This week RealestateCommercial.com.au a small player in the Australian commercial real estate space announced that it had secured funding from Chinese based Zhuhai Huachen. The Company shortly will be undertaking a capital raising program on the Australian Small Scale Offerings Board where they plan to raise a total of $1.2 million with investors owning around 30% of the Company valuing the company at $4m. 

Li Dan Financial Manager of Zhuhai Huachen Constructions stated “We are very happy to commence an association with Real Estate Commercial in Australia and here in China through their website www.zhongguorec.com, this is our first overseas venture and we see the business development between Australia and China growing in the future. We were impressed by the development to date of the website here in China and see the synergy between the real estate markets in China and Australia in the next few years as a fast growing market, particularly with more and more Chinese looking to invest in property overseas, with Australia high on that list. We will be looking to invest further in the Australian Company during their capital raising program through ASSOB (Australian Small Scale Offerings)”

Russell Robertson, Managing Director and Founder of Real Estate Commercial in Brisbane said “We welcome the investment from the Chinese company and their local knowledge will be vital to our future plans for China. We have more products in the pipeline for both countries and look forward to advancing our beta website running in China (www.zhongguorec.com) and working closely with our new partners.”

Rent.com.au is consolidating its position as Australia’s #1 rental property website, indicating in a December press release they have achieved 300% growth in the number of agency listings on their website since February 2011. They also indicate their portal has over 40,000 residential and holiday rentals now being listed by agencies across the country.

In the press release Mark Woschnak (CEO Rent.com.au) goes on to say some of their growth can be attributed to principals paying more attention to their rent rolls in these trying times, but other key factors include:

1. The unique traffic audience rent.com.au gets whereby over 40% have not been to REA and over 50% have not been to Domain. This provides an effective and genuine additional and growing target market to what most agencies get via REA alone.
2. The rent.com.au listing package offers excellent value for all agents, providing genuine rental enquiry and strong branding.
3. The specific range of services on rent.com.au that is purposely designed for property managers, including the unique property management lead generation services.
4. The high organic and natural online benefits of the domain name and branding that exists amongst the younger 18-39 year old renter community. Most importantly the brand that rent.com.au has developed as a rental solution stands proudly and clearly apart from all home purchaser focused sites.
5. The extensive national coverage of listings which continues to grow.

In mid December, Rent.com.au underwent a long overdue makeover. The site has a very fresh and almost fun feel, appearing as though they borrowed ideas from US based portals and social networking sites. Mark Woschnak on the recent upgrade:

Our recent site upgrade in early December, provides a much smarter and faster search engine, more flexible and detailed search options, improved tools for renters to keep track of their properties of interest, enhanced social media communication options and the largest photo display of any major portal, all of which provide an excellent user experience.

Rent.com.au has been around for a long time and its great to see them start receiving some reward for their hard work and persistence. We look forward to their continued success!

“Every act of creation is the first act of destruction “ – Pablo Picasso

As the balance of control and profits in the short-term holiday rental market continues to change for the players in this market: the owners, property managers, internet marketing channels and the clients, the response we make as property managers to the changing approaches will determine our longevity in this industry. The question is who really benefits in the end or are we just in a race to the bottom?

The internet has reshaped the holiday property management industry as it has done to nearly every other industry in Australia not sparing real estate sales. It has created a change of paradigm, with profits being distributed to more players wanting a piece of the holiday rental pie. The wealth potential and the vast number of people holidaying in self-contained holiday homes have attracted some big players. The Fairfax Group recently acquired Rentahome and Takeabreak (this follows their purchase of Stayz in 2005), and the US holiday rental group, Homeaway, bought www.realholidays.com.au in April last year.

Up until about the year 2000, holiday property managers called the shots. They were traditional businesses that managed owners’ properties – they took on all the responsibilities of renting the properties and they had control over the conditions under which renters stayed including cleaning, repairs, payments and profits. They provided the complete service.

Then along came the internet.

At an embryonic stage in the early years of this century, Ozstays joined other new distribution channels in the industry seizing an opportunity. It developed a new web process to empower property owners. The rental property paradigm began to change – a new process began to evolve.

Ozstays empowered property owners to change the way their holiday house was managed. No longer were owners bound by the usual ways of managing holiday rental property. Some, disenchanted with the traditional property manager, leapt at this new opportunity and went their own way. Ozstayz gave owners a way to self manage and put the commissions back into their own pockets and return a greater profit for their holiday investment property and many discounted the rate that the existing manager was charging to compete. They found locals to clean their property for incoming guests. A new rental management process was born, and it appealed to the holiday maker because it was cheaper – sometimes much cheaper than market price – and it allowed renters to deal directly with the owners.

