John McGrath shares 5-year plan as ‘strong’ FY22 results unveiled

In an exclusive industry interview with REB following the release of the company’s full-year results to the ASX and shareholders, McGrath CEO and managing director John McGrath said that while the business is proud of its $19 million profit margin for financial year 2022, given the real estate sector remains highly fragmented, he’s looking forward to the future even more.

Having only returned to the top role in April of this year, Mr McGrath has expressed how he is “really excited as to what we can achieve in the next five years”.   

“In my role prior, I was able to provide some guidance from the sidelines, but it’s never the same as to when you’ve got your hands on the wheel,” he said.

Expressing that they are “moving faster [and] in a better direction than we have for the last six years”, he shared that the company has now “laid a really good foundation for growing the brand up and down the east coast of Australia and filling in a lot of the areas where we’re not represented as yet”.

“The fact that COVID brought a shift to tree change and sea change is great for the market and great for us; a lot of the areas that we weren’t in have grown significantly, and they’re certainly on our radar to be represented,” he revealed.

According to the CEO, “there’s probably room on east coast Australia for about 250 McGrath territories”.

“Obviously we have a different model to many of the big franchise networks, where we don’t have an office in every suburb,” he outlined.

“We allocate an exclusive large territory, which is one of the attractions to our business.”

Mr McGrath acknowledges that 250 is a “directional number”, and, while “very achievable”, knows it’s more than double the brand’s current count of approximately 111 offices — and, therefore, not the only ambition of the business moving forward.

“We’re focused on both directions: the depth of our productivity and the width of our growth.

“What’s just as important to us is growing the existing agents; If we can double the number of agents and grow the productivity significantly of existing agents, that’s really our goal,” Mr McGrath shared, doubling down on the brand’s plans to “retain and attract the best agents in Australia”.

“We’ve got an amazing group of agents, but if we can add another 50 per cent agents to our existing businesses and increase productivity of all of those, it’s a fantastic result for us in the next two to three years,” he indicated.

Advising how they are planning to achieve these outcomes, the veteran said the network is “very focused on recruitment at the moment” while also keeping an eagle eye on the agent experience and agent technologies.  

“We’ve had some great wins in the last quarter with quality people coming to the brand or even coming back to the brand,” Mr McGrath said.

Consolidation will also be key.

Noting that company-owned offices do take “an enormous amount of corporate leadership”, Mr McGrath said that moving forward, the business intends “to retain a smaller number of our company-owned offices and property management rent roll and will seek to sell a number of these offices to franchise ownership”.

In their recent experience, offering members of the network a transition to local leadership — and partial or total equity in a business — has provided “terrific results”.

“We have recently experienced great success and proven the strategy when a small number of our company-owned offices were sold into franchise ownership structure and will assess each opportunity on its merits,” he recounted.

There’s also plenty of scope for potential future growth beyond the east coast, too.

While the real estate network is not currently focused on the likes of Perth and Adelaide, the CEO said the group does see “great opportunities there”, having also pointed out the network’s recent and early success in Tasmania.

He indicated that they are “very excited about the quality of people” they have attracted to the island state’s operations — as well as “the opportunity”; earmarking the region as “a growing market going forward”.

Operational performance

Key drivers of McGrath’s operational performance in FY22 included the sale of 13,944 properties for a total value of $19.1 billion — a 3.6 per cent dip in volume from the 14,459 properties sold in FY21, but a 12.9 per cent boost to total value from the $16.9 billion achieved in the previous financial year.

This buffer came from a $200,000 (or 17.1 per cent) boost to the average sales price — to $1.4 million in FY22 from the $1.2 million reported in FY21.

Over the same period, agent productivity was bolstered by 8.8 per cent to 31.6 sales per agent.

The company also saw a slight (2.6 per cent) improvement in its rent roll over the 12-month reporting period, which now sits at 7,948 company-owned properties under management — reportedly achieved through a combination of organic growth and acquisition.

Other key highlights from the FY22 report included: