Winkworth has performed better than most yet its current share price of about 130p is down on 213p five years ago. Hunters almost bucks the trend with its current 52p price only a little below its high of 63p earlier this year. The Property Franchise Group, meanwhile, is now 138p a share - well down on 196p almost three years ago.
Finally, inevitably, let’s look at Purplebricks: sure, its current price of around 300p is a startling three times that of its original price back in late 2015 but it’s still well off the hybrid agency’s best ever share price of damn near 500p a year ago.
So there’s a clear trend - whether an agency is regarded as good or bad, crusty or cutting-edge, the gloss has come off the sector for many investors.
So why might this be a good time to float?
There are the two age-old reasons and a couple of new ones.
Firstly, a company wants (it always says ‘needs’) investment greater than that available through direct borrowing or small-scale activities like crowdfunding. Secondly there’s a more base motive: directors of a quoted company are usually far better paid than those in a smaller operation, even if that requires certain disclosures through annual reports.
Those long-standing reasons aside, the timing might now be unusually favourable.
An IPO soon would happen with the agency sector at its trough, not its peak. So investors could make short-term gains, setting a favourable ‘mood music’ for future investors.
Because some agencies - notably Countrywide and Foxtons - had IPOs when agencies were more popular with investors, they are now seen by some as having been overvalued.
This is of course with the benefit of hindsight: years ago we all thought house prices were likely to rise and that transaction volumes would continue at a lick...those were the days.
Whatever, the reality is that Countrywide and Foxtons in particular demonstrate what some now believe to have been too optimistic a launch price: therefore the headlines, on EAT and elsewhere, inevitably refer to how far those share prices have dropped over time.
Any company launching on the stock market in the next year would avoid that - their more realistic starting price would reflect the current stodgy, stagnant market and the wider economic and political uncertainty that challenges estate agency today.
In addition, any agency floating now would probably be either an onliner or, at the very least, a traditional agency with more than a nod towards PropTech and digital innovation.
Whether we like it or not, these characteristics appear more fancied by investors as the relatively good stock market performance of Rightmove, Zoopla and possibly OnTheMarket prove. When an estate agency flies in the face of digitisation - perhaps one that promotes a Back To Basics programme? - many investors appear unimpressed.
Now what I’m ignoring, of course, is the fact that a floated company is not by definition a good company: brilliant estate agencies exist without floating and you probably have your own views as to whether some of today’s floated agencies are pretty poor.
The point, however, is that even though the current housing market is challenging (at best, perhaps) and the wider economic landscape clearly volatile, don’t rule out an agency or two considering floating in the next year or so.
And for investors, a company going public when the market is in the doldrums might just be a safer long-term bet than one valued a few years ago when life appeared rosier...
*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting all things property @PropertyJourn
Join the conversation
Jump to latest comment and add your reply
This article makes one huge implicit assertion, i.e. that estate is at the "trough" of a cycle, which will be followed by a "peak" at some unspecified time in the future. But what is the high cost high street model is actually on a path to secular extinction, like the "department store" which was viable from the 1940s to 2000s but which no longer works? My money says that high cost estate agency never recovers to what it was in thr 1990s and early 2000s.
Please login to comment