Winkworth plan to raise £1m signals confidence in housing market

Published 13th Oct 2009

Winkworth, the estate agent, plans to raise £1 million through a flotation on the Alternative Investment Market in the latest sign of renewed confidence in the housing market.

The family-run franchise business intends to float early next month after a revival in house prices, particularly in London, where 56 of Winkworth’s 86 offices are based.

Dominic Agace, the chief executive and son of Simon Agace, the founder, said that he would use the money to approach regional independent estate agents to join the group, with the intention to expand at a rate of eight new agencies a year.

A successful flotation would be second time lucky for Winkworth, which had considered entering AIM in 2006 before suspending plans because of market conditions that were “too strong to find opportunities”, according to Mr Agace.

Commenting on the timing of the decision, Mr Agace said: “While I don’t think the market is booming again, we are not going to see another Lehmans and what we have now is a slow easing around the country, with the exception of London, which has strengthened more drastically. The current momentum will not stop unless there is a major shock.”

The downturn has left many small agents vulnerable, potentially providing rich pickings for Winkworth, which said that it would give new franchisees better facilities and the benefits of a bigger brand name.

In recent months, Winkworth and other upmarket chains have benefited from rising demand for property relative to short supply. Winkworth said that it had benefited from an influx of foreign money chasing the short supply of homes in the capital. Mr Agace said that at present 60 per cent of Winkworth’s buyers were foreign.

The Royal Institution of Chartered Surveyors (RICS) will say today that the demand and supply imbalance has further pushed up prices around the country, with 22 per cent more surveyors reporting a rise rather than a fall, up from 10 per cent in August and the most positive balance since May 2007.

Contrary to expectations that more homeowners would be encouraged by the recent positive data to put their homes on the market, the RICS figures show that the number of agents reporting a rise in new instructions fell from 12 per cent in August to 4 per cent in September. However, surveyors also reported weaker demand, with the balance reporting an increase rather than a decrease in new buyers falling to 36, from 47 in August.

Knight Frank, one of Britain’s biggest agents, sounded a note of caution on the outlook for prices in 2010. It predicted that while house prices would end the year 2 per cent higher than they were at the start, led by London and the South East, there would be further modest falls next year.

Savills, the rival property group, also reported yesterday that foreign investors were behind recent price increases for ultra-prime homes in London. It said that the number of applicants for properties worth more than £6 million in the capital had risen by a fifth in the three months to the end of September, the highest level of demand for two years. Savills said that rising demand had pushed up prices of homes worth £5 million or more by 2.3 per cent in the last quarter.

In the flotation, first proposed in June, Winkworth will offer 11 million shares at 80p a share, giving a market capitalisation of about £8 million. The directors will still own about 80 per cent of the business, with Simon Agace in control of just under 60 per cent of the shares.

Source: ' Times '

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