Imagine a property website dedicated to the Christchurch market, not the whole of Canterbury, but just serving the Christchurch market, a population of around 350,000 people. A nice tidy little business especially if it was the website of choice for buyers, sellers and renters in Christchurch.
Now imagine if the news tomorrow stated that this website was just bought by Fairfax media for $53,000,000!
In effect this is what happened today, not in NZ but in Australia as Fairfax owned Domain (the second player in the Australian market behind Realesatate.com.au) acquired the website of AllHomes. It serves the Australian Capital Territory - a region of 381,000 people.
The website is the leader in this market. It is forward thinking as it has moved beyond a subscription service to charge a listing fee of not $159 per listing as Trade Me is now charging but upwards of A$600 a listing.
Certainly Fairfax is paying a fair premium to achieve consolidation in this market in order for it to better challenge the supremacy of Realestate.com.au. It will have to be seen as to the success it has in running the site as a separate business before integration into the Domain stable.
Benchmarking this acquisition is difficult as city specific property portals are rare. However on a population basis this acquisition values the Allhomes business at $139 per person in ACT. This compares with a current valuation for the REA Group which owns Realestate.com.au edging over $6 billion which equates to $277 per head of population in Australia. Both of these far surpass the collective value though of the two powerhouse property portals in the UK Rightmove and Zoopla which with a combined market capitalisation of over $6 billion equates to a value per head of population of just under $100.