Tuesday 20 March 2018

'Going into Britain was our best decision yet'

The recent sale of London-based estate agent Marsh and Parsons provided the resources to maintain 200 jobs directly in a network of branches nationwide. By Mark Keenan

THE worlds of economics and estate agency are both dominated by cycles, a fact never lost on Mark FitzGerald, the estate agent from a family of renowned economists and cycle stats crunchers that included his late father, former Taoiseach Garret FitzGerald, and brother John, the ESRI economist who was among those to call the property crash early.

It's not surprising then that the Sherry FitzGerald chief executive's knack of interpreting market cycles and remoulding his business to roll with them has preserved Sherry FitzGerald's dominant Irish market position in the decimated -- but perhaps soon to be revived -- Irish property sector. Throughout the crash the company has maintained all its branches.

FitzGerald's nous was again proven recently when he sold its London-based estate agency network, Marsh and Parsons, to recoup €44.7m for an investment of €10m seven years ago.

"Without the sale, Sherry FitzGerald certainly wouldn't be the same company today. We have 200 people employed directly in our branch network and we wouldn't have been able to sustain it.

"We've also been able to reduce our debt considerably and the sale has allowed us survive the worst of the Irish recession," says Mr FitzGerald.

Recent fears of a possible London crash suggest he might just have sold at the top. The timing of its purchase was just as prescient.

In 2005, when other Irish agencies were proclaiming a "soft landing" whilst quietly cashing in by selling out to London firms, FitzGerald was meanwhile buying as prices were falling in London and property businesses were cheap. The following year that market recovered and has remained robust ever since.

The cash-and-grab deal is reminiscent of his company's offloading of its stake of Myhome.ie in 2006. Myhome.ie was sold for €40m to the 'Irish Times' with the proceeds going to three Irish estate agencies.

That was an exquisitely timed deal just months before Ireland's property downturn. The deal means FitzGerald's company sits well to take advantage of any forthcoming property recovery here in Ireland.

As it happens the firm is already recruiting again after cutting numbers from 350 to 200 during the crash years.

"I wouldn't say the crash is over yet and I'm not going to estimate when prices will start rising again -- it would only invite trouble. But we are fine- tuning a number of aspects of our operations based on a market recovery.

"We've taken on Stephen Manek from DNG, David Ashmore from HOK, Patricia Ward of Treasury Holding and Gordon Lennox of Lennox Estates," says Mr FitzGerald.

Manek is an expert in South County Dublin residential where prices show signs of firming; Ashmore is one of the country's best "big house" country homes operators, an area in which Sherry FitzGerald is currently weak and where value is high.

Ward, who goes to DTZ, the agency's commercial property arm, is a commercial property investment expert, and Lennox's firm, which amalgamated with Sherry FitzGerald recently, is a dominant player in the north Wicklow upper mid-market.

"We're also in the process of taking on ten young graduates because we want to send a message to young people that it's a great time to get involved in the property industry because there's going to be a skills shortage."

City shortage

Controversially, he also asserts that there's a developing shortage of homes in the cities. "We're already experiencing a lack of supply for sale in certain areas and it means the market might recover a good deal quicker than policy makers would have us believe.

"In 2006 there were 145,000 private households renting, now there are 305,000. The number of households has grown from 1.46m in 2006 to 1.65m.

"Housing stock was built and then occupied but not sold, with the result that there are far fewer vacant houses around than people think. We're not talking about ghost estates in the middle of nowhere but shortages of the type of homes people actually want to live in."

So what sort of recovery would his business prefer?

"In a market that has gone down 65pc, a rise of 6pc to 7pc per annum would not upset us. But if it hit 9pc or above, then that's going to cause us some concern. We don't want boom and bust; we want controlled recovery. That means we need to plan now over what areas will need homes."

The agency's statistics and analysis division headed by economist Marian Finnegan is where he hopes to take the company's most interesting new step.

Unlike other property-based organisations at the cusp of the crash, FitzGerald didn't sideline or dispose of economists just because the company didn't like the market figures. Finnegan's "weighted basket" method allows instant and accurate value snapshots.

"Since 1996 our price statistics have always proven right. At no point did we try to hide that data. We might have provided a commentary which people didn't agree with but the statistics always stood up.

"We supplied the figures and left others to ask the questions."

Trend analysis

Inspired by information and trend analysis models already deployed by Google and Paddy Power, Mr FitzGerald hopes to develop a full-on property statistics and trends analysis consultancy business which can assess and project on behalf of individual clients.

He says the bubble and crash showed what happens when you don't know what's coming down the line and believes he can offer it professionally to local government, developers, banks, private firms and or even private home buyers.

"We've been in the business of providing our clients with reliable information all along. It's just a matter of taking it to a more complex and developed level."

If this seems an odd step, consider that Mr FitzGerald, who turns 54 next month, has been moulding his own industry since he first brokered the amalgamation of two smaller agencies into Sherry FitzGerald in 1982, aged just 24. He took a view in the 1980s that a successful Dublin agency should be on every suburban main street and started a branch war.

His was the first agency to franchise, the first to have a finance wing and among the first to develop an internet strategy after co-founding the successful Myhome.ie portal.

Apart from his agency's possibly misguided stock flotation, which burdened it with €16m debt when it had to buy back its own shares, Mr FitzGerald's trend analysis brain hasn't often been wrong.

"We thought the flotation would give us capital to make acquisitions but it didn't. What it did give us was excellent brand awareness at a time when we were busy developing our franchise network. We paid the shareholders off and then we went into Britain. And that was one of our best decisions yet."

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