Several of Ireland’s top agencies have recently sold out to large corporate firms – and there are grumblings that the takeovers are bad for the career prospects of Irish agents.
The source’s voice on the other end of the phone laughs lightly when asked whether it was a good decision for some Irish agencies to sell up. “Well, people over here think that it’s good on the Irish boys. They sold out at the right time, just as the market is now starting to soften. And they got a good price out of the English firms,” is the response.
Whether fair prices were paid or not, a lot of money has changed hands over the past three years – starting in 2005 when CB Richard Ellis bought Gunne for €20m, then in June last year when Atisreal bought Harrington Bannon for €10m.
The buyouts continued this year when, in March, Savills bought Hamilton Osborne King for an estimated €50m. Until then, it had been Knight Frank’s partner in Ireland.
But Knight Frank was not to be outdone. A few weeks later, in May, it paid a reported €10m for small Dublin-based firm Ganly Walters.
So, why all the interest in Irish firms, and what effect are the buyouts having on the Irish agency scene?
Given the amount of Irish money flowing out of the country into investment deals – not only in the UK, where last year the Irish sunk €5.5bn, but also across Europe – it would have been hard to ignore the potential for business.
And as Peter Stapleton, managing director of Lisney, which remains an entirely Irish company, says: “The big firms see the Irish money going out and they see this economy as being healthy.”
All this has been reflected in the Irish agencies’ turnover. For example, CBRE has seen its staff numbers rise from 60 in 2003 to today’s 140, while its revenue has grown by around 430% from €7.7m to above €33m over the same time. HOK announced in August that its profits more than doubled last year from €4m to €8.1m.
But Stapleton says that a lot of this buying activity “was at the peak of the market”, and points out that certain sectors have softened. For example, the Irish investment market has weakened, with CBRE predicting that overall spend will reach €2bn by the end of the year, compared with €3.3bn invested domestically in 2006.
Jeremy Helsby, Savills’ head of commercial property, also admits there is a slowdown in the market. “We will make less money in Dublin than we thought we would have this time last year,” he says. “Yes, at the moment volumes are down.” Helsby adds that this is indicative of the market across the UK.
Nevertheless, Alistair Elliott, head of commercial at Knight Frank, says that the scale of the investors was one of the attractions toward buying up an Irish agency.
“We felt that Dublin has always had critical mass,” he says. “It’s not a market you should overlook and therefore we wanted a business there.” But Knight Frank could not afford to buy its affiliate HOK.
“We had a relationship with HOK before it was bought by Savills,” says Elliott. “In terms of timing and scale of price, it didn’t fit with our plans, but we also felt the business case to have a representative in Ireland was strong, so we set about viewing alternative companies.”
The alternative was the 40-strong firm of Ganly Walters, which Elliott describes as a “neat fit” for Knight Frank because of the Irish firm’s residential arm. Ganly Walters had also expanded into overseas markets, where it used its associate King Sturge as a springboard.
As for HOK being too expensive, Elliott admits that it was “just too much for us at the time, and Savills paid what it paid, and we accepted that position reluctantly”.
The sales are resulting in new blood being brought in. For example, Guy Hollis is set to replace managing director Pat Gunne. Hollis previously worked for CBRE in Belfast and then Jones Lang LaSalle in the Far East and China.
Gunne will move away from the day-to-day running of the business, which he established along with his brother 10 years ago, to take up the position of deputy chairman of the company at the end of the year.
He will continue to serve on the European board of the company but says he is making the move to allow him “to spend more time focusing on Irish clients and the wider European capital markets business”.
The consensus is that this is not the end of the changes. Hollis says: “Yes, I would say that more will be bought.”
Industry figures are very reticent to name names, but the one company that is mentioned time and again is Lisney. The firm remains the only solely owned Irish company in the top-five Dublin agencies, and is an obvious prime target, especially as it has been affiliated to Cushman & Wakefield for the past five years (see box, below).
Whatever a property player’s position regarding the future shape of the market, the debate over ownership will go on as more acquisitions are predicted.
Do buyouts ruin Irish agents’ career prospects?
Peter Stapleton is adamant: Lisney will not be selling out because, as he says: “A buyout would make business less flexible.”
Lisney has a staff of 200 and offices nationwide. Stapleton says: “We have our own business plan, and selling our business is not on our agenda. In fact, quite the contrary. We want to grow.
“From an agency point of view, what selling out means is that a lot of senior shareholders can achieve a quick and early retirement. But, for the younger members of staff, their earning capacity is limited because they would have an outside owner who is looking for a return on their investment.” He believes that for staff, it’s a less attractive proposition to be owned by an outside company.
Stapleton says that Lisney is actually picking up staff from the companies that have been taken over.
Jeremy Helsby, head of commercial property at Savills, which this year bought Hamilton Osborne King, has a different view, however. “When we buy a business, we certainly don’t buy it to make a profit. We buy it to grow it,” he says. “We don’t just look at the bottom line.”
He accepts that churn can happen in any firm. “For young people, it’s good for them to be part of an international business,” adds Helsby. “It allows them to move around the globe easily.”
