Why is Thailand’s PropTech market so valuable…
… and who will come out on top in the battle of the portals and hybrids, 2020 and beyond?
How big is the Thailand economy? Is Thailand just for tourism?
The explosive growth in the economy has now placed Thailand as the second largest economy in Southeast Asia. With over 70 million people now residing in Thailand, the country boasts one of the lowest unemployment rates in the world, and is now one of the great emerging markets success stories.
The common misbelief is that tourism is the main driver (9% of GDP), but industry and manufacturing in Thailand make up around 50% of the total GDP of the country. This has led to a booming Thai Baht (THB) along with a thriving growing economy.
Thailand is cheap? How much is a 3-bedroom villa by the beach?
Just like the question above, there is a common perception that Thailand is cheap. In the last decade the appreciation of the Thai Baht against all major currencies along with the large influx of tourists driven to Thailand, prices have risen exponentially. Thailand is now by no means cheap, and the core cities like Bangkok and Phuket has seen prices in real estate rocket over the past years. Thailand offers some of the most exquisite real-estate in the world, with some amazing beach side properties, and no, it’s no longer cheap.
Where do we go to buy property? My friend Dave knows someone…?
Since 2010, the way that people search for homes in Thailand has completely changed. Previously the ‘mom and pop’ stores that dominated the highstreets have slowly washed away. Most expats living in Thailand previously knew another expat that sold property. Everyone had a mate called ‘Dave’ that knew very little about real estate but was selling it as the foremost ‘expert’. These days are over and ‘arise’ the new era of PropTech companies.
What are PropTech companies and who are the players?
The word PropTech has been massively overused. Companies providing not much more than a marketplace (like Craigslist or Gumtree) have now defined themselves as PropTech’ companies. You would hope that organisations bearing this name would help evolve the process of selling real estate, but instead their core focus is on selling advertising to agents and property developers.
The Thailand market is very fragmented with no clear dominant player. Although there are leaders in both the local Thai market and international market, not one company has yet shown the way. Below is a breakdown of the top 5 players based on our observations.
Why is the PropTech market in Thailand so valuable? How much is it worth?
PropTech companies in western markets have evolved and now carry very large valuations. Currently we are in the era of valuations based on revenue and not core profit, driven by the IPO’s and domination of tech companies globally.
Comparisons can be drawn against western markets such as the UK, where Rightmove who is the clear leader is valued in excess of US$7.5 billion… yes, that’s Billion with a capital B. The company is trading at around 20x its annual revenue (2018). This trend exists across all core established western markets with REA Group in Australia and Zillow Group in America showing similar trends.
This has got many in the emerging markets very excited, with the rapid growth of the economies in Southeast Asia. With a quickly scaling population and growing GDP and every evolving property market, we expect there to be the rise of the new billion-dollar PropTech player to be a definitive guarantee as opposed to a what if. It’s not really if for Thailand, it’s now just a case of how quickly the market consolidates.
♥ Traffic – We estimate around 1.9m sessions, making this platform the most popular according to our statistics. Established in 2007, 13 years has seen DD grow to be the market leader, focusing on sales and rental clients.
♥ Brand Recognition – DD most definitely has the best brand recognition domestically. This is down to the large audience and the scale of the parent company Property Guru who also hold No.1 positions in multiple regions.
♥ Inventory – DD has a lot of properties listed by owners and agents. This is a minefield but defiantly has the largest stock count of all platforms.
x Transparency – DD favors paid listings as ‘exclusive’ which just means that the agent or owner has paid. This is not representative of what the consumer is looking for. Also multiple agents listing the same units at invalidated prices creates misinformation for consumers.
x Lack of Innovation – The market has been waiting for DD to innovate but it seems that they have just stood still. We’re not too sure if this is to do with the fact that Property Guru was about to IPO and they wanted stability, but the company has not really innovated in the market.
x Agent Focused – DD is purely built around revenue from agents and developers. They are effectively a marketing platform for these actors and their focus on helping consumers is limited.
Our Verdict is 8/10 – There is no denying that this is the biggest platform currently. Lots of traffic and visitors but a lack of innovation leads DD open to being toppled and that will be a slippery slope for the company moving forward. Consumers are bending towards products that offer more value that just pure listings so will be interesting to see how DD develop over the next 5 years.
♥ Growth – DOT has grown over the last few years to become a number 2 in the market. They have 2 brands Thailand property and Dot Property which is effectively the same platform in English and Thai languages. Between both platforms they serve a lot of users.
