If we turn the clocks back to the 1980’s, the property listings’ page in your local paper was the only way to find out what was available on the market. Then everything changed with the invention of the Internet, which has helped to revolutionise how we now look for a property or room. We delve into how through advances in technology, this has helped develop property portals and take a look at the major players in the property portal market.
The invention of technology
When you think, of what era the computer may have been first imagined as an idea or even built as an initial prototype, you may say that it was in the 20th century but no it wasn’t. It was actually in the 19th century, by a British mathematician Charles Babbage, who in 1834 began drawing plans for what he called the ‘analytical engine’. His dream was to create a device whose gears, rods and wheels could be arranged – programmed – to perform a myriad of tasks from solving equations to composing music. Then a hundred years later it was Sir Alan Turing a pioneering mathematician who revived the idea of a ‘universal machine’ and investigated its theoretical powers.
Then it was of course Sir Tim Berners-Lee invented the World Wide Web in 1989. A graduate of Oxford University, Sir Tim invented the Web while at CERN, the European Particle Physics Laboratory, in 1989.
Technology changing the property landscape
Fireworks lit the night’s sky, as Big ben chimed in 2000 and we all gathered around to sing Auld Lang Syne, we welcomed in a new age, anticipating what the new Millennium would hold. For the property market the year 2000 was the birth of one of the UK’s most dominant property portals, Rightmove.
So just what is a property portal? A property portal hosts properties advertised by estate and letting agents, for sale and for rent on the internet. There are many different portals where you can advertise your property or room, therefore meaning that vendors have plenty of options for increasing their home’s exposure, on property portals such as Rightmove, Zoopla, PrimeLocation and OnTheMarket.
Property portals started up to help either agent; buyers, vendors, tenants or landlords enjoy the huge benefits that their platforms provide. You can be sitting anywhere in the world, whether it’s on your comfy sofa or relaxing in a holiday home abroad and as long as you have access to the internet and Wi-Fi, you can be transported in just one click of a mouse, to find your dream home, in London, Scotland or in Cornwall.
The age of the PropTech era
However property portals like Rightomve and Zoopla are also known as PropTechs. So just what is a proptech? Broadly speaking the term PropTech refers to the use of technology in the property industry.
According to a report ‘PropTech 2020: the future of real estate’, by the University of Oxford Research, exponential growth that characterises PropTech 2.0 began in 2008, with exogenous technologies such as cloud computing, mobile internet, leaner coding and broadband helped drive huge revenue growth in the late stage 1.0 companies such as Rightmove, Zoopla and Truila and Zillow.
So who are the top players in the property portal market?
It is now 22 years since the first property portal was created. Propertyfinder.co.uk, launched in the UK and its first online listings splashed all over the internet. Propertyfinder.co.uk was launched and conceived by then Humberts agent Nick Leeming (left) in his spare time. Many forget his contribution to the genesis of property portals following the much later success of Rightmove. To date there now a plethora of property portals in the UK and globally as well, some of them include Rightmove, Zoopla, PrimeLocation and OnTheMarket. However the top players in the UK property portal market are Rightmove and second in the league is Zoopla.
Rightmove began in 2000 with the backing (and listings) of many leading agents and offered a similar online service. Twenty one years later, Rightmove is the place home hunters turn to first and engage with most when searching, researching and moving homes, with the market share of time spent in June at 88% and a total revenue of £94.8 million. For a number of years, their lead in available properties for sale, has widened with over 50% more properties than any other website in the UK.
Depsite arriving later into the property portal market Rightmove has become the UK’s dominant property search portal. As well as consumers looking to let (rent) and buy home homes search on the Rightmove platform, estate agents can advertise their brands and listings on there. Rightmove is now the only place to find virtually the whole of the property market in one place with over 940,000 UK residential properties advertised on Rightmove.
Rightmove leverages its market dominance to gain pricing power. They charge ~£1,000 + VAT (value-added tax) to single-branch estate agencies per month, + VAT (value-added tax) to single-branch estate agencies per month, but those fees can add up to more than £10,000 for agencies with multiple branches. Their ARPA (Average Revenue Per Advertiser) is £1,088 per month.
