“There’s a seismic shift in people’s views towards technology,” Johnny Horgan tells PlaceTech as we approach the end of another pivotal year in real estate. MD for Europe at digital property marketplace BidX1, Horgan has witnessed the speed at which people have embraced a new way of doing things – and what that might mean for the future of the industry.
BidX1 has had a busy year: after doubling its UK auctions activity in 2020 despite a market slowdown, sales continued at pace in 2021, hitting €475m worldwide (excluding one final sale in Spain scheduled for 22 December). Total bids among 7,000 approved bidders came to €1.3bn, which, BidX1 says, implies a strong level of liquidity and demand in the market.
Horgan partly credits BidX1’s success to the pandemic-era growth in online shopping. “Even the most reticent digital user has had to change. Therefore, what I will buy online has gone from a pair of sneakers to wine, watches, houses,” he says.
Using that momentum, BidX1 is now plotting its expansion into Portugal and Greece in 2022 – eventually followed by Italy – while also diving into the non-performing loans market with the help of a pair of new shareholders.
Is this the end of brokers?
Still, there is more to real estate’s shift towards tech than just pandemic-driven necessity. Horgan calls it the “information asymmetry” that exists in the industry, which gives vendors an edge over prospective buyers.
“If I’m buying a house off you, you know everything about it. I don’t. You know the bathroom has a leak and the roof doesn’t work and the chimney’s blocked. I’ll find that out in due course, but at the start I don’t,” he says. “Buyers’ requirements for what they want to do to try and buy from what’s currently an opaque marketplace will push people towards tech.”
Not only do people want better information when buying properties, they want direct access to that information. As businesses like BidX1 fill that need, Horgan says the industry is facing disintermediation. Middlemen are being cut out and the value that agents add to the marketplace is falling.
He says: “I’m a very strong believer that people want to be provided information in an independent way to make decisions themselves.”
Does this mean we will see more companies compete with BidX1, creating their own online real estate marketplaces that offer the transparency that buyers want? “Inevitably,” says Horgan.
BidX1’s growth strategy
Despite the spectre of rising competition, Horgan expects BidX1 to grow 35-50% per year. Founded in 2011, the company has the benefit of being an established part of the auctions landscape. Over the last decade the company has steadily added features which, Horgan says, make it “quite different”.
“A lot of people offer proptech, but we do the full vertical, from people listing, to people providing information, to viewings, to bidding digitally and then obviously digitally signing the contract, and so on,” he says.
Looking ahead, BidX1 plans to add more services – such as valuations and curating properties for users – but the big push will be on data.
“We want to double down on our data and analytics to be able to provide [users] with better demand pictures of where requirements are to allow them to sell better,” Horgan says. This would make the platform smarter and more capable of connecting the right buyers with the right sellers.
BidX1 enters loan market
Outside the auctions space, BidX1 recently struck a deal with management consulting firm Oliver Wyman, giving it a foothold in the non-performing loans market. Using a platform developed by Oliver Wyman that was never brought to market, BidX1 will work with banks and private equity funds to sell bad loans.
With a background in the Irish capital markets industry, Horgan, who spent five years at CBRE before joining BidX1 in 2019, says: “We’ve always been in that ecosystem… selling loans digitally is something that we’ve had on our minds.”
Ireland was one of the first major NPL markets after the global financial crisis. Banks were steeped in loans that had gone wrong – by 2013 a record 25.7% of loans in Ireland were distressed – which meant their balance sheets were riddled with real estate loans that borrowers could not pay back. They had to offload these to buyers such as Blackstone and Cerberus.
More than a decade on from the crash, Horgan says that the way loans are sold hasn’t changed. Large Excel spreadsheets, data rooms and paper dominate, making the process highly inefficient.
Meanwhile, the European Central Bank is putting pressure on banks to sort out their distressed loan portfolios, in part over fears that NPLs could slow down Europe’s recovery from the pandemic. Instead of waiting for big buyers to take on hundreds of millions, or even billions, of euros worth of loans – often at a considerable discount – the ECB has been pushing for a marketplace where banks could sell smaller portfolios quicker.
“If you have a portfolio of bad loans, rather than waiting three years and getting thousands together, you should be selling every six months,” Horgan explains. The thinking is that a digital marketplace like BidX1’s would allow banks to upload loan information quickly and find interested buyers.
Despite the potential to re-imagine an industry that has yet to change, loans will remain a “sort of sidecar business” for BidX1. Focus for now will remain on auctions: expanding into new territories – with the help of new shareholder doValue, a credit management service provider in Southern Europe – enhancing services, developing data analytics and convincing users to become repeat customers (26% of bidders already are).
As for Horgan, he remains “super excited” about BidX1’s trajectory. Targeting the kind of growth the company wants might be ambitious, but, he says: “As a tech company, that’s where you’ve got to be.”