July 04 2015
By Lookup.Ae Sales
In this edition, we explore the online real estate search industry in Dubai which is extremely competitive, dynamic and evolving rapidly. It is also increasingly over-crowded, with 20+ players competing for market share.
Online real estate search is important; while no statistics are available for this region - according to research conducted in more mature Western markets, it is now estimated that over 80 – 90% of property searches begin online, compared to just 30% in 2002. This of course has all sorts of implications for real estate businesses. In Dubai, a majority of companies now invest a large share of their marketing budgets towards online portals – online advertising is still cheaper, and results are more measurable. By our estimates, real estate businesses (brokers, developers etc.) spend in access of AED 200 – 250 million a year in advertising & promotions and approximately 35 – 40% percent of that spend is online.
While the total may be higher, there are at least 20 portals catering to the Dubai market at the moment:
This large number of portals is unusual and hence the title of this article: the real estate portal wars. In this edition, we explore why there are so many portals, who the major & upcoming players are, some recent innovations that we see in online real estate search, drawbacks of the current system and a quick look at what the future may hold.
Why are there so many real estate portals in Dubai?
The most obvious reason is that it’s a pretty large & dynamic market. The numbers speak for themselves: in 2014 a total of AED 214 billion worth of property value was transacted, an estimated 15000 real estate brokers, over 2000 brokerage firms, over 400 property developers, over 120 nationalities purchasing property in Dubai every year.
Another factor in play is the technology boom in the region; along with Lebanon, the UAE is one of the leaders in the region in terms of producing, incubating and encouraging technology start-ups. While no Silicon Valley, there are a number of venture capital funds, Government programs and incubators that are set-up to encourage the growth of start-ups.
There are very few industries/sectors in a small market like Dubai where a new technology can have a broad reach and meet economies of scale – the real estate market is one of them. With a potential client-base in the thousands and traffic that can be generated from all parts of the world – technology entrepreneurs are keen to take a crack and building market share in this segment.
The last factor at play is the start-up costs. Not taking into account marketing, creating a real estate portal that searches for property is not that complex. There are about 2,000 real estate brokerage firms that employ about 15,000 estate agents. Over 90% of these companies use one of two Customer Management Software (CRMs) to manage their property listings. To build a search engine, you really only need to implement a search technology and integrate with these CRMs… and you’re in business.
Drawbacks of the Current System
“Over 120,000 listings available” – that’s a tagline of one of the major property search portals in Dubai. Other portals also proudly& regularly broadcast such statistics.
Considering that Dubai is quite a small market, it is incredible to see such a vast number of properties available for sale ore rent. Search for property in a city like Houston, TX or Manhattan, NY on Zillow.com (the world’s largest real estate portal) and the number of results for the entire city with populations much larger than Dubai are less than 10 – 20,000 units.
The reason there are so many listings is that many of those listings are expired (not updated by the broker), many are fake (to entice calls from prospects) and for the large part, the same property has been listed many times by different agencies and companies. It all adds up, and while the portals benefit from paid advertising – it hurts the user experience.
Since listing a property in Dubai is exceptionally easy, many a time properties are listed by agents who haven’t even visited the property or lack any basic knowledge about the area or its trends.
These issues listed are not necessarily the fault of the search portal – but it does hurt their users’ experience. It also:
- Creates confusion for potential buyers/renters
- Gives an unrealistic picture of the no. of properties available for sale / rent (which affects sellers)
- Frustrates the search process – the internet is supposed to improve search experience, and not prolong it.
Who are the major players?
By general consensus, the major destinations for online property searches are dubizzle.com, propertfinder.ae and bayut.com. These are the big 3 and combined probably have more than a 70% share of all Dubai property searches originating from the internet.
These 3 portals are also among the oldest in the business, all having been established between 2003 – 2005. These three companies maintain market share by the strength of their brand and network.
By all accounts they are successfully managed and established businesses that have for some time began a process of diversifying their brand & know-how to other markets in the region.
