CoStar Group, a major US property company, has made a bold £100 million takeover bid for OnTheMarket (OTM). The move has ignited speculation that this acquisition may finally provide a formidable challenger to the long-standing dominance of Rightmove, a leading player in the UK property listing sector.
CoStar Group, renowned for its ownership of US property portals Homes.com and Apartments.com, has set forth a vision to aggressively expand OTM’s market share and fortify its position in the UK property market. CoStar has a track record of transforming property platforms; in 2014, it acquired Apartments.com, which was then fifth in the US residential rental platform rankings, and turned it into the nation’s top player. Similarly, Homes.com, previously ranked sixth among US residential property portals with 6 million unique visitors, has emerged as the fastest-growing residential portal in the United States, boasting over 100 million unique visitors by September 2023. Today, Homes.com is the second most trafficked residential marketplace in the US.
CoStar Group has signalled its intent to infuse £46.5 million into sales and marketing activities during the first year of integration between OTM and its network. This financial commitment stands at six times OTM’s current annual media expenditure and more than triple the annual media spend of Rightmove.
OTM has expressed its support for the takeover bid and will seek shareholder approval in a vote scheduled for the fourth quarter of this year. The acquisition might mark the culmination of efforts to establish an agent-backed portal for the industry. Online agency founder-turned-property commentator, Russell Quirk, opined that this development could indeed pose a challenge to Rightmove’s market dominance and compel the company to reconsider its fee structures.
In a blog post on his ProperPr website, Quirk stated, “If CoStar has put £100 million into OnTheMarket, it’s not a private equity play. It’s not to make it leaner to re-sell it. It’s to make it grow and to dominate the sector.”
While the future of OTM under CoStar’s ownership remains to be seen, some industry observers suggest that Jason Tebb, the current Chief Executive of OnTheMarket, may not be the individual to lead the portal through the forthcoming phase of transformation. They anticipate that, as with previous CoStar acquisitions, management changes may be in the pipeline.
As this acquisition takes shape and OnTheMarket undergoes a rebranding and consumer marketing strategy overhaul, the impact on Rightmove’s position in the UK property market is eagerly anticipated. The initial market response to this development has been significant, with Rightmove’s share price experiencing a 10% decline while OTM’s shares surged by an impressive 52% during recent trading sessions.
It’s clear that the property market landscape in the UK is poised for a substantial shake-up, and the potential for increased competition is a topic that industry insiders and investors will be closely monitoring in the coming months. Rightmove’s leadership may indeed be facing some challenging times ahead as CoStar Group takes bold steps to expand its influence in the UK.