Spanish Online Real Estate Market

This is a guest post from Javier Hernandez, responsible for the Spanish market for Nestoria. He blogs regularly in Spanish on the Nestoria España blog.

State of the market
The Spanish real estate market finds itself in a very delicate situation. From 1998 to 2007 the real estate market represented a major engine of the Spanish economy. House prices usually increased by more than 10% year on year, following the successful Spanish banking system and the boom of tourism industry. M&A transactions within the RE sector and highly leveraged operations made Spain grow substantially over the last decade. The contribution to GDP of the real estate sector reached a remarkable 19% at the beginning of 2008.

Much of this growth came in the new builds sector. Unfortunately, and like in several other European countries, 2008 has been a tough year for developers overall. Smaller and big groups like Martinsa-Fadesa, Llanera, Colonial and recently Tremon went bankrupt. Others were able to get more time and re-negotiate the terms of the loans they are struggling with. The vast majority have highly leveraged balance sheets and the long-term outlook remains tricky unless the market regains confidence.

The number of real estate transactions in August 2008 decreased by a 38% (Source: INE) compared with August 2007. Nevertheless, the prices didn’t follow the same trend. Houses prices’ slowdown has been not as dramatic as in the US. Most of the buyers acquired their home not as a place to live (the population is not very mobile) but also thinking of it as an investment vehicle. The second fact explains why few people are willing to sell. In short: the market is frozen and the future is unclear.

According to OECD stats the Spanish market is the most overvalued real estate market in the world, in terms of the ration of property prices to average incomes.

Despite the overall decrease in transactions and drop in offline RE market transactions, the online property market is growing in terms of users. It grew by 5% in audience last month compared to the previous year according to comScore. Lettings have also risen slowly but steadily during this year and overall online real estate spending has gone up to a 32% in 2008 (Source: Nielsen Online, Nov 08).

Market Structure
There are several big nationwide estate agents (Alfa, Remax, Don Piso) but overall the market remains very fragmented. Small and very local estate agents are very important in the industry.
There is no clear number one player. According to September’s comScore figures, fotocasa.es is slightly above its main rival, idealista.com. fotocasa.es is owned by the Norwegian yellow pages group Schibsted and idealista.com is privately held.

fotocasa.es takes advantage of its offline print background in terms of sales force and has most of the country well covered. However, idealista.com has taken the lead in Madrid and its branding campaigns and innovative features are very creative and well known by both the market and consumers.

There is a gap between these two leaders and the other main players. Beyond these two, there are also a very innovative and savvy second tier with players like portae.com (as part of Endesa energy), tucasa.com, globaliza.com, facilisimo.com, sacacasa.com (owned by major media group Vocento), yaencontre.com, atrea.com (owned by BBVA), and ivive.com. enalquiler.com is the largest lettings portal.

As you can see from the list above the Spanish market has many different portals competing. Agents typically list on several portals, and sellers list their property with several agents. In addition portals accept FSBO listings (usually for free).

Two direct consequences derive from this:
1. Duplication of listings is very common, and 2. Agents are typically very vague about the address of a property for fear of other agents “stealing” the listing.

Nevertheless, players are very sophisticated and content has a high quality on top portals (except geodata).

Good online sources of information about the industry are Tecnologia Inmobiliaria, Inmoblog, Cienladrillos and Juan Carlos del Olmo’s interesting weblog. For macroeconomics and housing trends, you can check the exhaustive reports of the research department of major bank BBVA.

German Online Real Estate Market

This is a guest post from Ed Freyfogle, co-founder of nestoria.co.uk. Nestoria work together with over 40 property portals across Europe. This summer Nestoria Deutschland was launched.

State of the market
Unlike many other European markets, Germany has not experienced an appreciation in house prices over the last decade, and thus there is no bubble to burst now. This is for three main reasons. Firstly, the economy is only recently emerging from the cost of re-unification and rebuilding the East. Secondly, and perhaps most critically, the population is generally not very mobile (though this is slowly changing). There is no concept of a “property ladder”, and buyers generally purchase planning to live somewhere for life. And finally, many wealthy Germans purchase abroad, with Spain being a favourite destination.

Market Structure
The vast majority of German estate agents are small local players with very few recognisable nationwide or pan-regional brands. The exception to this rule are banks/building societies, many of whom also operate as estate agents.

The online property portal market in Germany is dominated by three major players. Clear leader in terms of usage and number of listings is immobilienscout24.de owned by Deutsche Telekom and part of the telco’s Scout Group which also operates portals in the other major classifieds categories.

The battle for second place is fiercely contested, with immonet (owned by Alex Springer, Germany’s largest publisher) slightly ahead of immowelt (originally started as an agent software business and now owned by major publishers Holtzbrinck, WAZ, and Ippen).

