Property entrepreneur Faisal Butt has predicted that over the next ten years, online estate agents could attain a 30% share of the market.
He said that ‘hybrid’ agents could win a 20% market share, leaving traditional high street agents with the balance.
However, Butt also made the point that many traditional agents will by then have adapted their own business models.
He also said it is likely that a big chain will want to acquire the likes of online agent eMoov or hybrid business Ivy Gate, raising the possibility that the likes of Countrywide or LSL might want to add such an arm to their business.
If not, he said eMoov or Ivy Gate could be among a new breed of real estate businesses falling into the hands of foreign buyers or looking to float on the stock market.
Butt, whose own business has recently rebranded from Hamilton Bradshaw Real Estate to Spire Ventures, backs a total of eight property-related companies including eMoov and Ivy Gate.
Butt also revealed that his company is currently in talks with other firms in the sector, and is likely to back another three next year.
The 36-year-old venture capitalist, who began his own business with backing from former Dragon James Caan, said that all will be in the real estate sector and all will have innovative business models.
Butt, who said yesterday that he has so far spent a seven-digit figure on his investments, and who gave measured answers in yesterday’s interview with Eye, said: “I don’t see my investment slowing down. We are keeping a close eye on those who are innovating in the sector.
“Our investment strategy is to back new models – the future players in real estate, those who will be the main players five years down the line.”
Butt told Eye: “We decided to rebrand because we sounded like a property firm and not a venture company.”
He told Eye that eMoov and Ivy Gate were doing well, and that he thought 2015 would be “a big year” for both.
He said: “eMoov is going from strength to strength, and there is likely to be an announcement about new funding.
“It now has more, big competitors, but we believe that we are in good stead to take on challengers.
“In many digital industries, there are only two big players. We think eMoov is well placed to be one of them.”
He said of Ivy Gate – which covers large geographical areas from its office in Kingston-upon-Thames, Surrey – that it has spent its first year of operations bedding in: “The team have put their heads down and concentrated on growing their business model,” he said.
“Operating from one office, it is able to save on accommodation and allocate that spend to hiring very good people, and that is what they are doing.”
Butt said that he does not see rapid changes immediately ahead in the estate agency sector, but does think that traditional firms will consider embracing a hybrid model, such as Ivy Gate, meaning a reduction of branches on the high street.
He also believes that some may bolt on an eMoov type of operation, which he described as being “at the other end of the spectrum, reducing the need for human interaction”.
Currently, the eight-strong portolio of companies backed by Spire Ventures employs 140 people. This time next year, Butt believes an 11-strong portfolio would employ 250.
Venture capitalists always want their money back at some point.
Butt emphasised that he is a long-term investor, planning for each of the businesses to hit various milestones over what could be a ten-year period before an exit.
He went on: “There are three options, as I see it.
“I think it is possible that one of the major chains will over the next couple of years start considering how a digital or hybrid business could be complementary to its operation.
“A trade sale could therefore be one option.
“Acquisition by a foreign buyer is certainly another option, and we have already seen foreign buyers target the UK property sector.
“The third option is, of course, to float on the stock market.”
Butt recently went into partnership with commercial property firm Cushman & Wakefield.
Here’s how Eye reported on Property Innovation Labs, Butt’s new high-tech firm, earlier this month.
Comments (22)
Out of curiosity, and I'm not saying that online agents don't do this but – how do online agents comply with money laundering procedures without ever meeting the vendor?
I'm told that as long as they do not get involved in any contact with seller or buyer (passive advertising only) they are not party to a transaction, do not need to belong to a redress scheme, are not an estate agents and do not have to comply with ML. And if that is correct my boy, they don't do anything for their money just like a newspaper. However if I got it right that ML loop hole is about to be plugged under new legislation relating to anti terrorism funding etc where web only portals will not be able to cope?
Faisal Butt… hmm sounds like a keeper. Jeez where ever there's a mic Russ is having s*x with it and now Beeny's spraying her musk so any wonder Faisal's high on protein shakes thinking we don't have the chops to hang with them. Look, we had a meeting and life's too Amish without news like this but whether the propositions sh*tty or not, online traffics up.Yes it sucks they're getting coverage but it sucks more a guy my age sleeps in a kimono so deal with it. Quit waiting on that walking digression called affiliation, that's the kind of mental masturbation that messes with your chakra dude. AM's got my vote but I'm p*ssed they're not putting on a spread because life's what happens when you're busy planning your future. Ok, before they take my shoe laces and I bed down for the night I've got to say Faisal & co have a licence to annoy and right now it's blowing cheap and raining cheerful. Time we got our word out.
Interesting that he describes emoov as being a business that doesn't require "human interaction". This has obviously let the cat out of the bag – their model is purely about listing the property on the web and then disappearing into the background. Tell me how anybody is able to progress a sale without the need for human interaction? This not only speaks volumes about the real focus of their "online" proposition, but also betrays their complete lack of understanding as to what estate agency is really about.
I'm sure he'll regret making that comment as no doubt it will be quoted again and again in order to highlight their true intentions for this revolutionary online model – essentially to provide an automated platform that allows the public to advertise their property on the portals.
I love the way Ros's one liners always make Faisal sound like James Caan's dupe.
To a vendor, disposing of what is probably their largest investment and asset, is a pretty big deal. Their biggest. The difference between selling at top and bottom price most likely equates to in excess of a years salary to them.
With this in mind, I find it hard to believe that many set out on the journey to find an agent with "cheap" even in their top 5 of requirements.
Hmmmm, so Easy Chris is admitting that his marketing model is inadequate at present.
