Last week German-based online real estate portal ImmobilienScout24 (a subsidiary of Deutsche Telecom) announced it had invested S$60million to acquire a minority stake in Singapore-based Property Guru, an online property portal established in 2006. Coming less than a year after leading French property portal SeLoger invested A$9million to acquire a 9% stake in Property Guru's rival iProperty Group (a stake subsequently increased to 17%), this indicates increasing interest from the major European online classifieds publishers in the SE Asian market, and is likely to spell bad news for newspaper publishers through the region.
With ImmobilienScout24's investment meaning Property Guru is valued at over S$150 million, the German company clearly sees potential for strong revenue growth. Although Property Guru has not revealed revenue figures, we estimate that revenue is currently around S$15 million, giving a valuation of over 10 times revenue. iProperty Group (which is listed on the Australian stock exchange) has an even higher multiple, being currently valued at over 15 times revenue. These are high multiples (by comparison established Australian property portal REA Group is valued at 7 times revenues) and reflect the high expectations for growth in SE Asia.
This market insight looks at what is driving investment in the Asian market from these European majors.
Rivers of Gold are Drying Up
Classified advertising has long represented a lucrative revenue stream for newspaper publishers, but the famed "rivers of gold" that Rupert Murdoch referred to in 2005 have started to dry up as classified advertisers increasingly use the online channel in preference to print. For the classified advertiser, online offers a number of advantages including improved flexibility, measurability and lower costs. The impact can be drastic - over the past decade newspapers in the USA have seen classified advertising revenues decline by two-thirds, and whereas online classified expenditure was only 5% of newspaper classified revenue in 2002, it had increased to 52% by 2011: