Powered by MOMENTUM MEDIA
realestatebusiness logo
Home of the REB Top 100 Agents

Must Read


PM Tech Growth Sales Marketing Industry
Do you have an industry update?

Major UK real estate disruptor to launch Down Under

By James Mitchell
04 July 2016 | 12 minute read
purplebricks

One of the UK’s largest and most disruptive real estate groups will launch in Australia by the end of the year.

Purplebricks has significantly shaken up the real estate industry in the UK, where it commands a 60 per cent share of the online market and is now the nation’s fourth-largest estate agency.

Unlike traditional agencies, Purplebricks does not have a strong street presence, and instead relies on ‘local property experts’ (LPEs) to make sales.

The online agency was last valued at £240 million when it listed on the Alternative Investment Market (AIM) of the London Stock Exchange in late 2015.

After achieving unexpectedly high growth this year, including a surge in LPE numbers, the group is turning its attention to the Australian market.

“In just our second full year of operation we are leading change in an industry that has long been stagnant and is only now waking up to the opportunities and threats posed by technological advance and changing consumer behaviour,” Purplebricks CEO Michael Bruce said.

“While others are following, we have retained our leading position, with 62 per cent of the non-traditional estate agency market, and look to replicate this success in Australia,” Mr Bruce said.

“We are confident in making continued rapid progress in the current financial year. Our investment in technology, building brand awareness and trust, expanding the data sales unit and the continued recruitment of LPEs, which we anticipate will rise to 245 by the end of June, should help us win further market share, the benefits of which are already starting to flow through our operationally geared business model.”

The group sold and completed on £2.8 billion worth of property in the 12 months to April 2016, with a further £1.7 billion worth of property in the pipeline sold subject to contract.

“Notwithstanding our growth, I am proud to say that we are the most reviewed estate agent in the UK, achieving a rating of ‘excellent’ from 5,800 Trustpilot [online consumer] reviews,” Mr Bruce said.

Purplebricks uses a flat-fee model, providing a personalised service for clients. When the company launched in April 2014 it offered a fixed-fee service for £665 plus VAT, or £995 plus VAT for expensive London postcodes.

Its biggest success to date, however, has been with a hybrid model combining a network of agents, who meet clients face-to-face, and a strong online proposition.

Technology is set to outpace real estate agents unless they find a way to differentiate themselves, according to former Microsoft vice-president Daniel Petre.

Speaking at AREC 2016, he said that while a plethora of tools and platforms are available to assist agents, it is important to remember that they do present a potential threat to the industry.

“Today, there are a lot of tools and platforms that do things to help you … [but] when you look at the platform providers, remember that they’re ‘frenemies’,” he warned.

“They’re trying to capture more layers of the vertical stack for themselves, because they can make more money,” he said. 

The ‘vertical stack’, Mr Petre explained, is a term that refers to the layers of activity that exist between a product and its customers.

“More and more of [the stack] is being taken from agents, and what you need to do is make sure that you stay differentiated,” he said.

Mr Petre pointed out that the rapid development of technology means that consumers now have better access to information than ever before.

“I’d argue that within the next year or two, price estimation will always be done better by software than [by] any human being,” Mr Petre predicted. 

Purplebricks in profile: business highlights over the year to April 2016

  • Sold £2.8bn of property in the year, with a further £1.7bn sold subject to contract
  • Instruction to sales conversion rate over 77 per cent, above industry norms
  • Ended the year with April instructions rising to 2,827
  • LPE recruitment ahead of plan, with 205 at 30 April, a year-on-year increase of 159 per cent
  • Operational leverage coming through with H2 EBITDA losses reducing from H1 by 38 per cent
  • Website visits grew to 1.23 million in April 2016 (400,000 in April 2015); Purplebricks app launched in April
  • Listed on the AIM market in December 2015
  • Plans to launch in Australia in 2016, a £3.3bn market

[Related: Tech is real estate's 'frenemy', warns former Microsoft exec]

Major UK real estate disruptor to launch Down Under
purplebricks
lawyersweekly logo

ABOUT THE AUTHOR


Comments powered by CComment

Do you have an industry update?