Property Finder CEO & Founder, Michael Lahyani Reveals Portal's Beginnings and Future Plans in Candid PPW Pod Interview

March 5, 2024
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Building a market-leading billion-dollar business is seldom straightforward.

Few understand the journey better than Michael Lahyani, the founder of Property Finder, a leading real estate classifieds platform in the Middle East. In a candid conversation on a recent episode of the PPW Podcast, Lahyani shared valuable insights gleaned from nearly two decades of growing an international real estate marketplace business.

Watch Michael Lahyani on the PPW Pod (below) or listen on iTunes, Spotify, Amazon or Google Podcasts.

From Al Bab World to Property Finder

Inspired by some words of wisdom, the young Swiss entrepreneur went from launching an equestrian magazine into real estate. Founded as Al Bab World back in 2005, the company was to be renamed Property Finder by the Australian, Newscorp-owned portal operator REA Group who came along in 2008 and invested for a 51% stake at a crucial time for the young business.

"We were competing against Gulf News, the major newspaper, and they wanted us out of business like any competitor wants its competition out of business. They had locked the market with exclusivity agreements where they said to real estate agents 'you have to advertise exclusively with us if you want to benefit from the 90% discounts'. And that made our life super hard... To be honest we were going to close shop after two years."

As the CEO of REA Group at the time, Simon Baker recalled the Melbourne-based portal operator's attitude to its new Middle Eastern subsidiary:

"We were pretty hands off. We basically said 'look, what do you need to have help in growing?' but we're in australia we can't tell you what to do because we don't know anything about the UAE except that it looks exciting."

Property Finder took many lessons from its new majority owner, not least of which was how to run a successful subscription business model— which Lahyani confirmed still generates 95% of company revenues to this day.

When the global financial crisis came in 2009 however, things got tricky. Lahyani recalled how REA Group, under a new CEO, "freaked out a little bit" as it looked to cut expenses and focus on its core domestic market.

"The real estate market started plummeting here in Dubai. And I don't know if you remember, but there was even articles in the newspaper of people fleeing the country, leaving their car at the airport."

"And so it was almost like doomsday. And in Australia, you know, they freaked out a little bit. And they were asking themselves 'why are we in Dubai?' 'What are we going to do with Dubai?'"

Lahyani was faced with a big decision. After some back and forth the young CEO was able to buy back REA Group's 51% stake in Property Finder for just A$310,000 and focus on doubling down its transition from print to online.

After regaining control of the company, Lahyani and the company had an "obsession" with reaching profitability to attract investment.

"I was really invested into the business. So for me, the obsession was, let's get it to break even. Luckily with the crisis, what happened is it accelerated the transfer or the transition from advertising dollar from print to online. And we were able to kind of get to a break even 18 months, maybe 24 months after that."

Property Finder managed to secure funds from local VC firm Beco Capital as well as from VNV Global (formerly Vostock New Ventures). Lahyani recalled that having Blocket founder Pierre Siri as his CTO at the time helped attract and gain the trust of the Swedish investment company.

The portal broke even by 2011 and went from strength to strength, eventually landing a $120 million cheque from General Atlantic in 2018 having expanded to eight markets across the MENA region.


Growing pains in international markets

As discussed on a previous episode of the podcast, taking a real estate portal over international borders is notoriously hard but with transactions "a fraction of what they are now" in its local market, Property Finder decided to expand in 2012.

After seeing success in Qatar, Property Finder moved into Bahrain, Egypt, Lebanon and Morocco. Eventually, the company decided to pull out of Lebanon and Morocco to focus on becoming the number one player in the much larger Egyptian market. Lahyani was honest in discussing what led to the decisions.

"What we hadn't anticipated is the complexity of running a multi-market classified from a product perspective, right? The tech architecture that you need in order to be able to release different products at different stages, depending on the needs of the market is quite complex."

"I think there's merit in focus. So the same reason that REA at that time exited Dubai. Today in hindsight, it's easy to say, oh, that was not a great decision. But there are moments where you just need to focus on your core."

The only international market that the company entered "unorganically" and without being a first-mover over the expansion period was Turkey which Lahyani said was attractive to Property Finder for one specific reason.

"What we identified was that the number one player was not a vertical. It was a horizontal. And talking to the real estate agents and the consumer, there was a lot of frustration there."

"And we identified a great team that did a better product than the others. And we said, all right, let's get in there. Let's invest the minority stake and let's learn about that market because I believe that the ultimate winner will be a vertical and that prize is up for grabs."

Property Finder invested in Turkish real estate vertical Zingat in 2017 and in late 2023 helped broker a deal to merge Zingat with rival Hepsiemlak. The combined portals compete in Turkey with horizontal market leader Sahibinden with Lahyani saying that the market is big enough for both to make a profit.


Domestic competition, business models and future IPO talk

In the Emirati market Property Finder faces stiff competition from Dubizzle Group (formerly EMPG) which owns the Dubizzle horizontal classifieds site as well as the Bayut real estate vertical.

Like in Turkey though, Lahyani sees the market as big enough for both to be successful.

"I wouldn't say that they've taken market share away from Property Finder. It's been a great last three, or four years. The business is growing in the UAE above 60 % year on year for three consecutive years. And we're starting our fourth consecutive year of that growth. So it's a very healthy, vibrant market. There's clearly room for more than one and it's okay as long as everybody's able to grow and grow profitably."

Asked if Property Finder might delve into transactional revenues as Dubizzle Group has done successfully in Pakistan, the CEO said that he hasn't seen portals pull it off successfully and wasn't looking to change a business model that's been working well.

"When you're the leader in a space where the business model can command up to 70, 75 % EBITDA margin, why disrupt that? What are you trying to achieve? I think there's very few examples of portals that have done that successfully. Zameen in Pakistan is one, I think they've done that successfully and I salute them for that."

"It works mainly for new builds. So portals can do online transactions and can take a piece of the transactions for new homes. When it comes to secondary homes, it's a lot trickier."

Lahyani also confirmed that he has no immediate plans to follow Dubizzle Group's rumoured path towards a potential IPO saying that Property Finder has already crystallized returns for investors without an IPO.

"When you look at the TAM that's ahead of us and the markets that are ahead of us, we're, you know, we're still getting started. Although it's been 20 years, there is a lot more growth ahead of us than there is behind us."

"At some point it [Property Finder] will reach a size where it will absolutely make sense to take it public. Is that the next thing I'm focusing on? No."

Asked for any lessons for aspiring marketplace entrepreneurs listening, Lahyani suggested being passionate about the project while being frugal as well as making sure you like the people you work with.

March 5, 2024
Since March 2020 Edmund's job has been to read about, write about, collect data on, analyse and generally know about real estate marketplaces and the companies that run them. Before that he worked at the aggregator Mitula Group (which became Lifull Connect) for five years.

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