25 January 2018 – Expansión
Century 21, one of the largest networks of real estate brokers in Spain, wants to take advantage of the upward trend in the real estate cycle to grow in size, and so is analysing the purchase of regional operators and is even considering merging with one of the national chains.
“Spain is one of the countries in which the broker segment is most fragmented. We are starting to see a trend towards consolidation, which is both inevitable and necessary. We believe that an organised network, with defined working and behavioural criteria and self-regulation, are fundamental for the professionalization of the sector”, said Ricardo Sousa, CEO of Century 21 for Spain and Portugal, speaking to Expansión.
Sousa explains that, although his firm is not currently holding any advanced negotiations in this regard, the company is “mindful” of acquisition opportunities. “There are regional players that may enhance the synergies and allow for more rapid and consistent growth. That is something that appeals to us”, he said.
Sousa also opens the door to alliances with players that compete on the national level: “We are continuing with our organic strategy of value creation with the opening of new branches and through our network of collaborators. In parallel, we are watching the market to find the ideal partner”.
The director gives the example of the “success” of the merger between Century 21 Portugal and Fitamétrica – two of the largest networks in the Portuguese market – five years ago.
Century 21 arrived in Spain in 2010, at the height of the crisis in the real estate market. Eight years later and, with the residential sector now booming, the company has 70 branches and 1,150 collaborators.
The director considers that “there is too much optimism in the market”, which is being translated into certain “irrational” investment and purchase decisions. And he adds: “People need to be more careful because the cycles are becoming increasingly faster and shorter”. For Sousa, there is a clear need in Spain for new-build and renovated properties and there is a segment of the population, the middle and low-middle class, that has been “forgotten”.
Last year, the company recorded turnover of €15.7 million, which represented an increase of 37%. In 2018, Century 21 plans to increase its revenues by 27%, to €20 million. Barcelona will account for 30% of total turnover, a similar percentage to that recorded in the Canary Islands, whilst Madrid is expected to represent 25% of total revenues. The company plans to focus its growth efforts on peripheral areas in those regions.
Last year, Century 21 brokered 5,414 transactions, which represents an increase of 22% with an average value of €199,598, down by 6.3%.
In terms of Cataluña –the chain’s main region, which currently accounts for 41% of turnover -, Sousa acknowledges that the political tension led to a deceleration during the months following the referendum. “Many buyers delayed their purchase decisions in October and November, and decided to close those operations in December and January instead, meaning that those months have reached record highs”, he said.
In this regard, Sousa says that whilst the domestic market has been reactivated, international firms are leaving their investment operations on standby, for the time being.
Original story: Expansión (by Rebeca Arroyo)
Translation: Carmel Drake