By and large all three portals offer a very similar palette of tools and features for consumers and agents, often copying each other relatively quickly with new features. immobilienscout24.de typically takes the lead in setting prices.

Beyond these three there are a few smaller property portals: s-immobilien.de run by banking group Sparkasse, regional portals operated by newspaper groups like sueddeutsche.de, kalaydo.de, or rheinmainclick.de, and brave newcomers like myimmoworld.de.

The most notable feature of the German market, and one that other portals from traditional newspaper backgrounds across Europe would do well to copy, is the well executed combination of print and online property advertising. Major publishers like Axel Springer have created best of breed integration for the advertiser across platforms, as a way of moving revenue from deteriorating print brands to the internet.

Other features of the German market

• All players accept listings directly from private sellers and present those listings alongside agent listings.
• Agent listings are of average to poor quality, often lacking photos and the address of the property.
• The market is only slowly opening its eyes to the new technical possibilities of platforms like blogs, videos, Google AdWords, etc

The best online source for information on the industry is Hannes Mehr’s excellent blog immobilienportale.com. Anyone seriously interested in the dynamics of the German market should read this year’s ImmoStudie (in German), a survey of over 1,000 agents about their marketing from Munich’s Ludwig-Maximilian Univerisity.

Italian Online Real Estate Market

This is a guest post from Matteo Starri, business analyst for Italian property search engine Nestoria Italia. Matteo blogs regularly (and in Italian) on the Nestoria Italian blog.

State of the market
The Italian market has been affected by the recent economic crisis, with the buy-to-let investments suffering particularly. Owners typically try to sell their properties both privately and through agents, usually setting a higher price in the latter case to cover the agents’ expenses. Agents don’t have exclusivity in negotiations. As a result they typically try to disguise or be vague about the listing content, particularly the location of the property. Because of this portals and search engines often don’t show listings on a map, or do so only approximately.

Market Structure
The majority of Italian estate agents are local players, with some of them moving in recent years towards a franchised model, in partnerships with the few nationwide brands.

The online property portal market is clearly lead by two major players, casa.it and the Immobiliare network, competing closely for the first spot. casa.it has been member of the global REA Group since late 2006. immobiliare.it and eurekasa.it form the Immobiliare network, founded and run by ex-Ebay.it executives.

Relevant databases are also offered by trova-casa.net (which mainly works on a free model), Homebit, the parent company of brands prendicasa.it and attico.it, and immobilmente.com, which started in two provinces in 2005 and now covers the entire country.

The big traditional publishing groups are only slowly moving online. Among these the biggest are trovocasa.it and repubblica.it belonging to the RCS and Manzoni groups respectively.

Geograhically Milan is the centre of the online property world with almost all major groups based there or near by. The exception is Immobilare which is headquartered in Rome.

Good sources of information about the market are Agenzie Immobiliari and Immobiliare Blog, focussed respectively on the agents’ and the users’ needs. The Italian market is interestingly analysed “from abroad” and in English by Italy Magazine and KeyItaly.

Australian Online Residential Property Ad Market

The Australian online residential real estate market is dominated by one player - realestate.com.au.  Since September 2000, realestate.com.au has been the most popular site in the country with domain.com.au consistently in second place.  realestate.com.au’s dominance of the Australian market can be seen in the following facts:

• An estimated 95% of Australian real estate offices advertise on realestate.com.au
• Over 70% of people visiting Australia residential real estate sites visit realestate.com.au - second place domain.com.au has only 32% of visitors coming to its site
• 72% of the Australia residential property portal page impressions go to realestate.com.au - second place domain.com.au accounts for 21% of page impressions
• 71% of the total session minutes spent on Australia residential real estate portals is spent on realestate.com.au - second place domain.com.au accounts for 17% of session minutes
• An estimated 60% of the spend of real estate offices on online advertising is placed with realestate.com.au - second place domain.com.au accounts for only 25% of the total spend

Over the years a number of new entrants have entered the market and each time they have failed.  The market is clearly a 2 player market with realestate.com.au being the leader and very profitable (51% EBITDA margin) while the number 2 player (domain.com.au) is estimated to achieves a 5 - 15% EBITDA margin.

Spend on Online Residential Advertising

Online advertising covers advertising by real estate offices on portal sites, the franchise group sites, SEM (Search Engine Marketing) and their own sites (web development).

Over the last 8 years, the online real estate advertising market (residential + commercial) has grown quite quickly.

$m	FY 2001	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008
Est Market Size ($m)	12	17	25	40	63	95	141	195
Year / Year Growth		39.9%	44.8%	61.3%	56.9%	51.4%	48.0%	38.6%

 

It is estimated that the total spend on online advertising was just under $200m in FY 2008.  Of this, residential online advertising captured around 90% - or $180m while commercial online advertising captured $20m.  The total advertising market for print and online is estimated to be around $1bn in FY 2008.

