The flotation of Purplebricks just before Christmas has been named as Deal of the Month for December.
The nomination of the Solihull-headquartered firm comes from regional publication Midlands Business Insider.
Separately, news agency Reuters has reported that more and more investors like the look of online agents.
Purplebricks started trading on AIM with a market capitalisation of £240.3m and with shares priced at 100p. The float raised £25m for the company.
Midlands Business Insider editor Kurt Jacobs, in naming Purplebricks as Deal of the Month, said: “The Purplebricks float is a notable deal, not just because it’s another great midlands flotation that’s been successfully got away, but because it underlines the emergence of a market – the flat fee online estate agency – that barely existed two years ago.
“A number of brands and platforms are rushing into this space: most will fail and fade quickly, and victory will go to those few who can quickly establish a strong brand and a clear presence.
“Purplebricks is already well ahead of most of the pack in its marketing strategy – it has a strong advertising presence on television – and this £25m cash input will do so much to ensure it has the funds to stay ahead.”
Separately, Reuters – under the headline “Investors eye growing number of online UK estate agents” – has reported that investors are warming to the sector.
Saying that Purplebricks is now the UK’s fourth largest estate agents by the number of transactions, Reuters says: “It charges much cheaper fees than traditional estate agents like Foxtons and Savills, and capitalises on the growing trend for online searches.”
The story goes on to quote a research firm called Hardman: “Already, around 90% of property is sold when customers contact a traditional estate agency after a search on websites like Rightmove and Zoopla, Hardman analyst Mike Foster said.
“Some analysts compared the ‘disruptive’ technology-driven new businesses with the success of taxi-hailing service Uber, which is challenging old-fashioned taxi services.
“Other unlisted online real estate companies, estimated by market research analysts to generate about $6bn in annual agency fees, include EstatesDirect.com, set up by Poundland founder Steven Smith, HouseSimple.com and eMoov.co.uk.
“Purplebricks listed on the London market in December. The stock has lost ground since then, partly hurt by a broader sell-off on world equity markets, but some analysts expect the shares to gradually recover.”
Reuters also quotes David Battersby, investment manager at Redmayne-Bentley, who told the news agency: “It’s not unusual to see some negative reaction in shares of a fairly new and innovative company at a time when the broader market sentiment is pretty bearish.
“But I believe that the experiment is going to have a huge traction. Star investor Neil Woodford’s involvement with Purplebricks gives the company more credibility.”
However, FinnCap analyst Duncan Hall played down the threat from new online players, saying many customers still prefer face-to-face meetings with traditional estate agents.
But, said Reuters, other analysts point out that some of the new online firms have formed partnerships with local experts, combining the ease of online searching with traditional customer service.
The story quotes one who said that lower, fixed prices of online players will increase pressure on commission rates charged by traditional agencies.
Yesterday, shares in Purplebricks were well down from their original £1 price tag at launch, at 75.5p.
Comments (14)
Purple Bricks were the deal of the month in December. And in January…?
At what point does a High Profile Investor, wheeled out to lure in sheep investors, think to themselves “I am starting to look like an idiot; I’ve stuck more cash into this than can be justified and all attempts to prop up the price are failing to slow the decline let alone reverse it”?
It must be a real blow to be revered as Midas only to find the latest nugget is a rock sprayed with MG cellulose #019
And another thing re: “Purplebricks is already well ahead of most of the pack in its marketing strategy – it has a strong advertising presence on television – and this £25m cash input will do so much to ensure it has the funds to stay ahead.”
How often do your vendors (and buyers) switch on the tv to find houses for sale?
So advertising your brand on TV works because?
Wrong strategy PB.
PBs’ adverts are aimed at sellers but, I feel their advert is flawed. That said, TV advertising has a place.
The reason Rightmove achieved the market dominance we have all come to love was through a brilliant TV marketing campaign that convinced sellers that they needed to be advertised on their platform.
The advert worked because it went against the perceived wisdom of the time that for a portal to be successful, it needed to engage agents and drive buyers to agents. Rightmove changed the game by recognising that agents need instructions first and foremost and, that agents would lose instructions if sellers made it a condition of giving them their business, that they be on Rightmove. The rest, as they say, is history…
Go to : http://www.londonstockexchange.com
PURP PURPLEBRICKS GROUP PLC ORD 1P
Last close
75.50 on 19-Jan-2016
39 pence to go and it will be trading at my predicted 36 p per share. Hopefully investors will wake up, smell the coffee and buy shares in a sustainable business and not these flybenites !!!!!
There is only one line at the end of this article about the FACT (not hyperbole) that the price is down a whopping 25% since it floated. I know alot of stocks are getting battered at the moment but 25%?…….
Again, as with all the stories about purpletricks, its all a bit wishy washy. 25m in the bank would do my company the world of good to keep it going for 20 years + but for this money hungry monster it will probably last until autumn at best and then they’ll be looking for more lemmings to stump up.
Have they made any profit yet? you know real profit? cash after expenses?
Come to think about it have any of them?
Express has been making good money for quite a few years, which is odd as you never hear from those guys? Their model of 2% no sale no fee maybe shows the way online should be going instead of this no profit £500 upfront fee
Have you tried google reviews, they probably have the worst reputation?
Float of the month? – 25% fall in price and losing £60m market cap… in a month since launch.That’s one stinky floater…
The shepherd bloke got it on the nose last week, if this one doesn’t work out then none of them will, that’s before the lack of growth of market share, the regular changes of mind about what they are going to shout loudest about and the big eared trunky thing in the online room; Online hasn’t worked, 500 quid upfront is all a bit 2014, you need people on the ground and you can’t do it for that fee.
So, remove the relatively small cost that an A2 unit, client meeting place, staff room, key safe, server base, 24 hour billboard and all the other stuff 1500 sq ft of high street shop does for you, still carry all the other costs and try to do it for a few bob upfront………what could go wrong?
Jonnie
It didn’t take too long to find an apparent caveat, a key sentence seems to have been missed out in this version of what jacbos said
Jacobs added: “Despite the importance of equity investment in business development, genuine cutting edge businesses still face serious challenges in getting venture capital funding because of the high risks, the relatively long time needed for returns, and because investors don’t really understand the products.”
Not to mention that 161 listing reps can not be #local to 3500+ activity centres and hope to compete meaningfully with 6 (average) genuinely local Estate Agents that service each of those centres.
It takes genuine experience and sound reputation for every agent to compete locally with their 5 main competitors so I’m at a genuine loss how anyone sane thinks they can compete and win listings off the 123 competitors that cover the 22 centres each rep is trying to service.
But, said Reuters, other analysts point out that some of the new online firms have formed partnerships with local experts, combining the ease of online searching with traditional customer service.
Local experts+online searching+traditional customer service. Er, isn’t that what a traditional estate agency offers?
Spot on… Foxtons also failed in the u.s becuase clever americans thought they were to cheap at 2% and prefer 6% fees. That with the recession saw that one off as well.
thanks to our govt. No one is moving at moment and when they do, genuine agents need to charge a decent fee. This hasnt changed in 50 years