bullish as he implied when he waved his nine billion dollars around on stage in Madrid.

True, the OnTheMarket deal came out of the blue, but it's been all quiet on the European front ever since.

Now we know why—while Jason Tebb hit the road with OnTheMarket's PR Roadshow, CoStar's Florance turned his attention towards the best tech in the world. He found it, he bought it, and my best guess is that he'll be back in Europe, signing cheques sooner rather than later. I'd be surprised (and disappointed) if Costar doesn't announce another major acquisition before the end of the year.

The question is, where? Idealista has been named as a potential suitor. Zoopla continues to do the rounds. Malcolm Myers, meanwhile, told the PPW podcast (see above) that Aviv Group or a similar conglomerate of portals across borders could be a more attractive and efficient use of resources.

What I do know is that the Matterport story came out of the blue just like the OnTheMarket one did. I won't hold my breath waiting for a clue for when the next CoStar-branded bombshell will land.

But, while we're here... how about Zoopla in 2024, Idealista in 2025, and Aviv Group in 2026? Don't put any money on this, by the way!

Is Andy Florance winning his war against market-leading portals?

As easy as it is to drum up headlines and column inches, it's still too early to tell whether CoStar Group's recent activity has had enough time to have a tangible impact on its standing on the macro level. This is a ten-year strategy, at least, and we're barely 10% through the mud as of the time of writing.

As Simon rightly pointed out in the special podcast we recorded last week (linked again here), OnTheMarket isn't firing on all cylinders, and the reality in the United States is that Florance will need to invest aggressively to even get in the ring with Zillow, let alone deliver a knockout blow.

Nevertheless, momentum counts for something. In previous years, Online Marketplaces' news coverage has been heavily weighted towards all things Zillow, but the last 12 months have seen a significant shift towards CoStar, which has deliberately upped the ante in terms of PR and significant financial investments.

While it is admirable that CoStar is now fighting on two fronts in the US and Europe, part of me wonders whether the Group has the focus to reach critical mass in two major markets. The Group certainly has the financial firepower and leadership to push hard in one direction—but in two? That's why this one is so hard to call, and that's why the jury remains out for now...

After all, as Hemnet's 2021 IPO prospectus pointed out, who's more motivated than the person selling the property to do whatever it takes for a high sale price?

Since 2013 Hemnet's model has proved that sellers will pay more for better exposure on a leading portal if they think they'll get a better outcome.

Is there still room to grow for Hemnet?

The other major vendor-paid advertising market is Australia, where the leading portal operator REA Group is an old hand at extracting money from sellers.

REA makes more money per user, more per transaction and more per listing* than its Swedish counterpart.

REA also reports better profit margins. Where Hemnet's operating margin was 44.6% in 2023, the comparison figure at REA Group's Australian portal operation was significantly higher at 64.8%.

But when comparing companies operating on opposite sides of the planet though, there are caveats. For one, Hemnet operates in a much smaller market both in absolute and relative terms.

Not only is Australia's population two and a half times bigger, but its property market sees around 25 residential transactions per 1,000 people every year whereas Sweden sees only 19. Average sale price and average agent commissions are also both much higher in Australia.

Another reason for Hemnet's ostensibly inferior numbers is that it doesn't keep all of its revenue.

Swedish agents can sign a contract with the portal which sees them earn a commission when they upsell Hemnet visibility packages to home vendors. It's a relationship that seems to work for both parties.

"Real estate agents are Hemnet's most important partner and we strive to create a win-win proposition and always include their perspective in our product development. Hemnet works by matching sellers and buyers, so agents using Hemnet are happy to communicate the win-win situation to new customers because we give the agents what they want.

"Creating a financial alignment with the interests of agents could definitely be used as food for thought with other portals looking to get agents onside." Hemnet's CPO, Francesca Cortesi in a 2023 interview with Online Marketplaces.

Over the last three years, Hemnet has paid an average of 21% of its revenue to agents. In Australia, portals aren't allowed to compensate agents for persuading vendors to stump up for visibility packages.

Who better to pay than sellers, who better to sell than agents?

The Swedish and Australian markets operate in harmony. The seller has perceived value from the extra visibility, the agents aren't fighting the portals as their interests are aligned, and the portals can increase prices regularly as their customers aren't paying them every single month and keeping track of the cost.

