PropertyGuru (NYSE:PGRU) : The Future Of Property Transactions?

PropertyGuru has recently made its debut on the NYSE following its merger with the Bridgetown 2 SPAC. Singaporeans would be familiar with this PropTech company which is frequented by agents and home-buyers.

While most of us know PropertyGuru through its online residential marketplace, a lesser known fact is that this company also owns and operates online property marketplaces throughout South-east Asia.

It’s been expanding into other verticals as well. Its business model also involves Mortgage loan marketing for financial institutions such as banks. As well as Data analytics and Software services.

As of January 2022, the company features over 3.3 million Real estate listings, catering to more than 52 million home-buyers. Subscription rate among agents stands at more than 57,000.

The Property Brokerage Hub

PropertyGuru functions like a Consortium of PropTech companies servicing various segments of the industry. It owns the PropertyGuru platform which operates throughout South-east-Asia. Recent acquisitions such as Batdongsan.vn, iProperty.my, and Thinkofliving.com help boost it’s market share, and user base.

Singapore is the Stronghold of the group, and provides the vast majority of EBITDA. The company boasts leading market shares in the 5 key regions in SEA.

Based on Engagement market share, which is time spent on the PropertyGuru website.

Propertyguru generates most of its revenue through agents, which subscribe to it’s platform in return for the ability to list properties, conduct marketing, and utilize data.

Subscriptions are offered in a tiered level, in which agents pay a small sum to use the platform, which they can upgrade if they need more features or require more listing space.

Apart from subscription revenue, income is also derived from digital marketing for new projects, SAAS sales automation, and mortgage loan commissions. The company also provides property market intelligence and valuation models for various agencies.

These are some products offered to agents and developers;

This was what we found online. We understand that prices have since increased further in Oct 2021.

A Competitive Edge

Tech innovations give this company an edge to dominate the market. These include Artificial Intelligence, Immersive Content, Data Solutions, and Enterprise Software.

Such features can really value-add to both agents and developer sales teams, making PropertyGuru a indispensable partner to those who work in the brokerage business.

The platform can also further enhance it’s attractiveness by expanding into adjacent industries such as Fintech, Mortgage Loans, and Property Insurance. This will help in customer retention and also provide a self-sustaining network effect.

Speaking Of Money

PropertyGuru collected S$100.7m in revenue for FY2021. This is slightly better than what management predicted initially. A rough conversion into USD would amount to about US$74m.

The difference is huge when we put this level of turnover beside other companies in the Property Brokerage space.

PropertyGuru clearly still has room to grow.

Management projects a turnover of S$145.1m, and a return to positive EBITDA for FY2022. This would represent a YoY growth of 44%, which seems quite adventurous to us.

The Market Opportunity

South-east Asia has a lot of advantages for digital and software companies. A large, young population with high internet penetration are among some of the characteristics observed from this market.

The PropertyGuru Group believes that this represents a opportunity for them, to grow the business alongside the region. Major tailwinds such as the expansion of the middle-class, and digitization should support PropertyGuru’s business model.

We’re pretty stoked on this PropTech company, and the market share it controls. The property industry has always been a pretty lucrative one to broker.

If the company is able to continue to value-add to participants, it should be able to grow it’s turnover and earnings, which will translate into gains for investors as well.

Yet we’re aware that it’s current revenue model is heavily dependent on agents, and market demand at times. We’d also be careful not to overpay for it’s shares, as turnover rates are still insignificant, and growth might take several years.

A solid ROI is likely to take quite a while, so dollar-cost averaging should be the way to go if you’re keen.

Casey H

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