Corporate Finance, Deal Advisory
Industry Update: Property Services
Despite continued economic uncertainty, many pockets of the property market are performing well, with strong growth prospects and M&A activity set for the future.
The property market has seen significant decline in activity in recent years, largely due to the political and economic uncertainty rife in the UK. However, the UK economy rebounded in August thanks to a strong service sector, and many pockets of the property market are showing strong performance.
Gerald Edelman has released its second industry report, which looks at the performance of three key property services: estate agents, mortgage broking and conveyancing.
Gerald Edelman’s ‘Property Services’ report provides insight into each individual service, discussing recent M&A activity, risks for the service and the outlook for the future.
Key takeaways from the report are:
- Profitability analysis reveals the disparity between the most profitable companies and the average estate agents; as at January 2019, the top 656 companies in the market benefit from 8.6% net profit margins, whereas the industry average for the remaining portion of the sector was less than 1.7%.
- Top estate agency firms are highly attractive to investors; 72 deals have been completed in the last 12 months, 56% of these were backed by private equity houses.
- Rising competition in the mortgage market has prompted banks and building societies to turn to riskier lending; mortgage deals where banks are willing to lend more than 95% of a property’s value has increased by 60% in the last two years.
Nick Wallis, Partner of Gerald Edelman Deal Advisory, stated, “As a business, we continually look for new ways to demonstrate our knowledge and provide insight for business owners and potential investors. Property services is a sector we know well, with a number of clients in the space, and with members of the team having advised on a large conveyancing deal within the last twelve months.
Despite the uncertainty of Brexit, M&A activity has increased over the past year and investors have shown a particular interest in property services firms.”