PropertyGuru Exiting Indonesia as SE Asia Expansion Fails to Produce Profit

PropertyGuru, an online property marketplace backed by KKR and TPG, plans to pull out of the Indonesian market this year as Singapore firm retreats from a Southeast Asian expansion that has generated three years of red ink.

In a statement on Monday, group chief executive and managing director Hari V Krishnan said that the company’s Indonesian marketplace Rumah.com will cease operations on 30 November.

The NYSE-listed firm is also ending FastKey, a software solution connecting agents across itsl markets in Jakarta, Malaysia and Singapore, after the group suffered a S$129 million net loss in 2022 to rack up its third consecutive year in negative territory.

“Our efforts and focus must be towards businesses that are already driving or have shown the potential to achieve scalable growth while ensuring strong unit economics,” said Krishnan. “Though these decisions are tough, they are necessary for us to focus and deliver our next phase of growth and will allow us to prioritise our resources accordingly.”

Going Away From Growth

PropertyGuru, which is backed by US private equity giants KKR and TPG, is shutting down Rumah.com nearly 12 years after acquiring the property portal in 2011 to buy into the Indonesian market. The company followed four years later with the purchase of RumahDijual.com, another Indonesian property portal which now also operates under Rumah.com. The company did not disclose its expenditures for the two acquisitions.

Krishnan said the company needs to periodically review its progress and streamline operations while prioritising resources where necessary.

“This decision has not been taken lightly, and we recognize the impact it will have on our valued Gurus and customers, who we have served for well over a decade,” he said.

The firm vowed to offer support to 61 affected employees through enhanced severance packages, healthcare and assistance in their job transitions. It will also refund the fees of agents and follow through on contractual commitments to vendors, the company said.

PropertyGuru had a 22 percent engagement market share in Indonesia where it achieved S$2.6 million in revenues last year, up 13 percent from S$2.3 million in 2021. Despite that growth, Southeast Asia most populous nation remained the company’s smallest market, accounting for under 2 percent of total revenues worth S$135.9 million in 2022, based on PropertyGuru’s annual report.

The company had acquired Rumahdijual.com shortly after raising $124 million from a trio of investors, including TPG, Australian VC firm Square Peg Capital and Indonesian media conglomerate Emtek Group in 2015, although the local media firm had exited its investment by 2020, according to media reports.

The firm said they will continue to host PropertyGuru Indonesia Property Awards. After leaving the Indonesia market, the company will continue to operate in Singapore, where it sourced more than half of revenues in the first quarter, followed by Vietnam, Malaysia and Thailand.

Losses Continue

As the firm bids farewell to Jakarta, Krishnan vowed that PropertyGuru will fulfil its commitments to existing customers before shutting down FastKey operations in the country on 31 July 2024, as well as in Malaysia and Singapore by 15 October next year.

“As we move forward, we are engaging in conversations with the affected FastKey team members, exploring redeployment opportunities within the Group and ensuring that they are supported throughout this period of change,” he said.

Winding down the two businesses is not expected to have a material impact on PropertyGuru’s financial outlook for this year, he said.

The firm has placed expansion across Southeast Asia as central to its growth strategy over the past several years, which Krishnan emphasised in an interview with Mingtiandi a month before the firm went public through a special purpose acquisition company (SPAC) listing in March 2022.

To date the expansion has failed to result in profits, however, with PropertyGuru having been in the red since 2020. Last year the company was able to reduce its loss to S$129 million from S$187.4 million in 2021, although that result still underperformed its S$14 million loss in 2020.

In 2019 the company booked a profit of S$8.6 million on an EBITDA basis.

“Our efforts and focus must be towards businesses that are already driving or have shown the potential to achieve scalable growth while ensuring strong unit economics,” Krishnan said in his statement on Monday.

PropertyGuru booked a net loss of S$10 million in the first quarter, down from a S$120 million net loss in the same period last year.

Note: A previous version of this article mistakenly referred to PropertyGuru CEO Hari V Krishnan as Hari V Krishna and indicated S$1.9 million in 2022 revenues instead of $1.9 million. The story has been updated to correct these errors.