"In Nigeria we've had some investors who have burned out in the process" - Interview with PropertyPro CEO Fikayo Ogundipe

PropertyPro is a real estate vertical that has been operating in its native Nigeria for over ten years.

Having started in the rentals sector, the portal pivoted to include sales and after receiving $1.2 million in investment from Malaysia-based online classifieds operator Frontier Digital Ventures in 2016 went on to acquire its competitor Jumia House in 2017.

The company today has a staff of around 40 people and has established itself as a competitive number two real estate vertical in Nigeria and also operates portals in Kenya, Uganda and Zimbabwe.

We spoke to PropertyPro CEO and co-founder Fikayo Ogundipe to find out about the realities of running a real estate portal in Nigeria and the state of investment in the online classifieds market...

PropertyPro profitable despite "pretty low" ARPA

PropertyPro has two monetisation models. It charges agents a subscription fee to list their properties on the portal in the secondary market and in the primary market it takes a share of the commission from developers to sell their inventory.

Ogundipe was coy about the split between primary and secondary revenues but did say that the primary market was similarly as important as it is in developing markets in Latin America.

Despite an average revenue per agent figure which Ogundipe admits is "still pretty low compared to global players" at around $25-30 per month, PropertyPro has been profitable for roughly two years which, its CEO admits, has made operations a lot easier.

Below: The financial performance of Frontier Digital Ventures' West Africa segment. FDV owns a 39% stake in PropertyPro.

Market challenges remain but Covid was a tipping point

There are challenges involved in operating a real estate vertical business that monetises through agents and developers in a market which is still largely informal. Apart from FDV and Naspers (which has a small presence through its Property24 portal which is a minor player in Nigeria), there isn't much outside investment in Nigerian online real estate markets at the moment.

There was a hint of frustration in the co-founder's voice in telling us that after ten years of operating a real estate vertical business, the market "is still early" - a phrase that investors are wary of.

Ogundipe told us that the issue historically for large classifieds players has been extracting value with some having come in and "burned out" in the process of trying.

However, the situation is improving, especially since the onset of the pandemic in 2020 and the PropertyPro CEO expects more players to get into the market in the coming years.

"Portals in the Nigerian market have not been able to extract as much value from the agents over the last eight years. But over the last two years, it's been promising."

In particular, there has been a real uptick in agents recognizing the value the portal brings them since the pandemic forced many consumers who would otherwise have turned to the informal market to find housing online. Ogundipe is predicting big things over the next five years as this trend continues.

"Agents automatically saw value in the results we were bringing them just by default because people couldn't do things on the road. People started to gravitate to our platform."

Interesting business models, demographic tailwinds and a big housing defecit

Nigeria is a market with some impressive demographic tailwinds and a housing deficit (estimated at around 28 million) in need of some inventive solutions.

There is increasing interest from investors in the sub-Saharan African property market though and investment in PropTech with the likes of Flow having made headlines for recent funding rounds.

There are also some innovative models out there with Ogundipe confirming that there are African companies trying out the iBuying model made famous in the United States by the likes of Zillow and drawing attention to Spleet and to SmallSmall, two Nigerian startups bringing liquidity and ingenuity to the complicated question of trust between landlord and tenant in the rental market.

His belief is that sooner rather than later the Nigerian market that PropertyPro operates in will reward outside investment

"It's a good strategy to do that [invest and wait for the market to mature] as at some point the market is going to catch up to all the investment that's been done over time."