Investors looking for opportunities in the rising property market can follow the builders, developers and building materials producers. Another angle is to cover the property listings websites that advertise real estate and other related services.
Anyone who has sold a property recently can tell you how important the internet listing is – even more important than the local and community newspapers – for buyer exposure. The websites also generate ad revenue from other companies like mortgage brokers, banks and property maintenance services. They have become the nexus of property information and businesses will pay good money to be seen there.
Here are three property listing companies that you should know.
Fairfax Media Limited (ASX: FXJ) is a media company that has traditional print media, radio and online advertising. Some of the well-known publications are The Australian Financial Review, Sydney Morning Herald and The Age. For property listings it has the domain.com.au website and property classifieds in its newspapers.
The Domain property listing print and digital business segment generated $68.6 million in revenue in the first half of FY2014, up 3.5% on the previous corresponding period. The EBITDA from digital were up 49.6%, whereas print media EBITDA rose only 4.9%. This shows how digital is moving ahead of print quickly.
In addition, the company offers property related services through its Australian Property Monitors, which offers property information and data that buyers can use to research individual properties or real estate trends nationwide. Its Property Data Solutions gives real estate agencies property sales data to create reports and conduct market research.
REA Group Limited (ASX: REA) is an online only real estate listings website that has pulled ahead to become the leading listings website in Australia. It is not involved in other media nor covers other classified ads, so its realestate.com.au can concentrate its business on one thing very well.
In its half-year results, $209 million in revenue generated $70.7 million in net profit. Net profit was up 37% in the interim.
iProperty Group Ltd (ASX: IPP) is also an online-only property website, but it covers listings under the iproperty.com umbrella in countries like Malaysia, Indonesia, Singapore, Hong Kong and Macau.
It has grown the business enough to make its maiden profit in 2013. On $19 million in annual revenue it made $1.7 million in net profit. Though small right now, it may have similar potential to that of REA Group when it was starting out in the early 2000s. However, it will have competition in those markets, so the same dynamic growth can't be certain.
Foolish takeaway
Like all advertising and media, being able to grab the most attention of buyers drives revenue. Any of these companies can still grow if they can create services which make sellers want to be seen on their online portals.
Also, the companies can better secure their market positions by getting real estate businesses to use their services as their main websites for property listings.