In second place is Zoopla, established in 2007 by former LoveFilm.com founder Alex Chesterman. His strategy to begin with, was to copy some of Rightmove’s tactics when growing the portal, which included signing up several leading estate agencies, which included Countrywide, Connells and LSL to invest in the business alongside two City investments firms.
Zoopla then went onto quietly hoover up every miscellaneous property website including, The Gaurdian newspaper’s ThinkPropert, PropertyFinder. Zoopla’s story then went onto a new chapter, with the US private equity firm Silver Lake acquiring Zoopla for £2.2 billion in May 2018. The company then returned to private ownership in July 2018, Siler Lake purchased the company.
Zoopla now has hundreds of thousands of home listings, and uSwitch, which allows consumers to compare prices for a range of home services including gas, electricity and broadband internet.
How do property portals generate revenue?
According to a Global Real Estate Portal report, major portals still generate most of their revenue from real estate agents. As you can see over 70% of Rightmove’s revenue was generated from real estate agents, whilst in stark contrast only 25% was generated from real estate agents for Zoopla. Other revenue sources include direct listings, display ads, new construction, data sales and ancillary revenue streams.
Percentage of revenue from Real estate agents
What sets Rightmove and Zoopla apart from the rest?
Rightmove and Zoopla, are both successful property portals in their own right and they have both adopted divergent strategies in the UK. Rightmove is narrowly focused and Zoopla is broadly diversified, but both succeed in different ways.
Part of Rightmove’s strategy is to focus predominantly on growing agency revenues through new products, as well as focusing their efforts on additional premium products, such as enabling agents to differentiate themselves and gain more business.
Zoopla’s strategy is geared primarily towards diversification and creating a “huge cross-sell opportunity”. However Rigthmove is mainly focused on being the best marketplace to advertise property or rooms. Their aim is to create a more transparent and efficient property marketplace and to make home moving easier in the UK. As you can see from the graph below Righmove has delivered consistent revenue growth, but Zoopla has made impressive gains.
Rightmove vs. Zoopla revenue
Unlike their rival Rightmove, Zoopla has gone onto diversify by spending approximately £480 million on acquisitions since 2015. Their first acquisition was acquiring uSwitch in April 2015, for £160 million, followed by acquiring the company Property Software Group a year later in April 2016, purchasing the company for £75 million.
In 2017 they acquired five more companies with their biggest acquisition being Hometrack, which they purchased for £120 million in January 2017. Overall Zoopla’s eight acquisitions have generated around 75% of total group revenues, totalling to around £185 million in annualised revenue.
A shift in strategy for Zoopla
Zoopla’s strategy is geared towards diversification. Indeed this is the major difference between Zoopla and Rightmove. While Rightmove gets close to 100% of its revenues from agencies’ subscriptions.
Zoopla’s aggressive diversification strategy has been a leading factor making it unique in the world of real estate portals. It’s been a world leader in acquiring adjacent businesses to dramatically grow revenues. Zoopla’s CMO is now building a brand from inside out, saying “Advertising is ‘just the cherry in the cake’.” Zoopla now looks to overhaul its proposition to boost engagement. Zoopla is hoping to change how customers use its site as it looks to drive up engagement and traffic, and therefore preference, in the competitive housing market.
Zoopla have also declared that its portal will be free of charge for agents with fewer than 30 branches (which compromise 80 per cent its client base) for five month, and nine months if the agent leaves Rightmove.
The story of property portals is not over
Propetry portals, such as Rightmove and Zoopla are here to stay and will carry on shaping the property market. With technology developing, property portals will become more efficient. Technology has already enabled so many people to gain access to properties to buy and rent not only in the UK, but globally.
The coronavirus pandemic has meant that PropTech property portals have had to adapt and this has driven the application of technologies such as artificial intelligence (AI). Virtual market appraisals to help estate agents value properties during the first lockdown of March 2020 started to come to the fore. 3D viewings, previously reserved by most agents for the international property market, also became more common.
Whether you are thinking of selling or renting, property portals are the way forward and as always whether you would like to find a London spare room, studio flats to rent in London, rooms for rent, student accommodation or a flat for sharing, Ministry of rooms are here to help guide you, at Ministryofrooms.com.