Bubble agents

Across the world people talk about hard times ahead, about cuts, strikes, debt crises, austerity taxes and job losses. In short, economic Armageddon. But not everyone is gloomy. Walk into an upmarket estate agency’s head office and you will find the mood upbeat. Here the boardroom flow charts and canteen conversations focus on plans for new offices, new affiliations, more staff and more business.

Agencies with ballooning ambitions include Sotheby’s International Realty, which has recently increased its representation in Britain from one office in Mayfair to include branches in Chelsea, Stratford-Upon-Avon and Canford Cliffs, near Sandbanks in Dorset, a tourist spot popular with Russian, US and European holiday home buyers. Over the next two years it plans to open eight more branches across the country.

Charles Smith, managing director of Sotheby’s International Realty UK, says his company is moving into areas beyond London, because overseas buyers are starting to look outside the capital.

“Some of the places we are thinking of moving to will have international appeal,” says Smith. “For example, Dorset. If you are Russian and you had a second home in England – in addition to one in London – you would go to Sandbanks, because it has smart hotels, glitzy bars. There are one or two Russians buying there now.”

In addition, the agency will open offices in areas with strong local markets such as Wilmslow, in Cheshire, where the demand for suburban homes from executives whose corporations, like the BBC, are moving to Manchester is growing.

Internationally, Sotheby’s network of affiliates has expanded to include Peru, Turkey, Hong Kong and the Caribbean over the past 12 months. By 2014 it will be represented in Taiwan, Saudi Arabia and, possibly, Australia.

Meanwhile, Knight Frank, which already has offices in 78 cities around the world, wants to have offices in 100 cities by 2016. “Significant developments in the last year have included the growth of the India team to a national force of over 800 staff, an increase in staffing across Asia Pacific and new offices opened in Austria, Switzerland, Romania, Abu Dhabi, Chennai, Hyderabad and the UK,” says Nick Thomlinson, a senior partner at Knight Frank. “Another 30 emerging locations have been marked as future additions to the network, including adding to our existing representation in Latin America, Brazil and Chile.”

Knight Frank is following the money. Supported by overseas staff, a 20-strong team of London researchers analyse capital flows around the world. Where they trace high levels of wealth transferring from one location to another, the company considers opening new branches or expanding existing ones, to create a web of inter-connected deal-making centres.

According to Thomlinson, “Indians are looking to buy in Singapore; Malaysian buyers are looking within their region; Hong Kong Chinese buyers are looking in Phuket; and Abu Dhabi buyers buy in Malaysia.”

In addition to providing referrals to other offices within the network, new branches will serve local demand for local property, says Thomlinson. And in early 2013, he adds, the agency will open its first office in Turkey, where a burgeoning economy supports local demand for luxury homes. The office will open in the country’s commercial centre, Istanbul.

“It is not just the movement of money out of an area,” Thomlinson says. “You must also be able to sustain business within the market.”

Savills, the international property adviser, is expanding its branch network in London and south-east Asia, including Singapore, where it hired 938 agents in the first 10 months of 2011. The most rapidly expanding sectors of the company’s residential estate agency business are prime London residential sales and lettings, and sales of British developments at exhibitions abroad, mainly in Hong Kong, Singapore and Kuala Lumpur. More than half of buyers in prime central London districts such as Kensington and Chelsea came from overseas in the past 12 months.

Savills appears to be unfazed by the eurozone crisis and its effects on housing markets. “Expansion of the residential business is a long-term game, and while there is going to be more short-term pain, as the eurozone crisis is going to take time to reach terra firma, we are convinced that the trend of buyers exporting wealth abroad will continue,” says Rupert Sebag-Montefiore, head of global residential real estate business at Savills. “In turbulent times, high net worth individuals are reassured by property as an asset.”

Christie’s International Real Estate opened an office in Hong Kong last summer and will add a further 20 affiliates’ offices to its network in the Asia-Pacific region, Moscow and the Middle East over the next three years.

Neil Palmer, chief executive officer at Christie’s International Real Estate, says the company’s expansion plans follow that of its parent company, the art auction house Christie’s, with which it has a symbiotic relationship, each providing the other with referrals.

“The art world is seeing a surge in interest in the very best and we are seeing a clear resurgence in interest in the very best residential property, particularly in the prime residential markets of London, Paris, Geneva, New York, Los Angeles and Toronto,” Palmer says.

Other estate agents expanding their operations in the upper quartile of the housing market include London-headquartered Fine & Country, which opened 16 offices in Britain and 11 overseas in 2011, adding to its existing network of 275 offices. Another 18 offices are expected to open in Britain, mainland Europe, the US and the Caribbean this year.

The company, which operates as a network of agents licensed to use the Fine & Country brand, has experienced growing interest for its licences. “In the recession we have seen a number of agencies looking to get into the more valuable higher-priced property market,” says Richard Combellack, Fine & Country’s head of marketing.

Hamptons International, which focuses on southern England, has opened five branches in 2011, including an office in Mayfair, and plans to open three more next year. It is also adding lettings departments to existing offices that don’t have one, to cater for a growing demand for rental properties.

“There is a lot of money floating around the globe looking for opportunities,” says Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. “There is some level of frustration with the performance of equity markets. There are high levels of volatility in Asian equity markets in particular, so many people from there may see property as a more secure investment.”

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Details: Contacts

● Christie’s International Real Estate www.christiesrealestate.com

● Fine & Country www.fineandcountry.com

● Hamptons International www.hamptons.co.uk

● Knight Frank www.knightfrank.co.uk

● Royal Institution of Chartered Surveyors www.rics.org

● Savills www.savills.co.uk

● Sotheby’s International Realty www.sothebysrealty.com