Who are the upcoming players?
These are four portals that have all launched within the last 12 months (in the case of Sakkini.com – soon to launch) that we believe are bringing something new to the industry:
We like Propsearch.ae because of its clean user interface, map search and a clever tool that provides prospects a quick summary of what properties in each area are selling and renting for.
Propertywifi.com is in the midst of a soft-launch but has already started generating positive reviews by first time users. This portal offers a live search that is fast & easy to navigate through We also really like their user interface which gives off a lot of energy and helps listings stand apart. This portal advertises properties in both English & Arabic. Propertywifi.com is backed by the Khalifa Fund for enterprise development.
This portal has not yet launched but is promising to deliver a new type of property search using information, analytics and better mapping technology. Sakkini.com is founded by two young entrepreneurs and is backed by a supported by Flat6labs – a startup incubator in Abu Dhabi.
Launched in 2014, Luxsqft.com conducted an incredible marketing campaign to build a brand and awareness. Luxsqft.com has positioned itself as a portal that understands and caters to the luxury property purchaser – so this portal will not advertise properties below a certain price-point nor properties in mid-income areas. With a number of reputed executives, backed by a media publishing group, and publishing a magazine by the same name – Luxsqft.com is one to watch.
These are the trends we will increasingly see during the Property Portal Wars:
- Adapting to Mobile: The internet is now accessed predominantly by smart-phones – so the challenge is to create responsive portals that adapt to screen sizes with modifications on the interface. Search Engines now also take into account mobile friendliness when it comes to ranking results. Many of the portals have adapted and a few have also developed mobile applications.
- Information Search: buyers and investors want data - as much data as possible before they make decisions. Can portals integrate property search with property information & market data in a better way? They probably will need to because the goal of every portal is to create an eco-system which keeps its clients coming back.
There have been some attempts to do this. As an example, GNproperty.com did a tie-up with Reidin.com (a market information company) but while it looks glossy, it doesn’t appear to function very well. Other portals publish data using their own analytics based on data on the site and behavior patterns of their own users.
Producing & providing quality information is an investment that portals may have to make to retain or gain market share.
- Mapping: to various degrees, most portals have adapted some sort of mapping integration, but there is a lot of room for improvement. As mapping technologies improve the world over, we’re hoping to see a lot more innovation by portals to integrate that technology with the search offering.
- Encouraging Interactions: real estate search portals can become more socially integrated to encourage community interactions between buyers, tenants, market observers, investors etc.
Our take on the future
- In all likelihood, the market cannot sustain so many portals. The other way to look at is that many portals will not be able to gain traction and will eventually have to modify their business models OR potentially close shop. This has happened in the past (remember Alineah.com or Gowealthy.com). Just like most cities in the world no longer support more than one newspaper, similarly – there is no real need for multiple real estate search portals. Over the mid-long term, many will shut down or fade away. We may also witness mergers and acquisitions in this sector.
- One of the interesting aspects of the real estate portal wars will be to see how successful the upstarts are in gaining market share when there are already 3 very well established brands. Can new and better technology offset the power of a brand?
- Falling margins. The well established players did very well between 2011 – 2014, with high margins and little competition. These businesses were able to invest, expand and cement their brand & market-share. However, with the real estate market slowing down and increased competition, margins are already beginning to fall. Many new portals have to resort to giving free listings for many months just to try to gain traction. Ultimately, this will benefit advertisers, but will also mean larger investments are required by portals to survive, improve their technology and brand.
- The Big 3 have already started diversifying their strength in search to neighboring countries. Propertyfinder.ae now has a presence in Bahrain, Egypt, Lebanon, Morocco, Qatar and Saudi Arabia. In 2014, Bayut.com announced its intention of operating portals in neighboring countries. Dubizzle.com already have a presence in most countries of the Middle East.
In our next edition: we rank the portals by various categories including brand power, design, search technology etc.
This article was written by Gibran Y. Bham, a co-founder of Lookup.ae