I'm going to agree with @easychris, Internet use is massive and an estate agent not allowing for this their offering is making a mistake, however he's wrong on any view there had been pioneers in online property sales, there hasn't been and he's not set to be it either, there are firms that do it cheap and charge mostly up front regardless of results and are totally dependant on third party businesses like RM & Z, infact most of them are simply a way for the consumer to take a punt with upfront fees in return for a listing on RM etc. Budget Agent is the right description, pioneering isn't – Jonnie
This is an advert designed to pitch his proposition to his 3 options.
Not really any new news. Just another person blinkered by the internet model. As he says and then forgets in an attempt to support his predictions, High Street agents are already web portals! So he isn't offering anything new, just publicity and as for his ventures never heard of them, so we all know what that means. Still doesn't answer the FACT that many people do not have the internet or want to use it. All I hear is people who think they can earn a quick buck with the internet revolution, they need to wake up that was 25 years ago and they are still small and inferior players dabbling in a market for their own ends.
"FACT many people do not have the internet or want to use it"
this may help you on the actual numbers,which you will see the vast majority of the population do use the internet and its growing over time
http://www.ons.gov.uk/ons/rel/rdit2/internet-access-quarterly-update/q1-2014/info-internet-usage.html
who in business in not in it for their "own ends "or those of their shareholders
the fact is other than the emergence of the portals many agents have not yet grasped the power of the internet to change the way they do business. You also do a disservice to the many online pioneers in this space who with little money have grown their businesses organically to decent levels have a look at the review sites of the happy customers,this space is growing and as more enter the market and invest it will grow further,we think there is a place for many models high street ,hybrid and online, clearly we believe the online space has plenty of room for growth. The customer will in the end decide.
So thats what you consider yourself to be Chris is it, an online pioneer!?! I think you will find that most people visiting this site advertise their properties online and have done so with behind the scenes software packages for many years, so really you are a pioneer of very little other than trying to dumb down an industry. The easy business model of all of them is the one I struggle with the most as others at least try to offer some form of estate agency work however badly, yours however, is just a third party medium for advertising. I have seen quotes from over recent weeks crowing about how many listings you have attracted and how that is a measure of how successful you have been, I have news for you, companies are not graded on their stock levels but the revenue they generate from it. Even as a non estate agent you should understand that concept. I don't have a link for you but you would be wise to read Apples comments on the subject. Here we do have a successful and pioneering company and their view is that often technology inhibits rather than enables communication. Your site positively shuts it off completely.
EasyChris, The point is agents are already using the internet so those that are using it have that service and a web only portal is nothing more than third part advertising as already mentioned. But there are many who don't have or don't want to us the internet to replace the high street agent because they need the service a web only portal cannot provide. If you understood estate agency and the complexity of its day to day service it would go along way to you understanding.
I bet google adwords are loving the comment 'New funding coming soon'.
I was intrigued by Ivygate as I had never heard of it and its interesting, it incorporates lots of my own well publicised marketing but hey no crime there. So here's the thing, two people working an area, lets say they are successful and generate lots of instructions. Here is how it will go: Well we really need people to call clients about these properties, oh and help with the viewings, after all we do need some days off. Hmm now we are doing quite well in our patch but we probably do need to advertise a bit more locally to try and get a few more properties to sell. Ok well lets do that then. But what about deal chasing?, we've got quite a large pipeline now and you know what these sales are requiring more and more time, ok well lets get a couple more negotiators in then to spread the burden and maintain customer service levels. Do you know I was thinking the other day, getting to these appointments from the centre of Kingston is a nightmare, it can take me an hour round trip and we are getting a little tight for space here, how about we get another office. Hmm it seems that we could have this huge first floor one for £22,000 a year and it does have a coffee machine, but do you know theres this shop on the high street that we can have for the same money, it has got a loo at the back with a water heater that barely works but it is close to Subway for lunch. Oh right well lets go for that then…….I will tell you what though, we should be careful or people might confuse us with those old dinosaurs the high street estate agent.
Depressing to see an industry in self defence mode, putting up barriers to entry rather than promoting their own qualities.
When did the association last put out a drive to promote the qualities of estate agency? They appear too involved in the wrong things in my opinion.
We need an association that will shout about our strengths, loud and proud!
What Faisal seems to have overlooked is that before market share starts ebbing away there has to be an alternative that offers EXACTLY the same service and results, just for less. That isn't the case right now. You have a number of businesses that have worked on purely listing numbers to substantiate their business models. To start with sure they can make claims about selling a property and making huge savings but in the end the numbers speak for themselves and none of these firms sell anywhere near enough to retain volume customer recommendation or repeat business. As Trevor rightly points out this is a glorified For Sale board put around Emoove which I think speaks volumes about their current status. Sure they may well obtain more funding from someone else on the basis of the PR releases but frankly thats all they are. I have an announcement of my own, I intend to sleep with James Caans wife within the year. See how easy it is to make wild unsubstantiated predictions Mr Butt!
Nice piece and sure to get some debate going, I'm not sure if hes right or wrong and he's not sure either but amusing that he's stuck a lead on Russell Quirk, quick look on RM shows his Ivygate boys with less than 40 houses for sale…….slow burn this disrupting thing? – Jonnie
40 is a fair amount in this neck of the woods. Most run on less than 20 legitimately available. They are rather scattered though and certainly not disrupting anything thus far.
Is he trying to get someone to buy the business? There is not an amazing amount of profit with online agencies, plus they are 100% dependant on the portals, what with RM increasing the fees every year it won't be too long until the online price is the same as the high street and most people i would think would rather use a local agent over one 100's of miles away.
I really don't get this whole "online agent" plug when every estate agent and letting is online.
I want some of what this guy is smoking..