CoStar CEO Andy Florance has revealed his intention to make a serious expansion into Europe—and hasn't limited his ambitions to acquiring just one portal.
In an on-stage chat with Online Marketplaces Founder, Simon Baker at the Property Portal Watch (PPW) conference in Madrid, Florance outlined his plans to invest a chunk of his "$9 billion war chest" into European portals and technology.
And, in an off-stage exclusive interview with Online Marketplaces, Florance said that a number of residential portals are on Costar's radar.
"We are interested in putting a bigger percentage of our investments into Europe. The space is moving very quickly.
"It's a good time to start looking at European options. There is a great big game of musical chairs going on in Europe, and people don't know it. I've seen this before in the United States three or four times.
"I think the music will stop within two years. There will be winners and losers. Time is of the essence."
Florance told Baker that he expects a mass consolidation across major markets in Europe and around the world and even hinted that he is looking at "the number one, two, and three" portals across Europe as he explores investment opportunities—as well as smaller players if the growth potential is there.
"There will be a couple of shakeups, a couple of rude awakenings. How people perceive the number one portal, the number two, three or even four portal in a country can change very quickly. Things will change rapidly over the next three to five years."
When asked if CoStar was on the lookout for more than one acquisition, Florance's brevity said it all: "For us? Oh, for sure."
Florance went on to describe how the European market has been falsely split into individual countries, with too many players operating within one country but too few effectively operating internationally:
"I do not see a world going forward where we have one portal in this country, one in the next country, one in the next country and so on.
"The European market is being driven by financial engineering that focuses on making decisions quarter to quarter or via investment cycles that hand over assets from one private equity fund to the next until they take it public.
"I can see two or three portals operating in a dozen to three dozen countries."
We asked if there was anything Florance would like to publicise, and only then did the shields go up:
"I wouldn't respect you as a reporter if you didn't ask, but I wouldn't respect myself as a CEO if I answered!"
Make no mistake—CoStar is coming to Europe, and soon.
The vastness of Costar's budget for mergers and acquisitions is no joke—Costar pulled out of a $3 billion deal to acquire Realtor.com in February 2023, and Florance was quick to highlight that the cancelled merger represented just one-third of Costar's buying power.
It appears that Florance's appearance at Property Portal Watch is part of a bigger vision to retarget the Group's funds into increasing its footprint in Europe, which currently includes the Spanish commercial portal Belbex, Loopnet in the UK, Bureaux Locaux in France and Germany-based real estate data company Thomas Daily.
In a wide-ranging conversation, Florance also shared insights on topics including building Jeff Bezos' first computer, Costar's partnership with MIT, the value of AI in real estate, and Costar's high-octane rivalry with Zillow.