Patrick's Property Politics

The Sharks are Circling

Wednesday 5th July 2023

By Patrick Bullick

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With sales transaction volumes in Central London (almost) at an all-time low, some of the big agents, often backed by venture capital types, continue to try to swallow up smaller agents and even open new branches.

Presumably, the logic is to grab market share, so when (if) sales turnover comes back they can clean up.

Some smaller agents will succumb as the owners reach retirement age but never underestimate the versatility of these independent agents and their abilities to retain their own market share. Often, they have great local knowledge, contacts built up over many years plus an ability to offer a long-term (and genuinely caring) relationship to their clients.

Staff turnover in bigger agencies often means a client never knows who they are speaking to from one year to the next.

With the infrequency of sales transactions, I guess that long-term consistency matters less but with lettings, a long-term relationship with a trusted agent really matters.

The current fashion for these big firms to keep expanding does remind me of the late eighties when the large insurance firms piled into Estate Agency, thinking they could use their branches as another outlet for their financial products. They got burnt and many ended up selling back to the original owners - for pennies.

There are some economies of scale with a multi-branch operation but there is the distinct danger they may end up with huge fixed central overheads plus layers of senior management out of touch with what is needed at local level.

Many good local Independent Agents will hang on in there.

I don’t wish it but do predict; some of the big boys will over extend themselves. One or two may even go bust or dissolve in their own Hubris - like Purplebricks.

On that cheery note,

Until next time.

PB

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