Opportunity knocks for agents
One of the surprising aspects of the collapse in the property markets has been the "status quo" among the estate agents, with no major failures, mergers or takeovers.
This contrasts with the downturn in the late-1970's and the deep recession of the 1980's which both saw major firms merging to survive and long familiar brand names disappear. Alongside that there was a spate of departures from struggling firms with good agents leaving to form new partnerships, many of which continue today.
This current recession produced certainly the quickest collapse in fee income of them all, and it continues. Yet the major players are all still in place and some are back in expansion mode.
The main reason for this is the amount of work created by Nama, banks and insolvency practitioners who need valuations and sales expertise. Firms have survived by switching manpower into the valuation and property management areas, which are low margin but at least it pays the bills.
Some commentators have found it ironic that the very professionals that benefited from the boom are surviving by working through the insolvencies. But if I had a property problem I would be consulting the experts who know their markets and how to sell and not an economist, lawyer or journalist.
Another survival factor has probably been that most of the major players are now owned by global firms, who may have provided some support in the crisis. That said, there have been heavy job losses on the residential agency side and some new homes departments are down from staffing levels of 25 to just one or two staff.
Probably the only major change on the Irish scene has been the launch of Allsop Space who pioneered the large auction format here.
One major difference between the Irish and UK markets was that usually only the better properties were auctioned here whereas there is a long tradition in the UK of bundling large numbers of secondary and insolvency properties into day long auctions with low reserve prices.
I suspect that the top firms here were paralysed by concerns over damaging their "high-end" brands by holding these auctions. The obvious solution was to launch a subsidiary company with a different brand but Allsop Space were "first to market" and can be congratulated for wiping the eyes of some big players. Allsop Space have sold over 900 properties in two years for a total value over €130m. Stephen McCarthy of Allsop Space told me that they will auction up to 200 more properties on May 15 next – half of them commercial.
My own experiences reflect some of the above. I started out in the business in 1979 with Osborne King and Megran. It was a top name in residential but probably only fourth in most commercial areas.
The firm expanded its market share dramatically in the 1980's, driven by a group of people who luckily didn't really know what a recession was.
There was a strategic leap forward in 1987 following the merger with Hamilton and Hamilton to form Hamilton Osborne King. That merger was precipitated by instructions from Laurence Crowley, the receiver of the H. Williams supermarket chain.
There were so many properties involved that neither firm could have handled the job alone. The merger was launched with two pages of advertisements for supermarkets all over Ireland and the firm (now Savills) never looked back.
Today's market is one of opportunity for estate agents. Markets have stabilised and some higher fee earning areas such as investment property are coming back strongly. But will any of the agents make a strategic leap? Is there a merger in the offing to combine two firms with complementary strengths to create a new dominant force?
Part of the opportunity is realising that all estate agents look similar to their clients and the public. There are large, medium and smaller firms but within those brackets the firms provide similar services, at similar fees, from similar offices, by similar staff with similar qualifications and similar overseas networks. The opportunity is to become the outstanding player by recruiting the very best people and inspiring an outstanding level of service.
This of course requires investment and that is not appealing in a recession. However as George Soros and Michael O'Leary would tell you, the time to short sterling and buy aeroplanes is when no-one else is, and with some competitors "bombed-out" now may be the time to make a move.