♥ Strong EN/TH – DOT has both dotproperty and Thailand-property brands which are both very strong in the respective Thai and English languages. This company is the only platform to lead in catering for both markets.
x Conflict – DOT is a real estate portal that serves agencies, but also owns its own agency called Homes Thailand that sells real estate in Thailand. Throughout the supply chain, the company chooses to empower their customers but also competes in the same business as their customers
x Quality vs Quantity – After speaking to multiple agents, there are many disgruntled with the quality of lead flow that DOT provides. Once logged into the platform, DOT then tracks user’s behavior on site, and sends potential leads without the consumers consciously requesting. Not sure how scalable this tactic is especially with global growing concerns regarding use of data.
x Agent Focused – Like the other portals, DOT is focused on empowering the agents and not the consumers (buyers or renters). Their revenue streams are linked heavily to developers
Our Verdict is 7/10 – DOT has seen an amazing growth strategy predominately fueled by its parent companies. Now the acquisition by Lifull puts the two largest aggregators (Mitula and Trovit) together, empowering DOT and Thailand-Property by sheer force. The core downside is the absolute conflict of interest (Homes Thailand) which the wider market is unaware of, but have limited choices to diversify.
♥ Transparency – FazWaz does not take payments from home owners, agents or developers to rank listings. Properties are rank by machine learning, that serves consumers what they are looking for as opposed to showing properties that people have paid to feature.
♥ Quality – The company has a centralized team that qualifies every buyer or renter that comes through their platform. Only leads that are fully qualified are passed to either the owner, developer or agent, so this results in a much better customer experience.
♥ Innovation – FazWaz mission is to ‘make buying a property as easy as renting one’. This has led to lots of innovative technologies that facilitates the sales process. The company is talking about dynamic pricing, live auctions and selling property online, in a bid to evolve the Thai real estate market.
♥ Consumer Focused – Because FazWaz is a hybrid model, their core user base is the home owners and consumers. This puts a consumer first focus on their business model which leads to added value through the supply chain.
♥ Search – Moving towards 2020, you would expect that map-based search is the default for all companies, but so far only FazWaz has managed to adopt this. With the golden rules of real estate being, “location, location, location”, FazWaz finds an easy way to help the users navigate.
x Market Share – FazWaz is relatively new to the scene (formed in 2015) and has been growing but is still relatively small in relation to the leaders.
Our Verdict is 8.5/10 – FazWaz is working to change the way people buy properties in Thailand and is a standalone offering in the market. The company is really innovating in providing solutions for real market problems. Currently, its still not one of the most trafficked platforms but if the growth continues down the same trajectory, FazWaz will probably become the dominant player in the Thailand ecosystem.
♥ Data – Baania has become the data kings of Thailand providing the most useful data to the market. There has been a real focus around this aspect providing as much information about projects, regions or the overall market.
♥ Inventory – Baania boasts probably the most up-to-date inventory on projects across Thailand. They literally have every project with up-to-date reviews, information on builds and much more
♥ Innovation – Baania is pioneering some interesting innovation that includes price estimates and locations scores. This are similar to what is available in the USA market, but updated to Thailand. A lot of their inspiration comes from Zillow / Trulia.
x Too Much Data – Similar to this being a positive it can also be a negative. Some users don’t want to be overloaded with data, and just want to simplify the buying process. Some of this should be restricted to professional investors who will find this information more useful
x North Focus – Baania has launched out of North Thailand, and the focus is clearly on the northern regions. They are coming more south but have yet to gain market share in the core markets such as Bangkok and surrounding regions.
x Unclear Focus – We are not sure if Baania knows their end game. Are they trying to be a portal, agency, bank or something else? Trying to be the everything of real estate, will probably confuse users and dilute this mission
Our Verdict is 7.5/10 – Baania is a clear one to watch. They are doing some really interesting things in the market, but face stiff competition from DD and DOT who have significant comparable market share. The do have a very compelling offering and if they grow market share, they could provide a real challenge to the leader’s dominance.
♥ Bangkok – Hipflat are certainly well known in the capital city. They pioneered search by project in Thailand and have historical gains in both search and branding that has allowed them to maintain a key status in the main region in Thailand.
♥ Projects – Hipflat rank online very well for buildings across Thailand. If your looking for a specific building or project you are almost sure to find the Hipflat site in some capacity.
x Innovation – Once the golden child of innovating the Thailand PropTech market, Hipflat has somewhat stood still in recent years. There was a shift towards blockchain (buzzword for 2017) but nothing more has really happened on the platform.
x Growth – Hipflat was once viewed as a number 2 positioned marketplace, but DOT has now far surpassed them. The numbers that we are viewing, Hipflat is bouncing up and down but not moving forwards.
Our Verdict is 6.5/10 – Hipflat was the poster child of Thai tech startups, has slowly fallen away from the top. The business really needs to shift around, to become competitive again. They still have some core advantages and will be interesting to see how they move forward in 2020. The lack of growth really diminishes their overall score.
Overall verdict – With DD owned by ProperyGuru and DOT owned by Lifull, in order for another player to compete and challenge for market dominance one of two things will need to be achieved. The most obvious is consolidation of lower players into a bigger entity to gain market share.
The later and more difficult option is for one of the companies to provide real innovation in a market lacking in transparency. FazWaz and Baania are definitely the ones to watch as they provide the biggest disruption to the current market. DD need to capitalise on their position and DOT needs to become more transparent about their business before alienating the market.
