Zoopla founder declares “change is inevitable” as proptech players prosper
10 min read
03 March 2016
Following Zoopla’s investment in a handful of proptech startups, Real Business has spoken with founder Alex Chesterman and other rising companies in the sector to discuss what the British property market should prepare for as technology merges with tradition.
Real estate in the UK is changing. No, not the soaring house prices and difficulty of accessing the ladder, but the way in which consumers set out to make a purchase.
In the same way the internet unshackled high street retail, estate agents have made use of the web to showcase properties to would-be homeowners.
Property websites like Rightmove and Zoopla have been instrumental in pushing this trend forward, while a number of other companies have sprouted up in recent years to enter an industry now commonly referred to as “proptech”.
Indeed, Zoopla invested £1m in four proptech startups in February. They include neighbourhood researcher PropertyDetective, repair reporting platform FixFlo, P2P lender Landbay and online mortgage advisor Trussle, which will see services all available to Zoopla users – the businesses and consumers.
Opening up on his expectation for what’s to come, Zoopla founder and CEO Alex Chesterman told Real Business he absolutely expects further transformation.
“We are starting to see it now with the growth of online estate agents but also with a number of new service providers to the industry who are offering new ways of dealing with old processes,” he said.
Reflecting on the startup investments, he added: “These deals confirm our commitment to leading innovation in the property space and nurturing UK technology entrepreneurs.”
Zoopla entered the market in 2008 – eight years after rival firm Rightmove – at which time it believed the use of digital would empower consumers making property decisions.
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Chesterman recalled: “We were confident that we could differentiate our proposition by solving a key consumer need around transparency in the property space.”
The firm initially provided historic sold house prices across the UK and now has a database of over 20m, while it developed algorithms to value all 28m residential abodes nationwide. From there, Zoopla added property search, but included various features that weren’t offered by rivals.
Of course, the launch took place during the recession, but Chesterman explained its offering, combined with the economic climate, allowed it to achieve growth.
“The difficult market conditions played to our strengths as consumers wanted more useful data and information and advertisers wanted more effective marketing and data solutions,” he detailed.
Believing tech in the property space has been transformative, he said that estate agents can’t afford to bury heads in the sand.
“Change is inevitable and more so over the past decade than at any time in recent history as a result of first the web and then mobile,” Chesterman said.
He noted that there are some that remain resistant and believe the old method of newspaper ads are the answer to achieve sales, but that is indeed a minority as over 70 per cent of UK estate agents work with Zoopla. As such, the company’s websites boast over 40m visits a month.
“Those who don’t use us are operating at a significant disadvantage and are not serving their customers, the homeowner, well as they are unlikely to get the best outcome in any transaction,” he added.
Zoopla’s revenue increased by a third in 2015 and Chesterman put that down to a strategy of audience and service growth, which included the acquisition of uSwitch.
Looking ahead, he said that brand and product investment will remain a key component of the ambition to scale.
“We have a great team and by continuing to hire great talent and investing in new areas, both our internal product developments and our partnerships will ensure that we continue to lead the way in terms of innovation across the property space,” he said.
Continue reading on the next page as we observe three proptech players that have different agendas, with one out to conquer, one blurring the lines and one hoping for harmonious collaboration – all with different innovations.
easyProperty is one of the other proptech developments on the scene, and it secured a £25m investment in December 2015. The online estate agent’s CEO Rob Ellice has been very vocal about his distaste of operating on the high street, as witnessed in a PR stunt that promoted the death of traditional firms.
“This new, very substantial investment from Toscafund is a real opportunity to keep expanding both in the sales and lettings markets in the UK and in pan-European property services, and a sure indication of how we plan to take the market share from traditional high street agencies,” said Ellice.
“Consumer behaviour has changed. No one walks into an estate agent’s office to start their search for a property anymore.”
To that end, we’ve also witnessed the arrival of new player Yopa – a hybrid estate agency.
Discussing the concept to Real Business, co-founder David Jacobs explained that the idea is to help buyers sell their homes at a reduced cost.
The company originally operated as an online-only operation that provided valuations, but quickly pivoted to appoint local estate agents, who work on a self-employed basis, to deliver more support to customers on the ground during the selling process.
Jacobs revealed that securing trust has been the biggest hurdle, which is why the business is ramping up its marketing strategy with a TV, radio and online advertising campaign. “This proves we’re serious – we’re not just going to be here today, gone tomorrow. We want to be a household brand name,” he said.
“The industry is growing so much. Currently, online and hybrid account for six per cent of all homes sold. By 2020, that will be 50 per cent. There’s a huge amount of sector growth and the traditional model will die out. It’s not a question of if, it’s more like when.”
Elsewhere, Virtual Walkthrough co-founder James Morris-Manuel has developed a proposition that he doesn’t want estate agents to consider a disruptive problem.
The tech provided by the company allows detailed, high definition property viewings from a computer, which means buyers and tenants needn’t worry about travelling to check out properties.
“Virtual Walkthrough is a very different proposition, in that we do not provide an online listings service. Our focus is on capturing immersive and interactive true-to-life environments for our customers that are fully navigable on screen,” he said.
“From our perspective we’re focused on offering a distinctive product that helps maximise client visibility and customer engagement online, offering a competitive edge.”
He described the idea behind the tours as a concept built to “transcend the printed brochure, floor plan and photography”.
As a result, the company has found key interest with clients in the commercial and residential sectors, with tours that span homes, offices, shopping centres and beyond.
He continued to note that the term of “disruption” swirling around the industry can be perceived as negative by the traditional circles in the real estate world.
“I think that technology is often viewed wrongly as a purely disruptive threat by the sector, which in turn has been slow to adopt technological change. Nevertheless, I firmly believe that it should be seen as a force for innovation, not disruption,” he said.
“We’re very clear that Virtual Walkthrough is not a disruptor; this is far from our strategy, and we’ve been extremely careful to work closely with the property industry to show that we’re actually the opposite.
“Change is happening in the property sector, but it is very much an evolution and not a revolution, and many of us are playing our part, demonstrating to clients and investors how technology innovation can be an asset, improving performance and increasing profitability.”