Foxtons in expansion push as profits rise 50% amid house prices surge
By Alex Hawkes, Financial Mail On Sunday
Upmarket estate agent Foxtons is to reveal that profits rose more than 50 per cent last year on the back of London’s booming property market.
City analysts expect the chain, once known for its fleet of Union Jack-covered Minis, to say on Tuesday that turnover rose 13 per cent to £136million in 2013 and that profits hit £38million, up from £25million in 2012.
The results will be the first since Foxtons’ stock market listing. Investors were offered shares at 230p in September last year, with the price soaring on the first day to 280p. They closed on Friday at 383p, valuing the group at £1.1billion and chief executive Michael Brown’s stake at £87million.
Well-placed: Foxtons aims to open five to ten more branches a year in London
Dozens of top staff made a fortune when the agency listed, having built up equity stakes during the group’s private ownership. Foxtons is also expanding.
It aims to open five to ten more branches a year in London, having earmarked 60 new sites. This would add to the 42 it already has in the capital, and two in Surrey.
Half of its turnover comes from lettings and the other half from sales. Despite suggestions of a bubble in the property market, analysts at investment bank Credit Suisse said in December that they expected estate agents to do well for a prolonged period.
‘The market has by no means fully recovered, which provides estate agents with a rare transaction-driven earnings growth tailwind, which we believe may last four years,’ the bank said in a note to clients.
It added that housing transactions collapsed during the credit crunch, but are recovering and could hit 1.1million in 2017 – 60 per cent above current levels.
Figures due on Thursday from the Royal Institution of Chartered Surveyors are likely to underline the growth in the UK housing market.
Of the trade body’s members, a balance of 53 per cent said they had seen prices rise in January and February figures are likely to be similarly strong. Halifax said last week that house prices had risen by 7.9 per cent in the year to February.