In Hemnets' case, it doesn't even have to worry about selling its own premium visibility packages. It has some of the best salespeople in the country motivated to grow their own earnings as well as the portal's

The only threat seems to be legislative change or government legal action such as the investigation into Hemnet launched by the Swedish regulatory body in 2013 (which ultimately came to nothing).

Other portals around the world are jealous.

Ireland's leading portal Daft.ie is currently three years into an experiment to see whether it can change the market and introduce vendor-paid advertising. The experiment was dealt a blow by Irish regulators recently and a lack of granularity in Adevinta's reporting** obscures any measurement of its success.

The relative harmony of vendor-paid advertising markets remains a privilege for an exclusive few portals.

* OC&C estimated the gap between Hemnet's ARPL and REA's at 5.5x in Hemnet's 2021 prospectus. Our estimate based on listing figures from ProperBird is 5.7x in 2023.

** Daft is owned by DistilledSCH, a joint venture between its founders and classifieds operator Adevinta. Although Adevinta is a public company (for now) it does not break down Daft's revenue in its reporting.

There can't be many markets in the world in which there are more real estate agents than transactions in a year. Even the US market, which is swamped with part-time agents, has a better ratio than the Lion City.

In a nation with 35,251 agents looking to catch a commission, there were only 19,044 transactions registered by the Singaporean government in 2023. However, and in mitigation for the numbers, the likelihood is that a sizeable chunk of these agents are inactive.

Agents chasing their Dream Commission

On average each agent in Singapore gets one transaction commission every two years.

The competition isn't nearly as fierce among the real estate portals in Singapore though. PropertyGuru is the clear market leader; a recent investor presentation claimed PropertyGuru has an 82% market share and a 5.7x traffic lead over its nearest rival.

PropertyGuru is synonymous with home search in Singapore and in 2023 leveraged that position into S$86M (USD 64M) in revenue and a whopping 76% operating profit margin.

For every home sold in Singapore in 2023, PropertyGuru made a profit of over 2,500 US Dollars. In context, that is (by our calculations) more than double that of other real estate marketplaces anywhere in the world!

A big fish in a small pond?

Where does that leave agents, or at least the circa 50% of them* that pay to list on PropertyGuru?

Well, they pay around S$415 (USD 308) every month to list on the portal and although that's significantly less than agents pay to list on Rightmove in the UK (USD 1,812) or ImmoScout in Germany (USD 1211), it is a lot of money—especially in a market where the commission pool is so small.

In other words, Singaporean agents pay a higher percentage of their earnings to list on a portal than agents anywhere else globally.

We estimate** that PropertyGuru's revenue in the market accounts for a whopping 11.6% of the total earnings available to residential sales agents in the country.

Why does this matter?

PropertyGuru has a good thing going in Singapore—but where's the ceiling? How much of the commission pool can a portal take up sustainably?

Rightmove recently told investors that it believes that agents in the UK can and will pay more than 15% of their commissions to portals. So maybe there is still headroom for PropertyGuru.

But the real issue might be more about the diversification of revenue.

Some back-of-the-envelope calculations (agent numbers X yearly ARPA) reveal that fully 95% of PropertyGuru's 2023 Singapore revenues came from agents. For comparison, Rightmove's number is 90% and Scout24's was just 64%.

The company floated on the New York Stock Exchange in 2022 trumpeting the 'demographic tailwinds' that were to fill its sails. PropertyGuru no longer operates in the country with the strongest tailwinds having pulled out of Indonesia in 2023 after 12 years.

With its Data and Fintech offering yet to flourish and the Vietnamese market experiencing a downturn, a massive percentage of PropertyGuru's profits come from Singapore, specifically from Singaporean agents' pockets.

PropertyGuru needs Singaporeans to keep loving property, and for agents to keep chasing that dream commission.

* As of PropertyGuru Q4 2023 reporting the number of paying agents was 16,424, around half the total number of agents in Singapore given by the Council for Estate Agencies (CEA) as of Jan 2024.

