Plenty of intrigue in the current market and it’s not just the agents who are showing signs of fatigue. If you ran a real estate agency in the 80’s all you did was read the owner’s operational manual from the 70’s. Much of the same in the 90’s where the focus was on scaling down operations as we battled the ‘recession we had to have’. Times have certainly changed in the new 21st century, and there is no better example than the real estate industry itself as today it can no longer be referred to as a ‘Rip Van Winkle’ business model. The operational manuals are now redundant (although some still abide by them). Today, we find ourselves in a new twilight zone with new concepts and thought processes on a fast emerging new horizon. This new zone will definitely recognise the many agents, agencies and franchisors (for that matter, unknowingly) in the twilight of their careers. There is now a host of new players (currently invisible) taking more than just a cursory glance at our industry and already some in the new regime have expressed their intentions to become major players in the property industry, as it offers so much diversity, i.e previously undetected and under-utilised rivers of gold.

It has recently been suggested in the media that a Melbourne based company Run Property, is holding discussions with Sydney based agencies regarding acquisition of their property management businesses with a view to running their new hi-tech model. This has never been seen before and the thought of running a call centre (hopefully not through India, as others are doing) will give many agencies reason for concern. What they apparently will offer (if they actually exist) is state of the art online technology, and this will immediately place agencies that are not at the forefront with technology, under extreme pressure to hold on to their rental portfolios. Like most successful agencies today, they are very much e-based. The agencies who have refused to log on to the Internet, now face being deleted and we are not seeing a recycle bin on the horizon. John Symond of Aussie Home Loans has publicly declared that he is moving into the real estate industry and one can only assume that he would be looking at establishing a franchise operation under his successful Aussie brand. As with his home loan business, he is not frightened of enormous advertising campaigns directing attention to his brand, and the obvious attractions of direct contact with home loans, insurance policies and all the other revenues that are somewhat untapped, are of great interest. Suncorp who own the successful LJ Hooker franchise has just launched their first Financial Services office in Double Bay, with a view to opening more across Sydney. Rumour that Macquarie Bank is also looking to play further in the property market too, adds more fuel to a fire that soon will rage. Macquarie, (we bank with them, as do quite a number of the bigger real estate agencies) already provides the business models for our property management. They also invest all the deposits that we hold in our trust accounts. We have not had any discussions with the ‘Millionaires’ Factory’, given that this week, they would have been somewhat distracted after announcing that their net profit was a record $881 million for the year to 30 March 2005. Over the next few years we will see many new franchises launching, therefore the landscape of agencies will change. These new groups collectively, will have greater bargaining power for cheaper media rates, not forgetting that they too will offer substantial online services utilising their combined resources.

Whilst on the subject of online, we had a close look at our business this week to identify our online (Internet)/offline (newspaper) ratios for our three divisions. Our Housing Division has a ratio of 55 per cent online to 45 per cent offline. The Apartment Division is 80 per cent online and just 20 per cent offline, our rentals are 90 per cent online and 10 per cent offline. The interesting part of this analysis is that the newspaper groups moved the apartment and rental divisions out of their respective brands, given that landlords and property owners could not justify the continually rising cost of advertising rates. The Internet then became the new and most cost effective medium, as the age demographic for those who happily participate in these markets is very much IT savvy. When domain.com.au and realestate.com.au launched, approximately five years ago (give or take), at that time the offline businesses (newspapers) then had 100 per cent control of this revenue (we launched ‘Virtual Realty News’ on 15 September 2000). Yet another example of how quickly the landscapes change in such a relatively short period of time. It should be noted that our business at RWM is one of the largest e-businesses in real estate today. Other real estate agency ratios would be more proportionate to a greater concentration of offline (newspapers) over online. Having said that, this week we broke a new milestone when we recorded our 172nd Internet sale to subscribers at a combined sales value of $300,427,500. I would suggest that this is an Australian record in our industry.

Maybe a bit more caffeine is all the agents need to get more spring in their steps as it is a much tougher market today and whilst sales are still taking place, the pace of the market is causing some concerns. Investors are back looking at the investment property market and many are waiting to see what Bobby ‘Dazzler’ delivers next week with his much awaited budget announcement. Market whispers suggest that Land Tax thresholds are coming back in (after a twelve month no brainer removal) hopefully, to curb the voter revolts from previous Labor strongholds, although when the next election arrives, the ‘State of Decay’ could very well be in the hands of the receivers !!

In harder times such as the 90’s real estate businesses reduced overheads and scaled their respective businesses down, to avoid bankruptcy. Now, in the 21st century if you apply that same (outdated operational) business model, agencies today will all but assure themselves that there is a light at the end of the tunnel. What they are unaware of, is that this light is actually a fully laden train. Today our industry is all about providing a point of difference, delivering, whilst acknowledging, changing times. Sadly, many remain on the wrong track !! Today, the derailment is all but guaranteed and we will witness enormous casualties. Cheers ^__^

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