In the second of our two-part interview series with Hemnet CPO Francesca Cortesi, we zoom out to look at the shape of the European real estate industry, the role of AI, consolidated marketplaces, and industry problems.
If you missed the first part of the interview, read it here.
One of the big stories to come out of Property Portal Watch was CoStar Group outlining its plans to invest in the European market.
Their CEO Andy Florance has implied that the European market will be consolidated, with fewer players.
Is there any danger of Hemnet having an unhealthy grip on the Swedish market?
Yes, we have a strong position, but there are two components to it. There is a lot happening in the space, with different players participating in different aspects of the real estate journey—many of which we are following.
Generally, we welcome competition because it pushes us to create better products and new experiences for our customers. We are not without competition today—there are other property portals in the Swedish market and that is how it should be. I'm happy to see the industry keeping us on our toes.
The second component is that the Swedish is a highly efficient market. The average time to sell a property is around 30 days—which is obviously really good for everybody because the loop opens and closes so quickly.
Sellers, buyers, agents, portals—everyone benefits from an efficient market, and this efficiency is created by having a strong player guiding the market, where seekers can find everything they need in one place.
I think that many consumers as well as agents see the benefits of having one strong marketplace for properties. We are fortunate in Sweden to have a very well-functioning housing market when it comes to buying and selling properties.
To what extent would the Scandinavian market make sense as one big marketplace?
That's the million-dollar question.
There is some sort of consolidation already happening in Europe. There are big players like AVIV Group and Scout24 already sharing their strategies across international markets.
But there is also a reason that multinational groups operate their portals in separate ways. One is language. In Europe, we don't have one language in the same way as in North America, which unifies the market.
There are also really different rules when it comes to brokerage in different countries. Take Sweden for example, where you have a unique mandate and you'll have four years of studying to become a real estate agent. Is it possible to replicate those conditions in the UK, Portugal, or Switzerland, where less studying is required?
There is also a component of brand trust, which we see in our research—it's extremely important when deciding to buy and sell. Do you feel the same connection to a multinational brand?
It's complicated, but obviously not impossible. As an industry, we don't really know, because nobody has proven that it works yet.
Would a consolidated market be better for buyers and sellers? Or is there too much value in individual marketplaces?
It's difficult to answer this question without knowing what this hypothetical marketplace looks like.
If our ideal outcome was a consolidated market, we could have very different solutions to achieve that goal. One example could be one gigantic marketplace, where everyone goes to search for, buy and sell real estate—it would be a totally different experience from what we have today.
Would it work? Would it not? We don't know yet.
Another solution is to have a few major players consolidate the market but serve users in their own language and in their own localized marketplace on their terms. This solution would not massively change the user experience, but from the company perspective, you would need a massive investment in platforming to ensure your market is highly localized while retaining synergies and best practices on a macro level.
Costar's CEO and AVIV's CEO were on stage in Madrid saying how they want to leverage tech and platforming, having a "plug-in and play" idea to achieve synergies—but how do you apply this to consumers?
It's a difficult question. It depends on the solution, and if there is to be "one big company to rule them all", there are many ways of achieving this new-look marketplace.
What do you think about AI and how it will affect the industry?
It's ultimately about user expectations. We know there are players like Google investing massively in AI and natural language search. And everyone uses Google, right? So how will their investments in AI shift user expectations? Will everyday people expect AI to become a companion in their search? Or will it become a whole new way of searching?
It's very early to be making conclusions.
I believe there will be two key components to AI usage in real estate.
One is efficiency via copiloting. Look at the conversation we're having right now, with a pilot transcribing the conversation live. We can use this in our meetings to make our lives easier. We can also use a copilot to help us test and code—having a companion to make your job easier will obviously make things better.
The second component is natural language search; is there a future for a more conversational search experience, and should we be paying attention to it?
My takeaway from the conference was that the jury is still out. Some speakers were really convinced that natural language search and images would be the future, while others were more convinced by the sanctity of data to drive search without AI.
Even the portals that have implemented this are still in their early stages—I've yet to see a "wow" experience with AI-enabled search.
What is Hemnet's feeling towards AI?
We're definitely following it, but for now, we will not be the innovators in the same way that PropTechs and startups will be.
If I were the CPO at a startup I would have more freedom to shape my users' expectations with AI and being innovative or disruptive, but as a market leader with a settled userbase, our experience is held to a different standard than a startup, for example.
We are definitely factoring it in when we make improvements to our product, and we are already seeing portals like Bayut launching its own BayutGPT product, and Zillow in the US integrating AI into its search function*.
*note that these AI plugins were disabled just one month after launch due to discriminatory search results
A brief word on Property Portal Watch. What ideas interested you the most?
I really liked Zoopla's time-based search experience. It is really connected to user needs.
One aspect of what makes it so interesting is that in a difficult market being impacted by spiking interest rates, Zoopla brought it back to user needs. You can't impact how much money a buyer has, but you can still help them in other ways. It's a clever way of using customer insights to respond to a new need in the market in a way that consumers really want to use.
What is something that the industry isn't talking about that it really ought to be talking about?
Firstly, the industry is talking about a lot of things at the moment. AI, transactions, conversational search, data, staying close to the agents, creating value—there are so many interesting conversations already happening.
But for me personally, something I wish we spent more time talking about is first-time buyers entering the market, and how portals can ease the friction for people coming onto the property market.
Homeownership is a dream for so many people, yet it is not so easy to achieve. I believe if portals take a bit more responsibility in this context, then we can create great synergies to create mobility in the market—which is what portals are for, right?
If you improve mobility, you improve the wheel for everybody. You are creating a loyal user base for a lifetime—you become their best friend for future transactions.
I also believe you create a more positive social impact. Look at me, I am an immigrant from Sweden. Can't portals help me buy my first house in a new country, or find help students save for their first property?
There are so many solutions available to portals to take those steps and create a better marketplace for those at the bottom of the property ladder.
How would you go about doing that at Hemnet?
That's a really good question.
Firstly, I would map out the pain points first-time buyers are facing.
Some research we have at Hemnet shows that there isn't necessarily a shortage of properties, but a shortage of effective matchmaking for buyers and sellers.
If we can connect buyers who want small houses with families who are ready to move into a bigger home, or downsizing retired couples who can't seem to shift their now-oversized properties, we will speed up the market for everybody by creating new opportunities.
Another big problem particularly in Sweden is downpayments for properties in big cities like Stockholm—perhaps we could partner with different companies who are working in this space.
There are a lot of things we could do!