There were some downsides: service level to the holiday-going client in many instances was decreased and, often there was no local office or assistance. But some properties ended up being marketed by owners at half the price advertised by the property management company. The holiday maker was the winner in this situation. As time went on and owners grew in confidence, some told their property managers to decrease charges or they would take back rental control of their own properties. To compete and keep their owners, many property managers dropped their pricing to keep their clients and some margin of profit. Again, control and profits were shifting.

As Ozstays attracted more and more owners, it became stronger and more owners used it. The process created an upward spiral of control over the market, not just over individual properties. Ozstays expanded and became Stayz. It wasn’t alone in this web-based approach: other similar marketing opportunities became available – Last Minute, WOTIF, Rent-a-Home, Takeabreak and local directories. The more owners that worked through an internet marketing site, the larger the site became, the greater the ranking in Google and so on… These new paradigms began outranking the traditional approaches, so then the traditional joined in and began listing on these new directories as well, thus contributing to the power and control of their competitors!

Top of the food chain
In the mid to late 90s, marketing was easy. $25 a quarter bought an advertisement in NRMA’s Open Road magazine. With the advent of internet, a website and, with some email marketing tools and a growing appreciation of SEO websites were generally what was required to be atop of the internet listings. Then along came Google and Google Adwords, and this allowed new players to spend their way to the head of the listings and then at the same time was the emergence of the Stayz, Last Minute. Wotif Take a Break and so on.

Ahead in the Game
The internet has brought about very significant change for the holiday rental property management industry right across Australia. In its initial years, it was seen as the savior, but in recent years and particularly in today’s current economic circumstances, the internet-based approaches have unsettled the status quo. It is not unusual to find holiday property management business that 10 years ago were charging in excess of 20% management fees now charging below 15% in response to the lower prices forced by the channels have pushed rental prices down. Property Management companies now have no choice other than to cut traditional costs and or find new streams of revenue; the old model is being buried and those not changing possibly may die with it.

Where’s all this leading? Does internet-based channel marketing and management spell the end for property managers? For some, the answer could be yes. For property managers who ignore the trends and current tools, the internet will have an impact on them similar to the impact a very large comet had on dinosaurs. And there are some property managers like this out there!

Given that new tools exist, it is amazing to hear and speak to businesses today that still operate using a calendar book and Fluorescent felt tip pens. I was dumbfounded in August 2010 when I went to a REINSW conference in Sydney where one of the keynote speakers spent about 10 minutes explaining how he colour-codes his keys! Yes, coloured envelopes with coloured key tags placed in an overnight safe for incoming guests. Just the management of keys for 50 properties would, over the course of a year, cost a holiday property management business a considerable amount. It’s now 2012 and better processes are available.

A Vision: The Future of Holiday Rental Property Management
The next dominant species of holiday property managers is evolving. They have a new philosophy on the whole business and pick up the majority of bookings through their own website but importantly with minimum human intervention; they will have a website that is strong organically and found easily through search engines.

They will use the latest Property Management System (PMS) software as is used throughout more forward markets such as in the USA. In these markets, gone are the days of booking button/Yesbookit type software’s and using channels as the mainstay of generating bookings. The software will have integrated trust accounting and marketing tools all in the complete package. The single PMS package will run the business removing the huge labour cost from the business operation.

For customers, it will be easy to book and pay on the website. In the future, there are no keys; all doors have digital locks, date and time-stamped door codes that are sent by SMS to client phones at check in time. The trust accounting component of the system will be so automated and integrated with the bookings and management system that the time spent each month managing the process will be hours, not days or weeks.

Maintenance personnel will be notified by SMS and email directly from the PMS. The maintenance person will close off jobs directly into the PMS with invoicing and outcomes. In the property management industry of tomorrow, the cost of staff may be an expensive luxury, so communications with and management of owners will also be managed by the PMS.

What is the future role of Stayz, Occupancy, WOTIF, Take a Break, Rentahome, Real holidays and all the other websites? It’s really up to how property management companies respond, we control their destiny. The more they rely on them, the stronger they become. They are the real competition as they continue to take a place in the organic listings in place of the established.

