Technology and innovative business models paving the way for growth of online Property Classified Platforms in Philippines
The Property Classifieds Platform market of Philippines has a potential to grow exponentially in the country supported by newer technology and innovative business models. Owing to the COVID-19 pandemic, there is an expected increase in demand for these classified platforms due to their user-friendly interfaces.
In conversation with Mr. Ramjit Lahiri, Vice President of Lamudi, we attempted to seek his opinion and understand his side of story to the changing fortunes of the Property Classified Platforms Industry and how are companies gearing up for it.
Q1: What have been the trends governing the classified property platform market of Philippines in the past few years and how has it grown?
Irrespective of the global dips in the economy and recessions, this particular industry has always recovered. Property in general, is bought for two purposes- investment and living. The classified market, in particular, has been catering not to the investment need but to the living need of the consumers. However, this does not mean that there aren’t any consumers who are not looking for investments. Just that the proportion of these consumers is very small as compared to the end users of the property. For Philippines, the real estate market has been a very traditional market. There are 4-5 major conglomerate players who own the real estate industry (SMBC, Robinson’s Land, Ayala Land etc). However, in the past 5 years, the need to adopt newer technology, to operate the market, has been felt and this is where the classified platforms have come into play and have gained popularity. With the onset of COVID, this process of adoption was accelerated. Instead of putting up ads on billboards, all major developers were now heavily relying on digital channels to market their properties. The classifieds industry, overall, benefitted from the pandemic. Developers were desperate to move their inventory, and an easy solution was these classified platforms. Classified companies are trying to build their technological capabilities in-house and are also investing in technology provided by third parties to grow their business.
Q2: As mentioned, the classifieds market mostly caters to the end-users of properties and not the investment market. What would you say is the reason behind this and what would be the distribution of the consumers?
Most of the consumers are end-users, however, there are a few investors as well. About 90% of the consumers are end users. The reason being, that if you’re looking out to invest, as a consumer, you would already have certain connections with developers. People looking for properties online are mostly looking for their first homes, second homes so on so forth.
Q3: With the increase usage of technology, one would expect that such online platforms are popular only with a particular age group. What would be your opinion on that? Also, would you say there exists a gender gap amongst the consumers?
The majority of the people using these online platforms lie in the age group 20 to 35. About 65% of the users of platforms come from this age group. They are the most comfortable using them. Also, this is the age group where people start looking for their first homes. While speaking about the gender gap, one could note that the economy overall is driven by women in the Philippines. In mostly all fields, women dominate the industries and the same goes for the consumers of classified platforms. The gender ratio is of about 60-40 with 60% being women.
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Q4: What are the most popular geographical regions where these classified platforms have experienced maximum growth?
Philippines is skewed towards Metro Manila and the areas surrounding it (NCR). 75% of the traffic of these classified platforms comes from Metro Manila and the areas surrounding it and the rest of the country accounts for about 25%. The demand for housing is the maximum in these areas as well.
Q5: There has been an influx of technology into the space of the property classified platform industry. In your opinion, what could be some other forthcoming changes in the business models of these platforms to accelerate growth?
Platforms nowadays, want to be a one-stop-shop for their users. The change with respect to business models will come in by trying to increase the consumer reach by tapping into the transaction space. Currently, most of the platforms are just a space to connect the buyers and sellers. They don’t influence the buying or influence the selling. They just play the role of connecting the buyers and sellers. Most of the developers now, are looking for a platform that not only market their product but also move their product. Meaning, for example, developers would now not only be concerned with the sale of units that the platform was able to carry forward but also with the advertising of the properties which would increase awareness amongst users. This is what would now matter. Classified platforms are now trying to come up with solutions and models to this, to move towards the transaction space. That within a classified set-up, how can one become a brokerage as well to sell properties- either through an in-house team or through an affiliated network. Platforms cannot sell subscriptions beyond a limit, but tapping into the transaction space will give them the opportunity to grow exponentially. Platforms would also move from just subscription models to commission models for higher growth as the earnings from this model would depend upon the number of units sold through the platform and this is where all of the innovation will come. Another aspect of growth in the industry would be the introduction of virtual reality. The aim is to bring the homes to the screen of your devices for a user-friendly comfortable experience. Virtual reality would enable 3D tours of properties which would help consumers buy properties with ease.
Q6: How do you see the market growing in the near future, say 5 years?
It is difficult to predict the growth of the market for the coming years due to COVID-19. As the market is extremely fragmented, no one entity will be able to give a precise growth trend, owing to the uncertainty that the pandemic has brought in with it. However, before the pandemic, a 7-8% year-on-year growth was predicted.
For any queries or feedback, reach out to the author at Namit@kenresearch.com
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