A Western Australia-based real estate group has set its sights on Adelaide, announcing plans to launch offices once a managing director is recruited.
Peter Peard, CEO of The Peter Peard Real Estate Group, which operates seven offices in Perth and is building another three, told Real Estate Business that Adelaide appears to offer growth opportunities for his group.
As a first step, the group, which owns 51 per cent of each of its offices, is targeting a local real estate professional with the skills and knowledge required to help get them started in the South Australian capital.
“We’re looking for an MD,” Mr Peard told Real Estate Business. “Once we get an MD appointed, we’ll look at moving into that market. We need someone with local knowledge and ear to the ground on who’s who, because I don’t know anyone there.”
“We are going into the South Australian market, but we have to find the right partner. And we have to find an MD with strong local knowledge of the Adelaide market to help us build our business model into that area.”
He said Adelaide “reminds him of Perth”, hence his interest.
Mr Peard is also targeting more growth in WA. “Our target is to have 15 offices in WA under this business model,” he continued. “We’re not interested in having 40 offices scattered all over the place.”
Mr Peard said his offices are performing strongly, with each location averaging 30 sales per month and commission turnover reaching $32 million for the group last year.
But Mr Peard stressed that his business model operates under strict guidelines.
“It’s very much you have to do it our way,” he said. “It’s like a McDonalds’ franchise, you have to do it their way.”
“I can show the profit and loss statements [from other offices]…I can prove to you it works. I’m an open book.”
“If we go into Adelaide with a good story to tell like that, there must be plenty of people around there to say, ‘I’ll have a piece of this’.”
The South Australian market is showing mixed signals. While the property market is doing it tough, the local agencies that remain in business appear to be performing adequately based on the recent Macquarie Relationship Banking 2012 Residential Real Estate Benchmarking Report.
According to the report, 24 per cent of SA-based agencies who completed the survey reported profit margins greater than 30 per cent, albeit off a small base.
“The sample size (substantially fewer agencies in SA completed the survey than other states) has played a small part in skewing the results,” Macquarie said in the report. “Anecdotally, we have not found SA agencies to be substantially more profitable than like-sized agencies in other states.
Moreover, the report found that revenue growth by states was strongest in NSW and SA (55 per cent each) and weakest in WA (25 per cent). “The somewhat strongly aligned increase in marketing and sales activity was also strongest in NSW and SA (55 per cent and 36 per cent respectively) and weakest in WA (25 per cent).”
SA agents were also doing well in maintaining property management average property management commission rates, which were up from 8.1 per cent in 2009 to 8.4 per cent in the latest survey.
Yet earlier this year, Raine & Horne SA chief executive, Kevin Magee, claimed one in 10 real estate businesses in South Australia ceased operations in 2011, and he predicted more could close their doors as principals near retirement age and agencies underperform.