I am in regular contact with property management business around Australia, and the bottom line is that profits are being whittled away with so many factors and opposing paradigms effecting the business. Property managers are potential losers in this changing situation and it is time now to change, evolve and avoid extinction.

Guest Author: Glenn Smith is the CEO of GENKAN and of Thredbonet Marketing Pty Ltd.
GENKAN is leading the way towards visionary property management and responsible for the driving of the companies three-property management business’s, Accommodation Thredbo is the largest holiday rental property manager in the snowy mountains, Port Douglas Reservations and Discover Niseko Japan.

I’m talking to you.

Yes, you.

The person who thinks you will start an Australian real estate portal that will shoot right past domain, dethrone realestate.com.au and become the new number one.

Or, maybe you’re an agent who for some reason (perhaps because you have to send them a check every month?) doesn’t like realestate.com.au and wishes the industry would start a portal as a realestate.com.au killer.

I have a message for you: you’re dreaming.

I tell you this because of a very interesting discussion that developed in the comments of Ryan’s excellent post on FarmBuy.com.au. I thought I’d pull out the topic and expand on it.

Face it. realestate.com.au is the dominant market leader in online real estate listings in Australia. It would be very hard to beat them at their own game. What’s more, you cannot expect to copy realestate.com.au and win without their help, in the form of massive, ongoing self-destructive behaviour. They are not likely to give you that help.

All those hopeful entrepreneurs trying to create a new website to knock realestate.com.au out of its top spot and take it for themselves are on a fool’s quest. That goes for everyone from domain.com.au and on down. Domain can aspire to a profitable second place. Smaller, later comers can aspire to make a living, maybe, but certainly not to kill the giant.

The plain truth is realestate.com.au is the leader and will be the leader in online real estate listings in Australia as long as there are online real estate listings in Australia. There have been instances in business history when a player with a dominance similar to realestate.com.au’s was displaced by a competitor, but not many.

I say this as someone who has worked at realestate.com.au and with other real estate related web businesses on three continents, and as an entrepreneur.But, if you think I am missing something here, please enlighten me in the comments.

How to Make Money

Tell them they're dreaming!

Instead of leadership, go for a niche and establish a strong brand as the first and best in that niche. Here are some niches that are already in play, with varying degrees of success:

• Farms: FarmBuy
• Rentals: Rent.com.au
• Regional: AllHomes
• Premium property: Million Plus
• Free listings: The Home Page
• Chinese buyers: Juwai.com (a client of mine)

If you can be content with a niche, you could possibly be profitable, or at least one day sell out at a profit. It will be hard, because the Australian market is so small, but it seems possible. A niche could also be an add-on to another real estate-related business, giving that other business strategic advantages — like domain.com.au does for Fairfax’s newspapers.

Still Dreaming?

If a niche is not enough for you, and you want to beat realestate.com.au, there is only one credible strategy. You must dominate a new niche. This new niche by definition cannot be dominated by realestate.com.au and must be able to grow big enough to one day eclipse realestate.com.au. The flaw in this strategy is that you have to be riding a wave of history for it to work for you. Those waves don’t come along often.

For an example, look at realestate.com.au’s own history. The major media businesses had print real estate classifieds locked up prior to the realestate.com.au’s rise. They were unassailable. Classifieds were so reliable and profitable that analysts called them “rivers of gold”.

Then, three friends in Melbourne registered the domain name realestate.com.au and began persuading skeptical real estate agents to put their listings online. They chose a real estate classifieds niche the big players had overlooked: online. And they made themselves the leader in that niche.

(It is true that News International has a stake in realestate.com.au today, but that only goes back to 1992, when Simon Baker in his wisdom convinced News to buy it. realestate.com.au was a pure, independent startup in the classic mold. I reckon if you did the numbers, you would find realestate.com.au has been a much more profitable investment for News Corp than myspace.)

Over time, little realestate.com.au grew and grew by riding the growth of the internet. realestate.com.au won online and rode the internet’s historic growth into the very backbone of our economy and culture. The big media companies still dominate print classifieds, but print is sliding into irrelevance.

As of today, realestate.com.au has reported record revenue for six consecutive half-years, while the newspapers are struggling.

The lesson to draw from this history is simple. real estate portals should not take on the established leader head-on. Find a new niche and become the leader in that niche. You can make a living, and you may even get lucky enough to ride a historic trend into great riches.

