The South African Competition Commission has decided that the country's two leading real estate portals are impeding competition and has imposed a strict series of trading conditions on the two businesses.
In a judgement that could shake up the hegemony of the two dominant portals, the regulatory authority's Online Intermediation Platforms Market Inquiry Report found that:
The South African real estate classifieds industry has long been dominated by two competing portals.
Property24 is the market leader in terms of traffic and is owned by the country's media giant, Naspers (which is also a major shareholder in several European portals via Prosus).
Private Property counts the likes of local media group Caxton & CTP, the financial services firm BetterHome Group, home loans company ooba and the investment company Fledge Capital among its shareholders as well as a number of national agency groups.
The competition authority's report alleges that one reason for the lack of any serious competition in the market is the situation around how portals ingest listings from CRMs in the South African market.
The two major portals are providers of syndication software used by many estate agencies and charge a monthly fee (said to be R500) to ingest listings from external software. Most smaller suppliers of listings syndication software do send listings to smaller portals but the largest independent supplier of this type of software, PropData does not.
Taking this into account the Competition Commission imposed several new conditions on the two property portals as well as on PropData:
The report was blunt and damning in its indictment of the practices of the leading portals with particularly fierce wording reserved for the pricing tactics of Property24:
"The inquiry find that the exorbitant fee increases by Property24 influence the decisions of the the business users and their willingness to pay for the services of smaller platforms. Exorbitant price increases have forced estate agents to prioritize their marketing budget by spending more on established platforms such as Property24 (while receiving the same level of service) at the expense of smaller platforms."
When contacted, Property24 boss JP Farinha said that the company noted the publication of the report and is still considering the findings. Private Property has so far not responded to our request for comment.
The ruling is considered a landmark case and is without parallel in the world when it comes to the conditions imposed on leading real estate portals. Its consequences in the South African real estate market might open the door for smaller companies such as Entegral, a company that offers listings syndication software as well as running one of the smaller portals mentioned in the report (MyProperty).
Adriaan Grové, the CEO of Entegral told Online Marketplaces:
"The ruling is historical for the online real estate space in South Africa as it will empower independent proptech companies like Entegral and others to access all property listing feeds within the next 12 months. This is not only important from a portal perspective but also to build 3rd party apps that rely on listing data. Access to listing data has held our portal and 3rd party portals we work with (via our listing syndication services) back (as also pointed out by the Competition Commission).
I think we could have seen more innovative products launched over the years in a more competitive open data environment, so it is now time to catch up."