PropertyIQ buying Terralink is a Bad Thing

This weekend saw the announcement that Terralink and PropertyIQ will be merging (see here and here for the respective releases). The basic fact is PropertyIQ (the QV joint venture with Australian company RP Data) is buying the number 2 player in real estate data provision in NZ.

This is a development that is not good for the real estate industry or the consumer. We have outlined the existing very controlled state of this area in NZ in the Watch My Street website here and this merger extends that control even further.

Let's look at the application side first:

Real Estate agents in NZ generally use either PropertyGuru (Terralink) or RPNZ (PropertyIQ) for property information to conduct appraisals. Obviously that becomes a sole supplier after the merger.

Both Terralink and PropertyIQ target their respective applications and websites (eg terranet.co.nz) at banks, insurance companies, property developers and investors - with the same post merger consequences.

The consumer is directly affected too. PropertyIQ sells consumer reports through the QV.co.nz website, while Terralink sells them through zoodle.co.nz. Now the consumer has a sole supplier of reports.

We haven’t mentioned valuers and what has been going on there. It has been interesting chatting to valuers about how PropertyIQ has been “commoditizing” valuations by working with the banks directly on a panel approach.  QV of course competes as a valuer. The merger strengthens QV/PropertyIQ’s hand in that industry too.

On the data supply side, the vast majority of rating valuations in NZ are done by QV - no one else has the size or scale to compete for the large councils work (and of course the trend is for councils to merge making it even harder for smaller valuation companies to compete for this work if they even wanted too).

QV’s 50% owned subsidiary PropertyIQ is the only source of national district valuation roll information today. No one else has the scale to compete - Terralink in fact tried and gave up. They have to source the data from PropertyIQ. Even if you wanted to try PropertyIQ has some contracts that prevent councils from supplying you the data.

PropertyIQ have the source data side basically wrapped up. After the merger they have the application side pretty much controlled too. The companies are there to maximise profits and as we have previously outlined their current usage terms and conditions are tough - that’s not likely to change with less competition.

New Zealand is a small country and one of the benefits outlined is the ability to expand internationally with the greater capability. Interestingly one of the reasons for the original sale/purchase by QV that created PropertyIQ was access to international markets and bringing their technology to NZ.  PropertyIQ is 50% owned by Australian data company RP Data - any access to that market is already controlled by their owner. RP Data is owned by USA company Core Logic.  If there is great technology in New Zealand there may be the opportunity to see the owner use it elsewhere. The more usual trend in these types of situations is the NZ business becomes a branch sales office selling overseas applications, with the websites and apps even hosted offshore.

I hope the Commerce Commission decides to take a good hard look at this.