The Irish estate agency business is to undergo a major restructuring following the decision by the Sherry FitzGerald Group to launch a property advisory franchise service. It is the first Irish professional services firm to use a franchise company to expand its operations. The group plans to have a network of 40 estate agents trading on a franchise basis in most large provincial towns within three years. It is also opening branch offices in Cork and Limerick, in addition to the recently established office in Galway. This will bring its branches to 14.
The company's new business strategy is to create the first national brand estate agency. According to a spokesman, the service will be funded from retained profits. If the policy is successful, the company may eventually seek external capital through a stock market flotation or a strategic partner. With profits currently around £2 million on fees of £9 million in 1998 and the prospect of further growth in the short to medium term, the company is likely to have a value of between £15 million and £20 million. Already, it is the largest estate agency in the State, having sold more than £400 million worth of new and second-hand houses in 1998. The group's turnover has also been boosted by the success of its commercial division since it was re-launched as DTZ Sherry FitzGerald last April.
The group is investing £1 million over three years on a marketing campaign to enlist member firms, which will be able to avail of Sherry FitzGerald's experience in the areas of training, marketing, information technology, quality services systems and research. Companies opting to join the group will pay an initial fee of £5,000 in addition 8 per cent of annual turnover.
Dermot McMahon, who has signed the first franchise agreement for his offices in Ennis and Shannon, is to be chairman of the subsidiary company. Philip Sherry, one of the group's founder directors, will act as managing director.
Mark FitzGerald, group chairman and chief executive, says the young demographic profile of the population continues to have a positive influence on the demand for property. There were now almost one million people aged between 10 and 24. This group would be aged 18-32 in 2006 and 23-37 in 2011 and "will continue to be one of the most powerful influences on the property market over the next 10 to 12 years."
Mr FitzGerald estimates that the combination of the young population profile, rising net immigration and falling dependency will generate demand for between 400,000 and 500,000 new homes in the 12 years up to 2001.