** Our calculations are based on transaction numbers according to the Singapore Government and a commission pool totalling $553M. PropertyGuru's IPO prospectus from 2021 puts the commissions pool figure at $460M which would put its 2023 revenue as a percentage of the commissions pool even higher at 13.9%

Author's note:

PropertyGuru highlighted the following in an email to us after publication. For transparency, here is what they said (edited for clarity):

• The article, specifically pointers such as “For every home sold in Singapore in 2023, PropertyGuru made a profit ", seems to suggest that our revenue is driven by transactions, which is inaccurate. 
• We believe the source for the cost of our listings, which was reported in the article to be S$415/mth, is incorrect. You can refer to our agent packages online, which start from SGD 118/mth. 
• From an industry perspective, while there are more than 35,000 agents, a sizable number is estimated to be inactive and so it will be inaccurate to align this data with the overall number of transactions and commissions.

Turkey-based iBuyer and brokerage Tiko was founded in 2017 and has raised in excess of $65 million since. And 2024 looks set to be a growth year for the startup, which is no better exemplified by the recent acquisition of the Madrid-based brokerage Housell.

Online Marketplaces reached out to Tiko CEO Sina Afra (pictured) to build our understanding of the business, iBuying in general, Big Data, and its plans for the future...

What problem does Tiko solve?

Traditionally, selling or buying a house takes several months, which leaves many clients frustrated. Additionally, clients face legal issues that further complicate the process.

At Tiko, we have harnessed the power of technology to accelerate the buying and selling of homes in Spain and Portugal at every step of the process.

We have built an agile, efficient and transparent real estate brokerage experience that prioritises the client, and we offer the best possible service by providing agents with the best tools on the market.

What’s the USP for sellers and agents using Tiko’s platform?

We offer buyers and sellers an easy and simple buying and selling process in which we help them buy or sell a house as quickly as possible without compromising on attention to detail.

For sellers, we use the most advanced technology in the market and marketing tools to amplify the reach of a property to many more potential buyers—which is a win-win for both parties.

We also believe in building trust in our system, partly to change the bad reputation of the real estate sector. We only partner with chosen real estate agent partners.

Finally, our internal platform Impulsa facilitates agents with an interconnected set of tools, making their day-to-day work much easier.

In other words, buyers and sellers with Tiko do not have to worry about anything, because the real estate agent solves everything—even the paperwork and bureaucratic issues afterwards—via Impulsa.

How do you make money? What numbers can you share with us?

Our business model is based on earning a commission on property sales, thanks to our great real estate brokerage service and main business model for 2024.

Thanks to our recent acquisition of Housell, we have 2,000 properties to broker, which makes us the largest digital real estate agency in Spain. We now operate in 48 provinces of Spain, meaning we are essentially nationwide.

How is Tiko funded? Will you seek funding this year?

We are always open to new sources of financing although we are well financed for now.

Our future need for financing will depend on our progress this year.

How will Tiko's product evolve in 2024?

This year we will focus most of our efforts on strengthening our brokerage business line. This is our highest priority in our 2024 business plan so that we can multiply the volume of transactions by a factor of ten.

To boost this goal, we have incorporated new important positions to lead this brokerage area and are creating a network of the best real estate agents. In this aspect, we intend to incorporate 700 real estate agents in the next 12 months.

Meanwhile, we will continue to work on the Impulsa platform.

Tiko loves Big Data. What can you tell us about real estate in Spain that nobody else knows?

Exactly, Tiko believes in the power of data to help our clients sell or buy their homes.

For example, in Spain, it takes on average of five months to sell a house. We used all our technology, based on algorithms and real data, to source a buyer and complete a sale in just 40 days.

This is a major milestone for the market. According to a recent survey we conducted in-house, more than half of Spaniards (53%) expect to sell their home in less than three months, despite rising interest rates.

Furthermore, the seller is in a relative hurry to sell their home. The good news is that the consumer is increasingly digital—8 out of 10 Spaniards would sell their home online without contacting the buyer.

From the outside, Spain’s housing market is struggling. High rents, low disposable income, not many transactions. What gave you the optimism to acquire Housell?

We are optimistic and the trend is positive.

Inflation is expected to be controlled and interest rates are expected to fall in the coming months, thus reducing the cost of financing home purchases. Moreover, with the shortage of supply and rising rental prices, buying a home is a profitable investment, especially in large cities.

We believe that the situation will improve and that we will do well, especially with a business model like ours, which is more innovative and fresher than the competition.

