Real Estate Agencies go Bust

Real estate agency network halved in under six months as crisis bites

August 26th 2008
Two major franchises seek bankruptcy protection; another two put up for sale

In the space of just six months, Spain’s 10 largest real estate agencies have closed half of their offices as a result of the dramatic slump in the country’s housing market. At the end of last year, the biggest 10 franchises all had more than 100 offices through out the country, but that is now the case of just the top three, as home sales dropped 27 percent in the first five months of the year. The biggest player, Tecnocasa, now has 415 outlets, compared with 665 at the end of 2007. Alfa Inmobiliaria has shed almost half of its offices and now has a network of only 350, while Donpiso has decided to shut up shop at all but 20 outlets out of the 450 it had last year.

The bigger franchises took advantage of the liberalization of the sector in 2000 to expand on the back of what was once a massive boom. Hordes of people decided to abandon their day jobs to buy a real estate franchise out let, attracted by the lucrative commissions charged for selling homes during a 10 year surge. A 32 year old who identifies himself as A. G. took out a €40,000 loan to buy a franchise from one of the bigger real estate agency chains in the Barcelona area. He has now lived to regret it. “I wouldn’t do it again,” he says. A. G. had to go to extremes to drum up business. “I was going knocking on neighbors’ doors to ask them if they wanted to sell their homes.”

Associations of real estate agents have complained about the business being flooded by in experienced operators drawn by visions of easy money. “There is a tremendous number of small real estate outlets closing,” says Santiago Baena, the president of the College of Real Estate (COAPI). “We told people that in order to sell a house, you need training. More qualifications are required of someone selling lettuce — who needs a permit to handle food — than a real estate agent,” Baena adds.

COAPI estimates that the number of real estate intermediaries has fallen by half from 60,000 last year to about 30,000 at present. At the height of the boom, which saw house prices rise by about 150 percent on average, there were 1,000 outlets using the Tecnocasa brand. Another two of the bigger brands, Catalonia based Expofincas and MC Inmobiliaria in Andalusia, have sought legal protection from creditors. Expofincas, which was set up by José Antonio Galdeano, did so after building up debt of €10 million and failing to refinance it as the global credit crunch hit the sector with a double whammy. Fincas Corral, one of the other big players, was sold this month to a Catalan investor, while Donpiso, which is owned by the Catalan property developer Habitat, has also been put on the block. Coldwell Banker, the biggest real estate intermediary in the world, decided to shut up shop in July after only two years in the country, abandoning plans to build up a network of 300 outlets. Experts say that in order for real estate agents to keep their heads above water in the future, they will have to extend their range of services beyond selling homes to include rental and appraisal services.

From El Pais international edition . Author LLUÍS PELLICER, Barcelona

Add a New Comment
Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License