Market share through foreign buyers in Spanish holiday destinations is 60-90%. The average purchase price is €800K. Yet the market is underserved and is in chaos. Here are 7 reasons why.
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We asked prime real estate buyers in Spain, France and Portugal
We (Team @ Casafari.com) conducted multiple interviews with potential buyers and owners of prime properties in Spain, Portugal, and France.
- All of the interviewed customers are non-residents meaning they are foreign buyers in the non-native to them markets.
- All of them bought a second home or holiday property in the above-mentioned countries.
- Each property is prime with a price above average.
Why are real estate buyers in Spain dissatisfied?
Our interviews with prime property buyers in Spain have shown that there are serious issues on the market.
- Real Estate buyers, especially foreign non-residents and expats in Spain, make up to 60-90% of the residential real estate market in popular holiday destinations (such as Balearic Islands, Catalunya, Alicante, Malaga)
- This number reflects the global trend of foreigners dominating prime property market (source: FT.com)
- In 2013-2014, the average purchasing price through foreign buyers / non-residents was €800K
- Yet the "niche" of second homes and holiday properties is currently underserved
- 100% of interviewed property buyers admitted, their real estate agents were lacking competence and were delivering a poor service.
We conducted interviews with 19 real estate agencies in Spain
When property buyers complain about realtors, we ask the source of the evil about the reasons.
So we conducted interviews with real estate agents, too.
We came to the conclusion that realtors also suffer because of
- just 10% exclusive listings
- high competition - every realtor has same properties as the next-door broker
- every realtor fights for the same client
- realtors spend up to 40% of their time analysing competitors and there is no automation of these processes existing
- usually, when there is a property listed among 10+ agencies, only 1-2 are in a direct contact with the seller
- because agencies copy listings from each other
- and when there are price or status changes, only a small portion of agencies are acknowledged
- hence prices on properties differ
- and there are 1000s of properties still in the portfolios of agencies that were sold the long time ago (let's call them property-corpses)
Technology will help us to find and solve problems!
If both, selling and buying parties suffer and all want to have a better service, there must be deeper reasons, we thought. We decided to investigate with the help of the latest technologies and Artificial Intelligence.
- We have localised one market. Our choice - Mallorca (also known as Majorca) in Balearic Islands, Spain.
Why?
1. Because Mallorca is the fastest growing real estate market in Spain.
2. The Islas Baleares Province is one of the most stable places for the real estate investment in Spain. (Source: Forbes.com)
3. Five of Spain's 10 most expensive properties are located on this island. (source:Telegraph.co.uk Luxury)
4. The market share through foreign property buyers in Mallorca is 80%. (source:
Ibestat - Statistics Institute of Balearic Islands )
- We aggregated and matched all the properties from major agencies offering their service on the island.
- As a result, Casafari.com unintentionally became a showcase of the ultimate chaos on the luxury real estate market in Spain.
Here is what we found out:
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Why does Casafari.com help real estate agents?
We are a team of experienced entrepreneurs who have been working together for several years and have built 3 large globally successful internet technology startups. We enjoy working together and as a team we are strong as we complement each other's skills. But it was time to move on, to build something new and different from our previous ventures.
Our choice fell on the prime real estate abroad as we wanted to solve our own problem and the market itself is immensely interesting.
At the beginning of our customer development journey, we were confident to work for and on behalf of the real estate buyers. After all the interviews, research, and analyses, we had the A-HA moment. But different than we expected at first.
At first, we thought to build a completely different product to what is live now at Casafari.com.
However, thanks to the customer development methodology invented and developed by Steve Blank, we could identify the real problems.
Answering the 7 innovation questions of Peter Thiel described in his book "Zero to One", we came to the product proposition that would save realtor's time min. 10-fold!
So we became the real estate search in Spain.
Copyright: Casafari.com, All Rights Reserved
Casafari's ultimate goal is satisfaction of all parties
While conducting the customer interviews and analysing the market, we realised, if we do all the efforts for the buyer but skip solving the core problem, we will fight with windmills.
We decided to bring transparency to the market by:
- helping real estate agents with the competitive analysis and 10x save their time
- sending a regular portfolio benchmarking feed
- automatically updating realtors on status and price changes in real time
- helping with the lead generation.
Following the Lean Startup methodology, we have developed and launched a Minimum Viable Product and collected the feedback from our potential B2B (agents) and B2C clients (buyers). The perception has been great and we will move towards the target described in this post, with the means mentioned above.
If we help real estate brokers to automatize their work they spend the most time on, they will unlock more time to focus on a better service for the buyers.
Our ultimate goal is the satisfaction of all parties, especially in the segment of prime properties in Spain, France, Italy, Greece, Portugal, and other countries popular among second home buyers.
Do you think the mentioned points would be enough to improve the market?
Or do you know about other problems to be solved that would save time and money of all parties in the real estate selling-buying process?
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