The Housell acquisition means Tiko is now one of the largest players in Proptech in Spain. This fundamental move consolidates our position among the market leaders in the Spanish real estate market and lays the basis for our future expansion.

Where does Tiko see itself in the next five years?

At Tiko, we are committed to sustainable growth and we make strategic decisions that allow us to grow every year a little more.

In the coming years, we want to scale our business to other European countries and continue to expand.

The iBuying model is complex and difficult to master. Zillow stopped doing it in the US, Casavo has stopped doing it in Italy. Yet Tiko is making acquisitions and growing its footprint. What makes you different?

Although we continue to offer unique products and services, such as an immediate sale or guaranteed sale, our brokerage philosophy is to sell the client's home as if it were our own. We have extensive experience in this thanks to our time at iBuying, and we give the utmost attention and dedication to each home.

We are experts in digital marketing. We invest in the most read media and social networks, we work with the best real estate portals, and we have a trusted base of buyers and a private network for investors.

We are also experts in valuation and data analysis. In this sense, we have the most reliable information on properties for sale and sale, and we provide a great after-sales service related to financing thanks to our data and agreements with partners.

What isn’t the real estate industry talking about that it should be talking about—and how would you tackle this issue?

I think technology is still a taboo in real estate. Our industry is one of the largest worldwide, but one of the slowest to embrace digitalization.

There remains a prejudice about how to sell a house online. But, we have proven that if you give attentive service and give the customer confidence, the business model is successful.

It sounds easy to say, but we have already achieved it!

The award for the best question at the PropTech and Portal Watch conference in Bangkok went to Nils Körber who posed a fascinating (if surreal) question to the audience during his keynote presentation about Ringier's journey to the AI-powered marketplace.

Nils is the Managing Director of Ringier South Africa, a software development hub providing tech solutions for many well-known classifieds platforms and property portals around the world including Imobiliare in Romania, BuyRentKenya and Reality in Slovakia.

I wanted to understand more of the motivations behind Nils' presentation, fight vs flight in the face of emerging technologies, the industry's seeming unwillingness to discuss its problems, and preparing for the next generation of workers, so I asked him...

Nils, give us a quick outline of your keynote presentation in Bangkok.

I called it our journey to the AI-powered marketplace.

[At Ringer] We are asking ourselves what we as a marketplace software provider can do with artificial intelligence, just like everybody else. We've done machine learning, recommendation, and personalization, which is a good start. But where do we go next?

We need to find a strategy.

I see that in three layers. The first is 'how can we improve the efficiency and performance of our own employees?' Not only software engineers, but also the employees across our marketplace businesses. In other words, engineering, sales, marketing, customer care and HR—how can we with AI support them to do a better job?

The next layer is the back end. So from a platform point of view, how can we enable engineers to build better AI-driven software? What is needed for that?

And then the last layer is more the consumer-facing part.

By dividing the strategic and tactical uses of AI into three digestible parts has made it much easier for us to parse this topic without getting overwhelmed, and my talk was about sharing these insights.

Below: Nils Körber on stage at PropTech & Portal Watch Bangkok 2024

If I operate a marketplace and want to start using AI, where should I look first: the back end or the front end?

The back end, for sure. Why? Because we all love to text. Let me explain.

How do we use our laptops? How do we use our phones? How do we interact with apps? We type, right?

Texting is ingrained in us. and it is fairly difficult to change this innate behaviour in one day. This will take some time. We should focus our efforts on building your product for internal use rather than on bells and whistles that our users aren't used to yet.

A user behaviour shift needs to happen before we can revolutionise the front-end experience for consumers. We are not there yet so it is better to make incremental improvements in the back-end for now.

Are you predicting an evolution from text to image or video? Where is the search experience headed?

Yes, this is a good question.

It's pretty easy to fall into the hype of Apple Vision Pro, AR, and the like. I believe it will take some time until that tech is really there for us.

But I think LLMs (large language models) will fundamentally change how we interact with the machine.

I also think voice is going to be reborn. Siri and Alexa almost messed it up.

Why did they mess it up? Because they have always been able to process what you say pretty well, but at the time when they were released—without LLMs that didn't exist—Alexa and Siri couldn't give you a satisfying answer.

It was a one-way conversation that limited the usefulness of the early Siri/Alexa product experience.

