Today at the Property Portal Watch Conference in Barcelona, Tim Bjelkstam from Hemnet in Sweden discussed what it is like to be owned by the industry and what opportunities and challenges it provides.
Sweden is an attractive market to operate in. There are 9.5 million people and 5.1 million homes. There are around 400 transactions per year and around 6,000 real estate agents operating in the market.
Hemnet has been around since 1998 when it was founded by a group from the real estate industry and the media industry. This combination created the clear market leader and in many ways, locked out the other players.
Over the 11 years between 2002 and 2013 weekly visits have increased from 600,000 to 6m. There are now 4.3m uniques browsers per month with an average of 10 min per visit. The business is profitable operating at 20 – 25% EBITDA margin. The business also has 43 employees.
Hemnet is now 100% owned by the industry with the 4 top players owning 25% each. The result of which there are some clear challenges given the competition between the shareholders.
There are two main problems – conflicts of interest and product development.
Conflicts of interest clearly exist between the owners, who are the real estate agents, and the consumers who want to see the complete market. One side wants to see everything including rentals and commercial while the other (the owners) are not as interested in having these types of listing on the site. This creates some tension between management who want to drive a better overall experience for the user and the owners who want to clearly favour their own businesses.
Another challenge is product development. Clearly product development needs ongoing high levels of expenditure required however this can sometimes be at conflict with profitability requirements of the shareholders. In addition, if you need to do development for the consumer but the shareholders want development for the industry, you need to invest time in understanding true underlying requirements of the business and communicating strongly with the industry owners.
Hemnet seems to have done a great job at walking the tight-rope between the consumer and the industry. In the process, they have built a fabulously strong business.
If you would like to attend the next Property Portal Conference, join us in New York on January 13 – 14 2014.