An interview with the CEO of PropertyGuru

Q&As:

PS = Property Soul
Steve = Steve Melhuish

PS: What do you think about the property market in 2013 and what is going to happen in 2014?

Steve: 2013 is an important year with the cooling measures showing their impact on the reduction of transaction volumes in the first half of the year, followed by the softening of prices in the last two quarters.

In 2014, with increased supply and declining prices, home buyers and investors will continue to adopt a wait-and-see approach and delay their purchases. Developers and property owners are both taking a longer time to market their properties.

PS: What are the negative factors and to what extent will they affect the public, private and commercial property markets?

Steve: They include the lack of buying interest due to buyer/seller stamp duties; the restrictions and tedious processing of the TDSR; the change of market sentiment from positive to negative; prediction that interest rates will go up; oversupply and slowing down of population growth, etc.

For HDBs, we expect a price decline of 8 to 11 percent and a drop of 15 to 20 percent in property transactions.

Similarly, private residential properties will experience reduction of transaction volumes but will have a lower price dip of 6 to 8 percent. Buyers will be going for attractively-priced smaller units at good locations mainly in the OCR.

The commercial market will be affected by the slowing economy. Buyers are put off by the cooling measures, sky-high prices and tepid interest of investors in the local market.

More buyers are looking for overseas properties, such as projects in Malaysia, Japan, UK or even Thailand.

PS: With the property market showing signs of slowdown, real estate agencies and property agents may be facing a tough time ahead. How do you think that will affect your business?

Steve: Yes, our customers are mainly property agents, real estate agencies and property developers. Our business has been affected by the lukewarm market, with close to 20 percent down in online traffic in the last 3 to 4 months.

However, PropertyGuru is the number one property portal in Singapore with around 80 percent market share. We are relying on the listings from the more seasoned agents. We have around 17,000 subscriptions and many are spending fifty to hundred thousand dollars a year on advertising. With lower demand and higher competition, these seasoned agents are more eager to own the advertising space. That is why our business is not impacted by the 2008 sub-prime crisis. Sales was still growing at that time due to the transition from traditional to online media.

People may think that more agents will be leaving the industry. But the CEA has a fairly constant record of around 31,000 registered agents, with almost the same number of dropouts and new entrants every year. Though there may be around one-third of agents either working part-time or being inactive but still remain under the registry.

PS: One of the biggest concern for users of property portals is the accuracy of information in the listings. As a leading portal in the industry, how do you guarantee the quality of details provided by the advertisers?

Steve: We often receive complaints from our users and we take them very seriously. We have an in-house ‘Content Moderation Team’ in PropertyGuru to moderate around 20 percent of a total of 300,000 listings. Any irrelevant content or duplicated listing will be eliminated. If there is a repeated complaint on an agent, we will carry out an investigation and will not hesitate to raise a temporary suspension or termination of the account.

PS: Looking forward, what is the expansion plan of PropertyGuru?

Steve: Our next move is to go mobile. For the last two years, we have launched 16 mobile applications in four countries. So far we have a total of 1.4 million downloads, with 500 to 600 thousands coming from Singapore.

We are coming up with more advanced location-based applications that allow users to search for properties on the go, and within the radius of the users’ residence and working place.

PS: Thank you very much for your time today to share with me your market insights and your business directions.

Note: The PropertyGuru Market Outlook 2014 eBook was launched on 20 January 2014. It can be downloaded for free at PropertyGuru.com.sg/propertyoutlook2014.