From a small office in Sheung Wan, Spacious founder Asif Ghafoor is plotting to reshape Hong Kong’s property market. The website he created in 2013, in part to deal with unscrupulous estate agents and old fashioned marketing tactics, has grown substantially this year, and Ghafoor is now trying to expand one of Hong Kong’s first home-grown proptech companies into the Greater Bay Area and overseas.
Six years since inception, Spacious is now one of the go-to websites for buyers and sellers in Hong Kong, gathering data on everything from search inquiries to prices. The site had 1.7 million unique visitors in 2019, about 80 per cent of them from Hong Kong, along with approximately 35,000 properties for rent, 25,000 for sale, and between four and five thousand sellers of various sizes, according to Ghafoor’s estimates. Simplified and traditional Chinese versions of the website are running, with 25 staff and US$3.5 million in funding secured in two rounds.
Ghafoor and his chief operating officer, James Fischer, are now pitching their growing database of Hong Kong property searchers to developers and agents in Australia, the UK, the US and Southeast Asia.
Ghafoor estimated that as much as a quarter of Spacious’ revenue this year will be from overseas clients, up from less than 5 per cent in 2018. Revenue grew 60 per cent year on year in 2019, allowing Spacious to break even. Meanwhile, the company has added agents in Zhongshan and Zhuhai, as well as offices in Shanghai, Shenzhen and Taipei.
Ghafoor had the idea for Spacious during his relocation to Hong Kong from London in 2008.
The former Goldman Sachs software engineer said he was surprised at how out-of-date Hong Kong’s property marketing sector was. “It was pretty poor. That was surprising, compared to how much money is at stake. But the online process was a million miles behind what was happening in the US and the UK,” he said.
Ghafoor started Spacious to capture that marketing spend, which he estimated at US$1 billion per year then. He described the websites that Hong Kong real estate agents would build as box-ticking exercises, rather than creating competitive advantage.
Users of Spacious can rate their experience with an estate agent, as a way to check undesirable behaviour, which gets filtered into Spacious’ in-house algorithms. Ghafoor said Spacious does not take commissions from property sales – they only do the online marketing of property through subscription fees for agents.
Ghafoor and his team are also trying to monetise their database by helping developers figure out the right size and type of flat they should build in given areas, depending on, say, the search history of that area.
Months of civil unrest in Hong Kong, paired with the impact of the US-China trade war, have dented the city’s property market. If there is real, lasting damage to the market, Ghafoor said it would probably become clear only in the first half of 2020.
But he also sees a silver lining. “People tend to be more open to new ideas when business is tough, because when you can’t grow the top line, you have to think about the bottom line. ‘I spend so much on marketing, so now how do I measure ROI?’ Those conversations come to the forefront in a difficult market.”
Spacious is not alone in the proptech space in Hong Kong. Australia’s REA Group, which operates the Squarefoot.com.hk website and magazine, is pushing for market share in Asia and Hong Kong with a similar online offering, though its Australian online marketing business accounted for nearly 84 per cent of the group’s total revenue of A$875 million (US$601 million) in 2018-19. Asian revenue was just 5.6 per cent of total revenue, having grown 9.8 per cent from 2018.
One Hong Kong start-up, SmartMe, promises a blockchain solution for people wanting to list Hong Kong properties for lease or sale.
But Ghafoor reckons there is still a long way to go, estimating the digital share of Hong Kong property marketing spend at just 20 per cent, compared to 70 per cent or more in the US. Fischer noted that the US market is now seeing online property companies like Opendoor experiment with entirely online property sales, conducted using biometrics and CCTV surveillance, in a sign of where the market might one day head.
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