What is interesting, is that the REA Group, through its Australian operations (realestate.com.au, realcommerical.com.au and Web Design Services) is estimated to capture around 60% of the total spend.

Residential Offices	Est. Total	% Total	Portal Ads	Web Design	SEM/SEO
REA	107.6	60.4%	104.6	3.0	0.0
DOM	45.0	25.3%	45.0	0.0	0.0
Other	25.5	14.3%	10.0	12.8	2.7
Total	178.1	100.0%	159.6	15.8	2.7
Commercial Offices	Est. Total	% Total	Portal Ads	Web Design	SEM/SEO
REA	10.1	60.5%	9.6	0.5	0.0
DOM	3.0	18.0%	3.0	0.0	0.0
Other	3.6	21.6%	0.0	3.0	0.6
Total	16.7	100.0%	12.6	3.5	0.6
Total Online Ad Spent	Est. Total	% Total	Portal Ads	Web Design	SEM/SEO
REA	117.7	60.4%	114.2	3.5	0.0
DOM	48.0	24.6%	48.0	0.0	0.0
Other	29.1	14.9%	10.0	15.8	3.3
Total	194.8	100.0%	172.2	19.3	3.3

Residential Portal Sites

Nielsen Netratings provides good coverage of the residential portal sites in Australia.  There are two major players - realestate.com.au and domain.com.au and a number of smaller players.  In July 2008, Nielsen Netratings tracked 12 sites. These sites are:

Name	Publisher	UB	PI	TT (’000 secs)
Market Aggregate		5,292,483	693,668,860	10,449,801
realestate.com.au	realestate.com.au Ltd.	3,825,316	497,894,322	7,381,431
domain.com.au	Fairfax Digital	1,683,560	144,157,609	1,821,332
homehound.com.au	Homehound	366,280	7,637,753	162,940
realestateview.com.au	realestateview.com.au Ltd	267,914	9,373,952	118,369
reiwa.com	REIWA	141,086	6,284,299	250,661
myhome.com.au	myhome.com.au Pty	113,261	1,450,788	57,451
property.com.au	realestate.com.au Ltd.	42,554	775,405	29,267
aussiehome.com.au	aussiehome.com Pty Ltd	20,619	431,062	15,175
justlisted.com.au	Sensis	21,679	160,359	7,480
realestate.ozfreeonline.com	Infodial	7,353	48,769	2,449
propertyfinda.com.au	APN Online	3,262	29,873	1,904
domainprestige.com.au	Fairfax Digital	3,884	56,766	1,096

Note: UB = unique browsers (akin to a visitor), PI = page impression, TT = total time on the site

In addition, there are a number of other smaller players not tracked by Nielsen Netratings.  They are:

• hotproperties.com.au
• privaterealestate.com.au
• propertynow.com.au
• realestatefind.com.au
• realestateworld.com.au
• real-estate-australia.com.au
• yourestate.com.au

Source: REA Group FY 2008 Financial Reports, Nielsen NetRatings, PPW Analysis

Australian Residential Real Estate Market

The Australian residential real estate market has been extremely active over the last 3 - 4 years.

Transactions

The Australian residential real estate market has around 750,000 transaction each year. 

Agents and Agencies

There are around 30,000 residential real estate agents in Australia who work for around 9,000 real estate offices.

In Australia, it is the real estate office, not the agent, that has the prime brand in a market.

Of these offices, around 50% are independently operated while the other 50% are members of franchise groups.  The large franchise groups include Ray White, LJ Hooker, Raine & Horne, and Century 21.

Sales Model

In Australia, a vendor will approach a real estate office to sell their property.  The real estate office will propose either a 3% commission and will handle all marketing costs (around 60% of sales in the country) or will propose a ~2% commission and will charge the vendor a marketing fee of approximately 1% of the estimated sale price.

There is a high use of auctions in Australia to sell homes.

There are almost no buyers agents in Australia with buyers dealing directly with the selling agent to negotiate the final sales price.  If a buyers agent is used, this is almost always paid for by the buyer and not the vendor.

Advertising Model

There is a strong focus on newspaper advertising in Australia.  This is driven by the wide use, especially in the premium property areas, of vendor paid advertising.  That is, the vendor will pay for the advertising of the property separately from the commission they pay on the sale of the property.

It is estimated that the total advertising market in Australia is A$1.2 billion p.a. split roughly as:

• $820m on news paper advertising
• $180m on online advertising
• $200m on sign board, window cards, direct mail etc

There has been a progressive shift to online with areas such as share accommodation, rentals and low end properties disappearing from newspapers.

The major newspaper publishers are News Limited (part of New Corporation) and Fairfax