The essential elements of  Domain’s email to PropertyNow, is that Domain intend a price increase (after approximately 6 years at the current rate) of something in the order of 53,000% ( based on the current clients using PropertyNow)  If the calculation of the percentage increase were based solely on new clients to PropertyNow from February onward, then the increase is still in the order of 3,000%.

PropertyNow has naturally put its point of view to Domain and to the credit of it’s management, negotiations may take place. I will comment further, but for now here is the letter sent to my business (PropertyNow) on December 15th 2012.

Start of email communication:-

Changes to you Domain advertising rates

We are writing to let you know about some changes to your Advertising Sales Agreement with Domain.com.au.

Ordinarily, we require all private advertisers on Domain.com.au to take out advertisements on a single buy basis. However, we recognise that you are a high-volume private advertiser and we have therefore created a special product to allow you to use Domain.com.au on a subscription basis.

Effective from 1 February 2012, your account will be migrated on to a Domain Flexi Subscription, which means that your rates will change to the applicable monthly State-based subscription rate set out in the table below plus a flat rate of $220.00 incl. GST per Sale listing and $165 incl. GST per Rental Listing.

Each listing will be in Priority Placement format for the first 2 weeks on Domain.com.au.

End text content of Domain email:

PropertyNow’s Viewpoint

From the point of view of PropertyNow, such an increase is the equivalent of filling ones petrol tank today for $60 and then going to the petrol station tomorrow and being charged $1800. The net result will be that PropertyNow will be forced to no longer offer Domain to its clients. This obviously impacts upon hundreds of individual property sellers (eventually many thousands) very directly.

PropertyNow intends to discuss this with the General Manager of Domain, while reserving the right to once again appeal to the ACCC to investigate a potentially anti-competitive practice. Propertynow will also explain to Domain management that it is at error in defining the nature of the PropertyNow business.

It is interesting to myself and no doubt would be to the ACCC, that PropertyNow will be charged massively more than other agents, despite charging its own clients a smaller fee than those agents. I would have thought this to be the absolute definition of an anti competitive practice.

I am interested to hear the thoughts of  Business2 readers in relation to Domains intentions, which were initally mooted back in January 2011.

Andrew Blachut

Director and Licensee PropertyNow

www.propertynow.com.au

Whilst there are major competitors in each field in the business portal industry we are all aware of the big three, Domain, Seek and REA. There are some smaller guys that are well worth mentioning and these days out rank and deliver better quality response to you as a business owner or business broker. The majors strongly rely on traffic derived from other verticals within their business, for example roughly 30 % of the real business traffic is direct from their realestate.com site.

The large traffic volume which the bigger guys rely on is just that, volume. Not necessarily quality targeted traffic that the small sites are delivering. I’ve never seen any of the majors optimize keywords that drive organic traffic to their site that was based on quality content, articles or blog posts from relevant sources. This is what leads me to my next point that’s bound to shake things up a little.

It may be too much work and not enough in return for one major portal in particular. Is Realbusinesses.com.au for sale? A little bird told me that another major is looking to take ownership so that REA can focus on their core business, whilst this will eliminate one competitor it will supercharge another. I’m not at liberty to make the comment on who the purchaser may be, though take your pick there are only two to choose from.

Another one to keep an eye on is the AIBB who has also just launched their platform for business brokers, word on the street is that they are aiming to become a major player in the online business for sale field within the next 12 months, they will however only offer their services to business brokers.

The business for sale market may not hold a big enough piece of the pie for the big wigs, which helps the likes of some of the industry specific sites like Listabusiness, business2sell & business-trader who focus heavily on quality traffic rather than volume, and seem to be giving these others a bit of a hard time.

Lets see what the next 12 months holds in store, i know I’ve got some work cut out for myself its going to be an interesting year in the business for sale niche/world.

I firmly believe that niche real estate portals can be successful and fill a gap which the major players Domain.com.au and Realestate.com.au don’t cater for. There is no better example than Farmbuy.com which targets a niche very relevant in Australia…rural properties.

Farmbuy.com launched in October 2009, it has grown from approx 4,000 unique browsers in the early days to now consistently achieve around 30,000-31,000 unique browsers per month (their stats). Currently they have approx 450 offices uploading – they include major franchises like First National, Ray White, Elders, PRD Nationwide and also a number of smaller independent rural agents.

