The new CEO of Emirati, agent-backed portal houza admits that the challenger has a lot of ground to make up but believes that the flywheel generated by exclusive content and an algorithm that promotes quality rather than top paying customers will help close the gap.
In an exclusive interview with OnlineMarketplaces.com, JP Mondalek reveals:
Houza shares several similarities with British agent-backed portal OnTheMarket (whose CEO Jason Tebb we interviewed last week). Apart from a CEO with seemingly boundless enthusiasm for his work, houza also shares a common foundation story - one where agents came together after growing fed up with incumbent portal prices...
"The conversation started as early as 2019 when frustration was building in the marketplace, just in terms of the level of monetization from the incumbents and I think where this really reached a breaking point, frankly, was during COVID when, as you can imagine, many of these agencies couldn't show properties and were brought down to their knees."
"When it came time to ask for a fee break, neither of the incumbents were willing to cede and that ultimately drove the industry for the first time really in the UAE to come together and build a challenger portal. And that's where Barry my predecessor, was tapped to basically set up this business and get it off the ground. I've taken over from Barry about six weeks ago."
Mondalek was appointed CEO in July 2022 at the same time that the company announced a $5.5 million funding round raised from its agent shareholders. The company is now looking outside that pool of agents for a new round to scale operations.
Any business that counts its customers as its major shareholders might face a conflict of interest, especially if it wants to bring in new institutional shareholders. According to Mondalek though, the structure means that houza is especially close with its customers and can work really well with them to overcome some common problems faced in the Emirati market.
"I can see how one might be worried that there's a conflict of interest. However, I think the way we've gotten around this is basically having a gentlemen's agreement in terms of how much you can increase rates within a span of time."
"[There are] a lot of opportunities for us with our shareholders in terms of problem-solving some of the lingering problems in the industry. Whether it's around fake listings or duplicate listings, for example, we can work directly with our shareholders to tackle them head-on."
One advantage for houza of having customers as stakeholders is that those customers can help the young portal establish a USP - exclusive content. The 'Only on houza' program is very similar to the strategy being employed in the UK by OnTheMarket and is made possible by the goodwill of agents.
"So we launched Only on houza with agencies who are listing about 100 new listings a day that last on the site for 72 hours. So on a weekly basis when you include the refresh cycle, we're talking about 1,000 unique listings per week."
It's not just the exclusive content that differentiates houza from the competition. The portal also has a search algorithm that rewards the best quality listings rather than the listings from customers who pay more, a strategy it can implement thanks to its pay-per-lead based business model.
"What motivates these agencies to participate in this right? Don't forget, unlike other platforms, Houza doesn't go via a vast content model to push listing to the top and monetize on that. Our listing algorithm is purely based on two main factors: quality of the ad and exclusivity of the content."
One question that has generated debate among followers of OnlineMarketplaces.com recently is the extent to which real estate portals truly embrace all the technology on offer. While some of us might see hidden agendas and interests here, for Mondalek there is a much more basic explanation for some portals' tardy adoption of PropTech.
"If I put on my old Dubizzle hat [Mondalek used to work for Houza's rival, the EMPG horizontal classifieds site, Dubizzle] and think about the rate at which we're able to bring innovation to the site. I think frankly, the explanation for maybe some of the tardiness is not as calculated as you described. I think it's just the amount of legacy technology and the monolithic structure of the tech that makes it very hard for older platforms."
"There were so many great ideas that we wanted to adopt back then but we couldn't. But now in Houza starting on a blank piece of paper and using best-in-class technology, which we're democratizing and making accessible to agents, even in the smaller agencies, it's quite powerful."
A flexible approach a clear USP and the goodwill of agents are all nice things to have. The Dubai-based portal company has a long way to go to catch up to the likes of Bayut-Dubizzle and Property Finder though. Despite the gap, ex-Amazon employee Mondalek is confident that the flywheel created by exclusive content will pay off in the long run.
"It's fair to say that there's a large gap between us and the incumbents, however, we believe in the flywheel or the network effects that we are going to be building."
"The way we see it is the more high-quality content you have and exclusive content, more property seekers will prioritize you in the search journey, driving more traffic and leads to the site. More traffic and leads to the site draws more agents and agencies to populate the content."
As a relatively new player in an up-and-coming market, houza is more flexible in its approach, takes on board a lot of industry news and pays close attention to innovation in other markets.
"We'd have our heads in the sand if we weren't looking at what Zillow is doing with Flex, where they are not charging for the lead up front but then maybe taking a piece of the commission or looking at a player like Property24 in South Africa that charges for leads, right. Other players like Hemnet that monetize on the back of the seller as opposed to the agent or the agency. Then obviously Compass with exclusive content..."
What a great attitude to have to innovation! If you'd like to learn about these trends in the real estate portal world and meet some of the people behind them you should get your tickets to Property Portal Watch Madrid (26th-28th of October) while the current pricing lasts.