Strong debut for Foxtons on market
BRITISH property agent Foxtons has enjoyed a strong stock market debut, seeing its stock rise well above its offer price in what could be seen as a vote of confidence in the property market, particularly in London, where Foxtons is focused.
Shrugging off some concerns that its core property market might be overheating, the shares opened 19pc above the 230 pence offer price last Friday – itself at the top of a targeted range between 190p and 230p – to value the company at around £775m (€900m).
Shares are now trading at 268.75 pence.
Foxtons sold 60pc of its equity to become the latest UK property-related company to float on the back of a recovering housing market, following real-estate agency Countrywide and housebuilder Crest Nicholson earlier this year.
Both have seen their shares rise more than 50pc since going public, but some investors said Foxtons was late to the party and too exposed to London.
While Britain's housing market has been boosted by signs of an improving economy as well as help from the government and the Bank of England to ease access to finance, the pace of recovery has raised concerns about a new property bubble.
Data last week showed British house prices recorded their fastest rise in almost seven years.
However, despite being wary of proposed further government stimulus measures, housebuilding analyst Tony Williams said London was not yet experiencing a market bubble and rising interest rates in coming years would act as a natural brake.
"A bubble is when you have people buying and flipping within the space of months.
"What you have in London is a shortage of supply and a planning system that gums up the works," he said.
"This particular run will end some time between the back end of 2014 and 2016, as rising mortgage rates will cause the market to plateau," Mr Williams added.
Foxtons, which last year earned more than half its revenue from its lettings business, is focused on expansion within London, home to 40 of its 42 branches, and has said it is aiming for five to 10 new branch openings a year between 2014 and 2018. (Reuters)