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Will a Property24-Private Property ‘deal’ see an industry on the offensive?

black-holeLast week news broke that Property24 was buying rival Private Property, with Naspers’ investment relations officer, Meloy Horn, saying “Property24 has reached an agreement to acquire Private Property, subject to approvals. Due to confidentiality agreements, details of the transaction will only be disclosed once the deal closes”.

The news of the possible buyout saw many estate agents, their principals and wider industry take to social media to voice their objections and disbelief at the news.

As it currently stands, Property24 and Private Property receive the vast majority of search results and between them hold almost the entire industry’s houses for sale and rental stock – the latter firmly in the hands of Private Property.

Speaking to an insider at Private Property, HomeTimes established that there was in fact no decision on the deal as yet. “We have a number of offers on the table,” the source told us.

HomeTimes has attempted to get comment from directors at Private Property, being told that they are bound by confidentiality clauses.

Grant Smee, MD & franchisor at Only Realty, who does not enjoy direct insight into the actual mechanisms of the deal, said Naspers had been expanding its presence in the online property sector over the past few years and that he imagined this was part of its expansion strategy.

“The intense competition between the two largest property portals in the country has in all likelihood driven up marketing and advertising costs, so a further reason for the buyout could be to reduce combined costs, taking advantage of economies of scale, eliminating pricing wars in the online search engines and lastly, combining intellectual property, leveraging on each portal’s strengths in the market,” he said, noting that this move did open the door for the industry to start an industry-owned property portal. “I have no doubt that there is room in the market for competition, whether industry-owned or privately-owned. The challenge for either of these is attracting a large proportion of the agents’ listings and then driving clients to the portal.”

An industry on the offensive

Property rights, including residential, are being threatened in South Africa.

A chief executive at one of South Africa’s biggest real estate agencies was visibly upset by this possible deal. He told HomeTimes that industry needed to get on the offensive and create its own portal as there was a very real danger that the merger would create a monopoly by Property24.

“One way to stop this if the deal is approved, is to stop supplying listings to Property24,” he said. “We own the inventory and are already paying a lot to list.”

Property24 and Private Property have dominated online search engines, securing a majority of paid and organic search results over the years through the allocation of massive expenditure towards domination of searches, said Smee.

“I have no doubt that there is a space for further completion in the market, and this potential monopoly, in my opinion, opens the door further for a competitive site to enter the market,” he said. “The benefits, or disadvantages, of the buyout will only become clear once Naspers releases information in relation to their intentions with each of the portal brands.”

Agents enlist the services of property listing syndicators, such as Entegral, which allows agents to capture their lisitings once on an office management system, which then feeds the listings to Property24 and Private Property – among a host of others. Adriaan Grove is managing director of Entegral Technologies, and said “most agents see the sale as negative”.

“It would be difficult to say what the impact will be for us – either positive or negative depending on what Property24 will do,” said Grove. “I think the biggest risk for us, and agents, would be if they increase prices, and force agents to use their services and portal only. It could also be positive, as it would open the door for a new #2 portal.”

Entegral ran an online survey last week and today released the results. Almost 60% of the 250 respondents viewed the possible deal as “a bad idea” with more than two-thirds saying the current paid-for portals were “overpriced and not the money’s worth”.

Click here to see what industry players had to say about the possible deal


David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

Review overview
  • Anonymous 16th March 2017

    I came across this article purely by chance. Certainly haven’t had any notification from Property 24 yet.

    They talk about levelling the playing fields ( and thereby disadvantaging the small independents). This will not only affect those players such as Steeple etc who offer cut price commissions (which could disrupt the entire industry) but also small offices (such as ours ). It may have the consequence of putting many smaller players out of business thus leaving it all to the big nationals ? They , of course deny , that they have been pressured by the established property players – so it is possibly just an unintended consequence which would benefit the larger players..

    This – to my mind – is part and parcel of Prop24’s proposed takeover of Private Property. This takeover still has to be approved by the competition authorities. Rationally it should be apparent to all fair minded persons that it wouldn’t be approved – one certainly hopes so !. One does ask the question, however, as to why an organisation such as Property 24 which is owned by the international group and financially astute and powerful Naspers would make an offer which they know the competition authorities would turn down?. Presumably they have consulted their financial and legal persons before they made an offer ?. The big nationals (those with 50 agents – or more) are 13% shareholders in Private Property, so would certainly been party to the takeover discussions and will know far more about the discussions behind the scenes in that regard. REBOSA, IEASA and CEO’s of the large companies have been remarkably quiet on the whole issue.


    Property 24’s actions as detailed in the website address above leads one to suspect that they are already acting as a monopoly player – maybe they know something we don’t ?

    The above reinforces the belief that the real estate industry should have it’s own property portal which is democratically owned by ALL real estate companies – irrespective of number of agents. Should Property 24 gain a monopoly what would stop them from taking a further step and forming a national real estate company as mentioned elsewhere? With their financial backing they will, unfortunately, always be in a position to upset the status quo in the own interests.

    Property 24 is certainly excellent at what they do. Our company gets 80 to 90% of its leads from them. It should always be remembered, however, that they achieved their enviable position with initial support from some of the real estate industry when they were setting up their site. It should also be borne in mind that – when they were up an running – they reneged on an agreement with the established real estate players. It does show that they are not to be trusted.