The news of CoStar’s £100m-plus acquisition of OnTheMarket should have every agent in the UK rejoicing at the prospect of a complete shake-up of the property portals, which could severely curtail the dominance of Rightmove and Zoopla.
For too long, we’ve all been held over a barrel by Rightmove which has continually raised its fees to agents, despite knowing the difficulties that everyone in the industry is facing.
With almost £130m profit in the first half of this year, an uptick of 7% from the same period last year, you might think there would be some empathy from Rightmove towards its customers during these turbulent times. But alas, that appears to be wishful thinking.
The market has retaliated, as evidenced by the immediate freefall of Rightmove shares by a stark 14.3% following the announcement. CoStar isn’t just any competitor; it’s a behemoth with deep coffers, immense technological prowess, and the experience of transforming Homes.com into a market leader in the U.S.
The promise of a £46.5m investment in OnTheMarket from a company worth almost $28bn tantalises us with exciting times ahead. I, for one, can’t wait to see if it will have a TV campaign and what it will look like, in the same way I look forward to the John Lewis ads at Christmas!
CoStar has multiple platforms including Apartments.com, and an extensive network of content creators, giving them digital dominance in real estate. They’ve mastered the art of ‘freemium’ — offering core services at no cost and then monetising through premium features or data selling.
If they adopt the same model here, we could be looking at free listings, which will make a huge difference to the estate agency sector. I’ve noticed a similar model has been introduced in Australia, through a company called view.com.au.
It’s a model used by everything from search engines to social media and software companies, and much more. The Googles, Amazons and Facebook of the world leverage intimate data, knowing more about us than perhaps our closest friends or even ourselves.
CoStar’s meteoric rise to global prominence is impressive. Its commitment to innovation, paired with its in-depth analytics expertise, makes it formidable. And with OnTheMarket’s history of taking on Rightmove, this partnership promises fireworks.
However, this acquisition prompts a cascade of questions. Will Rightmove, perhaps out of sheer survival instinct, finally reduce its fees? Or, in a drastic pivot, make its platform free? As CoStar rebrands or repositions OnTheMarket, how long will it take to topple the existing hierarchy in search engine rankings – or might it even start up its own agency? Given the vast pools of data both portals are sitting on, the potential integration of advanced AI could revolutionise property searches.
And let’s not forget about Zoopla and the other portals who’ve been tossed into this turbulent sea of uncertainty. Their fate remains a tantalising question mark.
CoStar’s entry isn’t just about a business deal; it’s about challenging the status quo, redefining industry norms, and hinting at a future where agents might finally breathe a little easier.
This isn’t just business; this is the property market getting the shake-up it’s been crying out for.
Paul Smith is executive chairman of Spicerhaart
EYE Newsflash: OnTheMarket takeover confirmed as CoStar Group bid accepted
