PropertyGuru: Portal not enough
Singapore
LOSS-MAKING online real estate classifieds marketplace PropertyGuru may boast of its pole position in its core markets in South-east Asia, but it has to find a way to monetise its data in order to propel its growth beyond just a reliance on advertising revenue.
To this end, it launched its initial public offering (IPO) on Monday, spelling out its plans to use some of the listing proceeds to explore expansion into direct adjacencies, including providing property buyers with access to mortgage financing through an online mortgage marketplace, and developing other data offerings for its customers.
Other monetisation opportunities include refinancing, transaction, insurance and home services, including connections and repair.
Market watchers say that with some creativity, data can be harnessed and customised into value-added services and regular, customised reports for consumers to suit their interests.
This would rely greatly on the portal's ability to organise its data and enhance its search engine, so as to increase the "stickiness" of use of the portal, and encourage the public's and even institutions' (banks, developers, government agencies) use of such services.
In an industry where the latest advertising platform can quickly disrupt and displace its predecessor, PropertyGuru also acknowledged Facebook and Google as potential competitors should they decide to enter the property advertising business.
To be sure, it is still early days, says 99.co CEO Darius Cheung. For now, the growth of the overall pie of online marketing still outpaces the appearance of new competitors, whether social media giants or search engines.
Still, in its prospectus, PropertyGuru has said that its business and financials can be harmed if its more technology-savvy competitors "devote greater technical and other resources than we have available, have a more accelerated time frame for deployment and leverage their existing user bases and proprietary technologies to provide products and services that consumers might view as superior to our offerings".
One way it could be affected is especially if they are able to cross-subsidise and lower their advertising rates, it said.
PropertyGuru draws revenue from two main sources - agents and property developers. According to its 2018 pro forma historic metrics, agent and developer revenue made up S$52 million and S$19 million respectively.
This represents year-on-year growth rates of 38 per cent and 11 per cent respectively, as online platforms continue to steal advertising dollar from traditional print and broadcast channels as well as outdoor advertising.
Market watchers believe that there remains significant room for growth in the online advertising space, especially in developing markets that the group operates in, such as Thailand, Indonesia and Vietnam.
In Singapore, a more saturated market where the online search population is already close to 100 per cent, they believe that developer advertising still has room to move progressively online, given that developers still advertise quite heavily on offline platforms.
That said, PropertyGuru reported net losses of S$13 million last year. For the first half of 2019, its net loss deepened to about S$44 million for the six-month period, illustrating the need for new growth drivers beyond advertising.
PropertyGuru has done other things to diversify from a purely advertising model. It has, for instance, a few years ago acquired a SaaS-based sales automation solution which it renamed "PropertyGuru FastKey". This is used by property developers to enable end-to-end project management from launch to sales conversion.
Revenue contribution from it is not significant yet, but is forecast to grow as the group introduces the solution in more markets, the next one being Vietnam.
The idea here is to build a 360-degree revenue around on a single marketplace platform, exploiting every angle to provide possible ancillary services that would benefit all its stakeholders - property buyers, renters, agents and developers.
The fight among portal businesses has gone beyond website traffic and user base into affiliated business lines that boast higher margins. And this is the growth engine PropertyGuru is likely seeking to tap as it prepares to list.
