This article is from the Australian Property Journal archive
BRITISH fixed-fee real estate agency Purplebricks has stunned the market by announcing it will exit the Australian market, after arriving down under two and a half years ago to much fanfare.
In a statement, the company said market conditions in Australia have become increasingly challenging.
Launched in the UK in 2014, the company expanded into Australia in 2016, claiming it could save vendors an average $11,500 in agents commission.
The company spent $17.4 million to setup shop.
However, Purplebricks yesterday said returns in Australia are not sufficient to justify continued investment.
It will begin an orderly exit.
“During the two and a half years that Purplebricks has been operating in Australia, market conditions have become increasingly challenging. This, combined with some execution errors, has resulted in the business not delivering the progress the board expected.
“The board has therefore concluded that the prospective returns from Australia are not sufficient to justify continued investment. Accordingly, the group has chosen to exit the Australian market and the business there has been put into an orderly run down with immediate effect, pending closure. The business remains committed to our current customers,” Purplebricks said.
At the same time, the group’s founder and CEO Michael Bruce is also stepping down, with chief operating officer Vic Darvey to take over the reins.
Non executive chairman Paul Pindar thanked Bruce for his contribution.
“Michael’s vision in creating the UK’s leading hybrid estate agent has been deeply impressive, as has his relentless energy in developing the business both in the UK and internationally.
“The board is delighted to have an executive of Vic Darvey’s calibre to take on the leadership of our business for its next important phase of development. We have a lot to do and Vic has a clear vision of the priorities we need to address.
“Importantly, we are very conscious that the Group’s performance has been disappointing over the last 12 months and we sincerely apologise to shareholders for that. With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered. We have also made sub-optimal decisions in allocating capital. We will learn from these errors and will not make them again,” Pindar admitted.
Darvey said going forward the group will focus on its businesses in the UK and Canada.
“We have also made significant progress in the US building a disruptive brand in the real estate market and our proposed strategic review will allow us to determine how we deliver the next phase of growth in a more effective and cost-efficient way.” Darvey concluded.
Australian Property Journal
