In a bid to compete with the rise of online real estate agents in the U.K, the country's largest estate agency group Countrywide launched an online offering of its own. Eddie Holmes and Mike DelPrete analyse this offering, and ask: was it designed to fail?
Often, we spend most of our time looking at the disruptors. But for every disrupter, there are those being disrupted. In this case that’s Countrywide, the U.K.’s largest estate agency group.
Countrywide’s stock price is down over 50% during the past 12 months, shedding hundreds of millions of pounds in value. But the firm hasn’t stayed still; in 2016 it launched its own online offering which is now rolling out across its massive network. But while credit should be given for moving early and quickly, Countrywide’s strategy raises serious questions around the viability of the offering and if it was, in fact, designed to fail.
Today it employs 11,300 personnel across 1,500 branches under 47 high street brands. Trading as a property services business, rather than simply an estate agency, Countrywide provides a range of services to homebuyers, sellers, renters and landlords.
Countrywide has been the hardest hit estate agency incumbent in the U.K. The perfect storm of macro-economic factors affecting the housing market combined with the rising competition from online agencies has brought immense pressure on its business. This has come about in the context of an organisation that was not known for the robustness or depth of their technology systems before the market dynamics changed.
Purplebricks is the largest of a new breed of online agencies. Its proposition to homeowners is a low, fixed-fee, combined with smart technology to save consumers thousands of pounds when selling their home. Together, these firms have captured six percent of the market in the U.K., and continue to grow.
To illustrate their different fortunes and trajectories, the chart below shows share price changes over the past 16 months for Countrywide and Purplebricks:
Countrywide’s stock price has taken a hammering. Meanwhile, Purplebricks’ market cap is greater than the two largest listed estate agency groups in the U.K. combined, showing a clear picture of where the investment community sees the future of the industry:
If the investment community was bearish on the entire real estate market, Purplebricks’ market cap would be much lower. But the reality of the markets shows a clear preference towards where the future lies.
This market pressure is affecting all estate agency groups in the U.K. The chart below shows how three of the largest players have seen their revenues and profits impacted over the past 12 months. Countrywide is not alone, but it has been the hardest hit:
Eddie Holmes has a wealth of experience as an entrepreneur in the property and PropTech sectors, bringing together business, property services and technology expertise in one skill set. Through these experiences and in his role as Chairman of the UK PropTech Association, Eddie has an unparalleled perspective of the challenges and opportunities facing property and PropTech businesses. You can read the article in full on his site: PropTech Consult
Mike DelPrete is a tech entrepreneur and business advisor with broad expertise in online real estate tech. As head of strategy at the online real estate portal and classifieds firm Trade Me in New Zealand, he oversaw investments and acquisitions for the publicly-traded firm. Now he travels the world engaging with leading property portals and real estate tech startups, gathering first-hand knowledge on emerging trends and industry themes. You can read the article in full on his site: Adventures in Real Estate Tech.