For big brands moving into real estate, the business of a sales agency is a great proposition.
From an accounting point of view, there is no cost to acquiring stock to sell, each unit sold usually yields tens of thousands in revenue, your advertising and marketing is paid for by your clients, and your product is in very high demand.
On top of that, your sales arm will often feed leasing management contracts of someone else’s asset into your property management business, which in turn is an asset you can build and sell for a value often multiple times the revenue generated.
Life is good in real estate. At least, that’s what the outside world sees.
Big Players Diving Into Our Pond
But where there’s money to be made, new competitors will always be snapping at your heels to offer some differentiated version of the same product. And if they can’t do it differently, then they can always just offer it cheaper.
And big companies are always looking to create alternative revenue streams, so it’s no surprise that many are opening real estate sales businesses to try to get a piece of the pie.
So let’s take a look at who’s coming to town, and what they’re bringing to the table…
Jims Real Estate
Mr “Jim-of-all-trades” Jim Penman started his career by launching a part-time gardening business while studying his PhD, and launched a full-time mowing business in 1982 with just a $24 investment.
In 1989 he changed from a subcontracting business into a franchise business and in 1994 launched the second franchise, Jim’s Cleaning. The Jim’s Group now has over 50 other divisions with over 3,800 franchisees, including real estate which was launched in 2017.
Easily one of Australia’s most recognisable big brands moving into real estate, Jim’s Real Estate has launched headfirst into the exciting new venture, during one of the most volatile times the industry has seen in years.
- The Jim’s Group brand is one of the most recognisable global brands, with franchises in Australia, New Zealand, the UK and Canada.
- Franchisees are able to offer vouchers to clients to use across multiple services, including cleaning and gardening.
- There is confusion whether franchisees will actually be able to access the Jim’s Group database of clients from other services – but Jamie Byard the Divisional Franchisor at Jim’s says they can service the 160,000 calls they receive a year as a part of the group.
- The Jim’s Group charges new franchisees a $48,000 territory fee when they start, as well as $1,650 a month in franchise fees ongoing, but agents keep 100% of their fees.
Better Homes And Gardens
The brand behind the TV Show & magazine has launched into the real estate sales game after 90 years of dominating the media industry.
They claim to have a network of more than 11,500 sales associates and 350 offices, however this claim is a stretch, given that this network is that of the Century 21 brand, owned by Charles Tarbey, who also is a director of the Better Homes & Gardens brand.
The brand held their launch events across the country in November this year, and joins Domain as another media company announcing a “pivot” in their business model this year.
- The Better Homes & Gardens brand claims a reach of 7.4 million across multiple platforms including TV, print & social media
- With some of the strongest media connections in the industry, the brand will be able to leverage a strong established presence in the psyche of the high-end property market
- Charles Tarbey is a well respected and experienced leader within the industry, and can be expected to lead the venture successfully given his experience in both fields
Giorgio Armani & Versace
Easily the biggest 2 of the big brands moving into real estate, are the Armani & Versace empires.
Armani is worth $9 billion and has ventured into the property development world, partnering with Dezer Development, Related Group and Argentine Architect Cesar Pelli to build a 60 story, 260 unit apartment building in Sunny Isles Beach, Florida.
Armani is also working on other developments in the Philippines & Beijing, designing the common areas & residential units.
Versace has built a 360 unit in London called “AYKON Nine Elms” set to be completed in 2020 with views across the Thames & Westminster Palace, with further developments in Beirut and Jeddah.
LJ Hooker’s “Avnu”
One of the big brands moving into real estate is technically already here.
After the failed launch of DIY platform “Settl”, LJ Hooker looked to create a new play in the real estate market with the announcement of “Avnu”, a completely tech-focused firm (however the website gives no indication what tech the firm uses to give a competitive edge).
A press release to Elite Agent says the firm will streamline data processing, contracts and marketing. No mention is made of what technology will directly benefit clients.
- A tech focused firm means Avnu’s value add to agents and agencies will continue to grow and develop
- The LJ Hooker brand has put vast resources into developing new tech and leading the digital marketing space (including a recent $16m digital advertising spend) indicating a commitment to finding their place in the future of the industry despite tightening advertising rules
- Avnu agents may be seen to be competing with LJ Hooker agents, and may struggle to integrate with the 90 year old brand