Competition in the Real Estate Portal Market Led to Lower Prices
An analysis of the Tax and Customs Board's 2019 turnover figures shows that increased competition led to lower real estate ad prices last year and a redistribution of the real estate portal market. Due to lower prices, clients paid a total of 13 percent or 1.2 million euros less for real estate advertisements last year.
Although real estate sales were very active last year and the number of real estate transactions and advertisements did not decline, due to lower prices, the combined revenue of the three largest portals fell last year, according to a Kinnisvara24 analysis. While the three largest portals sold real estate advertisements and advertising in 2018 for a total of 8.99 million euros, in 2019 the three portals' combined revenue was 7.78 million euros.
Statistics on turnover declared to the Tax and Customs Board in 2019 show that with the entry of a third portal to the market, competition increased and provided significant savings to individuals and real estate agencies – 1.2 million euros. According to Kinnisvara24.ee CEO Kalev Roosiväli, in 2019, significantly less money had to be paid on average for a real estate advertisement than the year before.
The main reason for the changed situation is the new portal Kinnisvara24.ee launched to the market in spring 2018, which was founded by five real estate agencies in cooperation with Ekspress Grupp. "The entry of a third portal to the market made a 1.2 million euro gift to advertisers. When previously there were only two significant real estate portals in Estonia, both belonging to the same owner, the lack of competition allowed prices to be raised multiple times. Real estate agencies and individual real estate owners had no choice but to accept the price increases. The goal of the real estate agencies in establishing the new portal was to fight against the monopoly pricing policy that dominated the market, and last year this already had some effect, but the situation is far from resolved. Kinnisvara24 did grow and shook up the market to the benefit of clients, but making this gift requires large investments, which is why we ended the 2019 financial year with a loss of 326 thousand euros," explained Roosiväli.
He said that City24 and kv.ee, sold last year to international investment firm Apax Partners, remain in a dominant market position and hinder competitors' entry through various restrictions that prevent free market formation, the most important of which is the restriction of free movement of business clients. The Competition Authority has also initiated proceedings in the latter regard.
Kinnisvara24 was the only portal that, as a new entrant, managed to grow its revenue in 2019. The portal, which entered the market in April 2018, generated revenue of 122 thousand euros in its first nine months, which grew more than fourfold to 519 thousand euros in 2019.
| Portal | Company | 2018 revenue in euros | 2019 revenue in euros | Revenue increase/decrease in euros | Change in percentage |
| kinnisvara24.ee | Kinnisvarakeskkond OÜ | 122 530 | 641 674 | 519 144 | 424% |
| kv.ee | Allepal OÜ | 5 786 857 | 4 671 955 | -1 114 902 | -19% |
| city24.ee | Kinnisvaraportaal OÜ | 3 079 514 | 2 468 866 | -610 648 | -20% |
| Portals market total | 8 988 901 | 7 782 495 | -1 206 406 | -13% |
Source: Turnover declared to the Tax and Customs Board in 2019
Kv.ee's revenue fell last year by 19% or more than one million euros. The biggest market share loser, however, was City24, whose revenue fell by a fifth or over 600,000 euros.
Kinnisvara24 is the second largest real estate portal in Estonia by number of advertisements, founded by Ekspress Grupp and Estonia's leading real estate agencies in 2018. The portal is managed by Kinnisvarakeskkond OÜ, which is 49% owned by Ekspress Grupp and 51% by five real estate agencies.