In the recent past, for me to use my voice to trigger a search in the marketplace hasn't made sense. If I use my voice, I want that voice experience to be rich, not just replicating what you can type. We must overcome this hurdle before we can truly extract value from a voice search.

What skills have I inherited thanks to AI?

It is difficult to comprehend, but with AI you have inherited all human knowledge—and a workforce to match.

This was always the case with Google but in the past, you had to process it yourself. But now the machine is writing for you, generating for you what you want to know about human knowledge.

This means we can now parse market-related data and formulate a strategy out of that, just by asking the question.

This is where human interference is needed. When it comes to strategic stuff, the machine can't do that yet, but collaboratively that potential is there.

As a businessman, today you have infinitely more support. You no longer only have your normal teams available. And you know, like, managers of sales and marketing will report back to you and you can give them commands. Suddenly you have of these resources available across the board, and they can work for you.

Your presentation asked, 'What would you do with one million interns?'

That's enough to trigger my fight-or-flight response! Where are the quick wins for a technophobe like me?

I think there is a rather tremendous mind shift that needs to happen on this topic. It is therefore a difficult question to answer without getting too high-level and philosophical, but I will try to answer it!

The short answer is mastering prompt engineering.

I think we are quite stuck within this business-focused structure whereby we have teams, onboarding processes, and knowledge transfer from person A to B that needs to happen for the business to succeed.

If a new hire joins, there is a bedding-in period for them to learn the ropes before they can start meaningfully contributing to the business—even for a CEO. The same goes for AI.

The key is to break down your strategy into achievable tasks and divvy them as if the AI were your team member, then put the AI to work once it has been trained according to your processes.

And because AI is getting smarter, one million interns quickly become one million junior-level people, then mid-level people and at some point even senior people—either way, it is about getting accustomed to, and mastering, prompt engineering.

We can now tell a machine to perform all types of tasks. It's just about pushing our creativity and moulding the AI to what we need.

What isn't the industry talking about that it should be talking about?

Budgets, and the transparency of problem-sharing.

It isn't so much the budget itself that we need to talk about, but I want to know how businesses are extracting revenue from budget investments. I would like to see more transparency in which products and services are performing well for other businesses and watch someone get up on stage and be more open about how 'hey, I messed this up and this is what we will do about it and this is the return we can get from this level of investment.'

I would like to see anonymous submissions from attendees at a conference being brutal about their failures and then we can work through them together as a roundtable discussion. If someone wants to stand up and say 'That was me and it's the biggest mistake I made in the past 12 months!' then maybe we can continue that conversation at dinner later.

What has your biggest failing been in the past 12 months?

You're going to laugh, but it's being four to six months late on generative AI.

Of course, we knew it was going to happen, and we knew about the impact, but until we came up with our little strategy it took us a while to realise that wow, we need to do something here. It feels like we came to that conclusion a little late. Not years late, thankfully, just months late.

What's the next big problem?

From my responsibility, which is predominantly tech teams, we have to increase the efficiency of our developers.

The big guys are doing this already and that's why we are seeing all these tech layoffs. From my point of view, The Big Four and McKinsey are being a bit aggressive, but in essence what they are saying is that in the next five to ten years, you have 60%-80% efficiencies, and efficiencies in that vocabulary mean you can let 60%-80% of the people go because the machine takes care of their jobs.

For me it is a problem because I like my team! And this cost pressure will only come to mind more and more. Tech salaries are high and it's a big line item on our total budgets.

We will need to be 20% more efficient but have the same output. My mandate as a manager and as a business owner is to understand how to make that happen.

One more question: Digital Natives Vs. AI Natives. Is the workplace going to place a higher value on creative thinkers who are more in sync with AI and can think laterally in tandem with emerging technologies?

The 18-24 bracket is going to be the first generation that is not only internet native but will be used to having everything available to them, all the time, 24/7.

This will be the first generation of AI natives, and they are already being underestimated. People lazily brand them as "the generation that doesn't want to work". They may be ten years old today but they will be used to having a whole life experience that is generated just for them at their fingertips.

We will need people like that and we need to take that generation more seriously.

Can we get a testimonial for the conference?

I don't think there's a better conference for the marketplace industry. I attended some other conferences more local to me in Europe and Africa. For me, the set of great people, such as real business leaders and industry leaders for online marketplaces, make you unbeaten.