I asked founder Philip Sondhu what he sees Farmbuy’s strategic advantage being:

• Farmbuy.com’s key focus is complimenting and enhancing our agents rural property marketing (something which appears that nobody else is doing well)
• Our site also incorporates a number “rural specific” tools, the main ones being the ability to search by weather district & land size, but more importantly once the buyer has found a property the user can run a number of farm income / production calculations to help work out the production and income capability of the property.
• By focusing on a niche we provide agents a qualified audience to market their rural properties to buyers solely interested in rural property. They’ve also found that by adding farmbuy.com to their suite of marketing tools it also helps them to win over vendors who like the fact that there is a dedicated / specialised online service in Australia.
• Lastly, this qualified audience has helped us gain 3rd party banner advertising from the likes of Commonwealth Bank, Rabobank, Suncorp Bank and John Deere who can leverage our site to reach the Agribusiness market. Farmbuy.com would now be one of the bigger online Agribusiness websites in Australia.

Philip also indicated that through the demand from the site audience another niche has emerged.

It is also of note that we now allow lifestyle properties to be listed on the site which was largely due to the demand coming out of metro areas.

A further example highlighting that web browsers are looking to begin their searches at content which is already relevant to their needs. What are your thoughts?

A few noticeable changes I can see include:

1. There is a newly styled main navigation bar
2. Search Results – Look of the search results has been improved.
3. Search Results – Upgraded listings don’t stand out as much anymore
4. Search Results – “New” listings have a red slash over the image.
5. Property Page – The layout of the media player has changed so images now scroll down rather than across.
6. Property Page – Open times are now in a container which stands out
7. Property Page – There is a large ad on the right of the main content area which is very hard not to notice.
8. Property Page – More preference to the agency, providing links to their For Sale, Rental and Sold listings.

There are probably other things I’ve missed but I’m sure you’ll point them out.

Well, realestate.com.au is in just that position right now. But, they weren’t lying.

The old, larger number refers to “unique browsers”, the old standard for measuring web traffic. The new, smaller number refers to “unique audience”, and is supposed to measure the actual number of people (not web browsers) visiting the website.

Both numbers count the same people, doing the same things, but they count in different ways.

The new system is more precise and useful than the old system. There are problems, of course, like the fact that the new “unique audience” doesn’t yet count mobile users or international users. Even so, it represents real innovation by the people at Nielsen, who created it. (Here’s a shout out to my old buddy Matt Bruce over at Nielsen.)

For example, as of June 2011, the old method counted almost 120 million unique browsers per month in Australia. That is great, but only about 15 million Australians are actually online. According to the new data, each Australian who uses the internet sees 2,772 web pages in a month, goes online 69 times and spends nearly 69 hours there. (It’s nice that I finally found something in which I can be above average!)

Now here’s the paragraph you have all been waiting for. Robert Simeon, I write this especially for you, with a smile. The new system gives realestate.com.au almost exactly the same relative dominance over domain as the old system did. In the old system, realestate.com.au had 1.8 times more unique browsers than domain.com.au. In the new system, it has 1.6 times more unique audience.

I used to work at realestate.com.au. You can probably tell that I’m still proud of them.

Anyone who finds this topic fascinating should, first, see a shrink. After that, if you’re still not cured, you can read more at the following links:

• The Sydney Morning Herald gives a layman’s summary
• An information page from the IAB, which is the online advertising industry’s trade group
• A briefing to investors from realestate.com.au (this is a 13-page PDF file)

Late last month Realestateview undertook a small makeover to the residential section of their portal. What they’ve done is enhanced the usability of the site, provided extra content, improved the styling and overall, offer site browsers a better experience.

The key homepage improvements include:

1. Search – is now the main priority on the homepage allowing users to search for listings or agents. REV have also launched a search via map feature which can be selected from the homepage search.
2. Local Data – this is now a key part of the homepage and showcases a few graphs with medium prices. I’m surprised this does not link through to their property data section.
3. Expert View – useful information for vendors, property seekers and investors, links through to this section where site users can engage in forums.
4. My Searchers, My Shortlist and My Last Viewed – here REV have attempt to personalise the portal by providing information specific to site users.

Other changes within the site include removing the right sidebar for search results and on the property page they have added recent sales and suburb profile information which is sensible given the sold data they have access to. They’ve also moved away from the sidebar navigation and placed a secondary navigation across the top below the header. This provides a much cleaner and less cluttered experience for the user.

I think Realestateview has done a reasonable job with this upgrade and they’ll find users become a lot more engaged with the portal.

What are your thoughts?