Breaking Property News – 19/10/2023
Daily bite-sized proptech and property news in partnership with Proptech-X.
OnTheMarket likely to be bought by CoStar Group in £100M deal
OnTheMarket, the third of the big three UK property portals, which only launched in January 2015 is possibly set to be snapped up by the property analytics and data leviathan CoStar Group Inc which has an annual revenue of $2.2BN. The acquisition has a price tag of £100M, and whilst there is no confirmation from OnTheMarket it is thought that by the end of the week a deal will be done.
If the present speculation is correct it will be a huge uptick on the portals trading price on AIM, and so is likely to be embraced by the board. The benefit to the CoStar Group would be that it adds another property portal to its stable, which would allow it a distribution channel for services, increasingly property portals are changing their clothes from being just digital marketing players.
For the OnTheMarket brand, the huge financial resources that it would have and indeed the commercial expertise that it would also have, given this a core element of CoStar could cause huge headaches for Rightmove and Zoopla who have been sluggish in changing their portal business model.
On a personal level I have always been a huge advocate of Jason Tebb the present CEO of OnTheMarket, as he fully understands that agents need the new digital handtools to carry out their frontline work, so in a strategic sense having an owner of the portal like CoStar Group with a digital DNA would be a great match. After all CoStar Group does have the tagline ‘A GLOBAL LEADER IN THE DIGITAL TRANSFORMATION OF THE $300+ TRILLION REAL ESTATE INDUSTRY.’
Whereas Rightmove is a listed FTSE company, and seems content with its ‘winning’ model of increasing agents fees annually in return for basically being a digital billboard. And whilst this has given a 70% profit margin for several years, apart from the Covid-19 blip, its weakness is that younger people do not use propery portals to buy and sell, they use a variety of platforms and super Apps, and without those visitors agents may not see the value add anymore. Maybe now OTM will be the one to watch after all.
Association of Real Estate Funds wants government to facilitate freer Defined Contribution investment
Press Release London, 18 October 2023: The Association of Real Estate Funds – the trade body for investors in real estate, with £50bn in member assets – urges the Government to remove barriers and impediments to investments in productive assets by defined contribution pension funds. This comes in the Association’s Submission for the Autumn Statement 2023 (which is on 22 November). The Association, known as AREF, has proposals for five areas:
1. Maintain the current universe of daily-traded commercial real estate funds. These funds provide daily liquidity for the majority of the time through holding relatively high levels of cash, with rare suspensions under extreme market conditions. They should not have longer notice periods imposed until other avenues have been opened for Defined Contribution funds.
2. Encourage or mandate DC platforms to hold non-daily-traded assets. The persistent problem of platforms being unwilling to offer DC funds access to illiquid assets must be solved.
3. Encourage or mandate smaller DC funds to merge to create funds with scale and the ability to invest in large real assets.
4. Move DC funds from an individual account model to a collective DC model.
5. Address the correct gatekeepers and incentivise them to take managed risk. Focus must be placed on the investment consultants and the in-house teams of the very large DC schemes – and not the underlying pension savers, most of whom invest through default funds.
AREF’s submission concludes: “If DC investment in illiquids does not grow to fill the gap left by the decline of DB investment, there will almost certainly be profound consequences. Levelling up will be more difficult to finance, as will addressing the housing shortage and financing the net-zero agenda through retrofitting.”
Paul Richards, managing director at AREF, says: “The handbrake’s been left on regarding Defined Contribution investment in illiquid assets – from housing to city centres – and the Government can help to take it off. Doing so will help redirect billions in defined contribution pension scheme savings into housing, levelling up and net zero projects. These are the great domestic issues of our time. We and our members are willing to help solve them – but we need a lot of change to enable us to wheel into action.”
(AREF) is the body that represents the interests of its member funds, those firms that advise and support them, and the end customers that invest in the funds. Membership includes over fifty funds spanning the leading real estate fund management houses in the industry, through to smaller, specialist boutiques, with a collective net asset value of over £50bn (at 31 Dec 2022).
With more than fifty affiliate members and a number of associate members. It is a recognised by policy makers, regulators, tax authorities and other official organisations as the leading spokesperson for real estate funds, so through bringing all stakeholders together we have the ability to influence the way our industry evolves.
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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